Health and Safety

Management Approach

Our health and safety management approach has historically been decentralized, with each division applying its own expertise and experience to identifying hazards and risks, implementing controls, monitoring performance, and assigning appropriate accountabilities. We are now working to establish enterprise-wide standards, aligned with international best practice, as part of our commitment to continuous improvement, operational excellence and a stronger safety culture.

We have also identified the need for a general health and safety standard, which will be based largely on guidance from the Mining Association of Canada, and specific fatality prevention standards. These will clearly articulate expectations across the business for all elements of health and safety performance. They will be developed, reviewed and implemented over the next three years.

In 2015, we developed and introduced our significant potential incident standard to all divisions. This standard provides us with a new performance indicator and requires tracking and specific management actions for any workplace incident that, under slightly different circumstances, could have resulted in a fatality.

We also began conducting safety culture assessments at our divisions, and introduced and refined a series of leading indicators designed to increase hazard awareness, improve performance and strengthen safety culture. These include leader walks around sites to set the tone from the top, proactive health and safety communication activities, workplace inspections and training hours. Our intent is to embed all these initiatives deep within the organization. Ultimately, experience has taught us that everyone must take ownership of safety and be comfortable having safety-related conversations as a matter of course in their everyday activities.

In addition, at the corporate level, we monitor health and safety performance through regular executive reviews, peer comparisons and independent assessments.

Performance

Fatalities

We were deeply disappointed by our safety performance in 2015, as there were four fatalities at the Ambatovy Joint Venture: three related to operational activities and one suspicious death linked to fuel theft that remains under investigation by the authorities. These were the first fatalities for the company since 2012.

  • On February 15, a contract maintenance worker was fatally exposed to an unplanned release of hydrogen sulphide vapour from a process tank. This incident also resulted in two lost time injuries.
  • On May 16, an employee operating a large bulldozer was fatally injured when the crest of the low-grade ore stockpile failed, causing the dozer to fall down a steep slope. The employee exited the equipment in an effort to escape but was caught up in the sliding material.
  • On July 8, a contract dump truck operator was found unresponsive on a haul road approximately 40 metres from his truck, which was parked with its lights on and engine running. The cause of death continues to be investigated. We will categorize it as a workplace fatality until the investigation is complete.
  • On August 21, a contractor suffered a head injury during tree-felling activities. After being treated at the on-site medical clinic and subsequently discharged with no abnormal symptoms, the worker’s condition deteriorated overnight and he passed away after being admitted to hospital.

Lost Time and Recordable Incidents

In addition to the four fatalities, we reported 20 lost time incidents (which are recorded when a worker misses at least one shift following a workplace injury) and 58 recordable incidents (which include injuries resulting in death, lost time, restricted work, medical treatment beyond first aid, or loss of consciousness) across the company.

Our overall safety performance in 2015 was good, with a lost time incident index (total number of lost time injuries per 200,000 work hours) of 0.14 and a total recordable incident index (total number of recordable injuries per 200,000 work hours) of 0.41, both of which are peer and industry leading but indicate a negative trend compared to recent years.

Lost Time Incident (LTI) Index
* LTI index = # LTI * 200,000/SUM (exposure hours for the year)
Total Recordable Incident (TRI) Index
* TRI rate = # TRI * 200,000/SUM (exposure hours for the year)

Significant Potential Incidents

There were nine significant potential incidents (SPIs) reported in the fourth quarter, following the introduction of the SPI standard. They were investigated in the same manner as fatalities. Detailed investigations to identify the cause(s) of each incident were completed, and actions to prevent recurrence were identified and implemented. Examples of the SPIs include:

  • A contract equipment operator was injured by a haul truck at Ambatovy.
  • A fall hazard was created by a contractor at Ambatovy who removed a floor grating and did not replace the grating or hard-barricade the area before leaving.
  • Ammonia vapour was released from a process tank at Fort Saskatchewan when connected equipment was incorrectly prepared for maintenance.
  • A steam pipeline released a potentially hazardous emission during pre-commissioning activities of the project at Moa.
  • A partial finger amputation occurred when a falling object struck an employee who was leveling a shelving unit at Oil & Gas and Power.

Public Safety

Management Approach

As good neighbours, we work hard to ensure that our operations, transportation activities and other business practices do not have unintended or adverse effects on the public. We closely follow the regulations of our operating jurisdictions, strive to meet the expectations of nearby communities and regularly engage and collaborate with local stakeholders on risk awareness and emergency preparedness.

