Environmental performance

This year we embarked on a project to improve both environmental data reporting and environmental risk management. The status of the various actions is shown below. Results from this process are expected to be visible in FY2013.

DETERMINING OUR MATERIAL ISSUES

Through engagement with the operating entities it was determined that the most material environmental issues are: energy and climate change; environmental compliance and incidents; and waste and water management.

For the Construction Products Africa operating platform raw materials were also identified as being of particular significance.

The process of determining materiality has informed the development of an environmental data reporting standard. It is expected that the operating entities will report on these material issues in the next year.

2012 PERFORMANCE

The 2012 environmental performance with respect to energy, carbon footprint and ISO 14001 is shown below.

KEY INDICATORS	Performance
Performance dimension	2012		2011		2010		Movement
Environmental
Energy usage (MWh)	1 717 120		1 319 329		1 327 327
Carbon footprint (tonnes of carbon dioxide equivalent)	565 034		515 5061		633 643
ISO 14001 implementation (percentage coverage)	40%		±30%2		N/A

RESOURCE EFFICIENCY AND CARBON FOOTPRINT

ENERGY USAGE

During FY2012, the Group consumed approximately 1,7 million megawatt hours (MWh) of energy from a variety of fuel sources, with diesel (both stationary and mobile) and bituminous coal accounting for 80% of the Group’s energy usage. The table below indicates the different fuel sources utilised across the Group.

CARBON FOOTPRINT

Murray & Roberts has participated in the Carbon Disclosure Project (“CDP”) since 2008, measuring and reporting on its carbon emissions since then.

Between FY2010 and FY2011 the Group’s absolute emissions (Scope 1 and 2) decreased by 26,6%, largely due to the mothballing of CISCO during FY2011. In FY2010, CISCO contributed 203 856 tonnes CO₂e to the Group’s absolute emissions; 66 604 tonnes CO2e in FY2011 and zero in FY2012. Between FY2011 and FY2012, absolute emissions increased by 10%. Ocon Brick accounts for approximately 40% of the Group’s carbon footprint.

Murray & Roberts’ carbon footprint is affected by the number and size of projects. This varies year to year, making accurate carbon footprint comparisons difficult.

Several operating companies have introduced energy-efficiency/ saving measures and this has positively affected our carbon footprint. These measures include:

	Improving power factor correction systems and monitoring within Building Products operating companies
	Improving machine efficiencies (including set ups and maintenance) and replacing old machinery within the Building Products platform
	New technology to improve energy efficiency (such as installing new oil-fired burners) at Much Asphalt
	Energy-saving initiatives within head offices, such as introducing a ‘switch off at night’ campaign, installing energy-saving light bulbs and installing sensors to control lighting and air conditioning

The Group’s South African operations account for approximately 73% of the Group’s absolute emissions. Carbon emissions have potentially been under-reported within some of the countries in which Murray & Roberts operates.

CARBON TAX IMPLICATIONS

The South African Government’s 2012/13 budget review outlined elements of a carbon tax. These include the tax starting at R120 per tonne of CO₂, increasing at 10% per year and limited to Scope 1 emissions. Basic free allowances for businesses across certain sectors to the amount of 60% of their annual Scope 1 emissions will also be introduced, and an emissions benchmark per unit of output will be defined for each sector.

Murray & Roberts will be exposed to the carbon tax on its South African Scope 1 emissions. It is unclear whether Murray & Roberts will qualify for the 60% free allowance. Should Murray & Roberts qualify for the allowance, only 40% of Scope 1 emissions would be liable for a carbon tax at R120 per tonne of CO₂e. This would result in a tax liability of some R16,5 million based on FY2012 figures. Should Murray & Roberts not be liable for the allowance, it will be taxed on 100% of Scope 1 emissions. This could result in a tax liability of some R41,3 million a year.

Additionally, Murray & Roberts may face an increase in the price of electricity as a result of Eskom passing the cost of the carbon tax on to its consumers. This may be in the region of R0,04/kWh which would result in an increase of R2,7 million a year based on FY2012 consumption.

The Australian Government has implemented a carbon pricing scheme in July 2012. Based on their current emissions, the Group’s Australian operations (Clough and RUC Cementation) will not be subject to the carbon pricing scheme.

WATER USAGE

The estimated water usage for the Group is approximately 630 000 kilolitres, mainly supplied by local municipal systems.

Water data is possibly underreported across the Group. Data for municipal water consumed is provided quarterly by some operations. Mine contracting operations and entities in the Construction platform do not report on water used as the client concerned accounts for it on site. Training will be rolled out during FY2013 to assist with the reporting process.

ENVIRONMENTAL RISK AND COMPLIANCE

Environmental status reviews were conducted at 16 sites across the Construction Products Africa, Engineering Africa, Construction Africa and Middle East and Construction Global Underground Mining operating platforms.

Site visits were conducted at each of the sites by an independent team of environmental consultants and the environmental status of each operation was reviewed against environmental best practice.

The most significant environmental risks identified were:

	Poor waste management, including the inadequate disposal of hazardous waste and insufficient management of appointed waste contractors
	Authorisations, such as water and waste licences, not being in place
	Conditions of authorisations and client authorisations not being met and/or reviewed to verify compliance
	Soil and groundwater contamination from potential leaks of underground fuel storage tanks
	Wastewater discharged to the soil or storm water drains and industrial effluent discharges having exceeded effluent limits

REPORTED CONTRAVENTIONS, SPILLS AND FINES

	Murray & Roberts Cementation reported that both the Impala 20 hostel and Pandora hostel are located on agricultural ground and neither site carries the required environmental, town planning and water use licence authorisations. However, these incidents did not result in any fines or penalties
	Concor Roads and Earthworks reported two non-conformances, one involving a water pipe and the second relating to the dumping of waste. Neither incident resulted in a fine
	UCW reported that its iron, zinc and suspended solids levels in their industrial effluent were above the required limits
	A pre-compliance and compliance notice was issued in 2011 by the Gauteng Department of Agriculture and Rural Development (“GDARD”) provincial environmental authority to Much Asphalt for contravening the conditions of the Environmental Impact Assessment Record of Decision for the new Benoni plant. All issues have been addressed, except for the storm water plan which is awaiting approval from GDARD
	The operating entities reported approximately 150 spills in FY2012, the majority of which were minor spills. The spills were remediated immediately and accordingly

Murray & Roberts requires that operating companies adopt the most stringent standards, whether they are imposed by client environmental management plans, local and national legislation, or the Group itself. Our operations are required to implement and comply with ISO 14001, a standard that addresses environmental management systems as well as the ISO 9001 quality management standard. Currently, 40% of the Group’s operations are ISO 14001 certified, based on number of employees and subcontractors under our control. We last year reported that approximately 70% of operations had ISO 14001 accreditation, which incorrectly assumed that all employees in two of our largest operations were covered by the certification, however only certain smaller sites and corporate offices in these operations were certified. The correct level of certification was approximately 30% for FY2011. ISO 9001 coverage was at 68% at the end of the financial year. We will be tracking progress towards full compliance as part of our internal assurance plan.

WASTE MANAGEMENT

WASTE GENERATION AND DISPOSAL

Waste generated is measured and monitored at an operational level but the data is currently inconsistent and incomplete so aggregation of data is not possible at present. Reporting on waste will take place from the first quarter of FY2013. Non-hazardous waste (concrete, brick, paper) is recycled or reused where possible. Hazardous hydrocarbons and plastic waste is removed and recycled where possible.

OUTLOOK

The following strategic objectives and actions will form the basis of our focus during the next year:

LEADING THE WAY IN RECYCLING Rehabilitating roads does not have to mean that the “tar” being replaced should be discarded. Today, more and more asphalt is being recycled without compromising the quality of the end product. Locally Much Asphalt is the leader in asphalt recycling, in the past year processing some 85 000 tonnes of recycled asphalt (“RA”). In 2011, Much Asphalt’s Benoni operation commissioned mobile crushing and screening equipment costing R4 million for the processing of recycled asphalt materials. In 2012 a second unit was acquired as demand grew. The new equipment, an impact crusher and a mobile screen, were immediately put to work processing a 100 000 tonne stockpile of RA for recycling. Much Asphalt has big plans for recycling which, in the United States of America, accounts for around 30% of all asphalt production. RA is rapidly gaining market acceptance for its “green” properties. The bitumen and aggregates used in asphalt are non-renewable resources that are becoming increasingly scarce. In South Africa, most RA is generated through milling machines which remove the layers of asphalt requiring replacement. Using milling machines means that the asphalt is fragmented to a uniform grading and can be removed without disturbing the edges or underlying pavement materials. Pavement materials that are still useable can then be left as is, while edges of the road are not disturbed. A further advantage of recycling asphalt is that it can be used in warm mix asphalt – which uses a production process that utilises 30% less energy, than that used in hot mix asphalt, thus saving cost and the environment. Much Asphalt, who is currently using RA at seven of its facilities, has plans to extend it to its remaining operations. This initiative is evidence of Much Asphalt’s support for one of Murray & Roberts’ key values “care”, which in this case relates to care for the environment.