There are natural links between public safety and effective community engagement. Through engagement, we work to understand public concerns and safety risks, evaluate steps we can take to reduce risk, help clarify misunderstandings and dispel misinformation, and, when appropriate, collaborate with communities on initiatives that make us all safer. Through these efforts, we contribute to building a strong safety culture in the communities near our sites.

One of the most important ways we protect both communities and our business is through effective emergency preparedness and response planning. At our operating sites, we develop plans, grounded in scenario/risk assessments, to protect infrastructure, the environment and the public, in the event of a significant incident. We also implement actions to limit the severity of impacts, should an incident occur.

In Madagascar and Canada, Sherritt is responsible for leading emergency response efforts at its sites, while in Cuba we support our joint venture partners and the government authorities who take the lead in responding to operational emergencies. Refer to this case study for more information on the Cuban approach. Whenever possible, we coordinate closely with emergency responders in both preparedness and response activities, and we regularly conduct joint training exercises with them.

Sherritt is developing an enterprise-wide crisis management standard that includes emergency response. The standard is influenced by Canadian and international practices, including the Mining Association of Canada’s Towards Sustainable Mining (TSM) Crisis Management Planning protocol, the Incident Command System’s (ICS) management approach, and the United Nations Awareness and Preparedness of Emergencies at the Local Level (APELL) Programme.

Performance

Emergency Response Planning

All operating sites have up-to-date emergency response plans in place. In 2015, Fort Saskatchewan conducted four table-top training exercises, as well as training on the safety of certain chemicals and joint participation in emergency response testing. Moa performed risk assessments of new site infrastructure to evaluate response needs. Sites began working on establishing timelines to review emergency response plans and conduct training exercises to ensure the plans are up to date and applicable.

Post-Incident Community Support

In 2015, there were two noteworthy industrial incidents that presented a threat to human health. The first, the only high-severity environmental incident, concerned a leak from Ambatovy’s tailings management facility. The leak resulted in elevated levels of manganese in ponds occasionally used for drinking water by the local community. Please refer to Water Quality Performance for more information on the incident and our response.

The second incident involved a minor process emission of sulphur dioxide (SO2) at Ambatovy’s plant site. After quickly containing the emission, Ambatovy worked with local health authorities to conduct medical check-ups of community members. No concerning symptoms were noted. Further investigations with authorities determined the release had no lasting impact on human health or the environment.

Stakeholder Awareness and Collaboration

Our operations continue to engage with local communities on risk awareness and emergency response.

In 2015, Ambatovy directly engaged with communities near the tailings facility on health, safety and security, which included circulating 23,000 awareness flyers to more than 8,000 households. Ambatovy signed a memorandum of understanding with the Atsinanana Region (where the plant site is located), to bolster collaboration and build capacity for response planning and simulation activities. In 2015, the Atsinanana Region also updated its Particular Intervention Plan with support from Ambatovy, and in collaboration with the National Disaster Management Office. All the major risks associated with Ambatovy’s operations are now taken into consideration in this plan. Ambatovy contributed, both technically and financially, to the application of the APELL and Chemical Accident Prevention and Preparedness processes in Madagascar and to the establishment of a Civil Protection Unit and crisis management centre in Toamasina.

The Fort Saskatchewan operations continued participating in key multi-stakeholder forums. Our emergency response team there works actively with the Northeast Region Community Awareness Emergency Response (NRCAER) association, and in 2015 participated in a chemical hazards education session for the local police detachment. We also work with Life in the Heartland on building community awareness about operational risks. The site also met several times with local authorities and first responders to update emergency scenario plans and response activities.

International Recognition

In 2015, Ambatovy received the Green Star Award for the category of Prevention and Preparedness for neutralizing 26 tonnes of ammonia that had been stored for over 30 years in the City of Toamasina (adjacent to the plant site). Approximately 4,000 people live in the immediate vicinity of the storage tank, which was not owned by Ambatovy. The award was granted jointly by the United Nations Environment Programme, the United Nations Office for the Coordination of Humanitarian Affairs and Green Cross International.

Site Security

Management Approach

We are committed to safeguarding our people, assets, reputation and the environment, while respecting the rights of the public. To ensure our site security strikes the right balance, we have an enterprise-wide policy that outlines our principles for creating a safe and secure business environment and for conducting security operations in compliance with local, national and international legal requirements, security standards and law enforcement principles.

Our management approach to site security involves identifying, understanding and minimizing security threats and risks; working with local law enforcement authorities to respond appropriately to security incidents; investigating incidents and complaints, and taking actions to minimize the probability of recurrence; and implementing relevant international principles, including the Voluntary Principles on Security and Human Rights (VPSHRs).

In late 2014, we were accepted into the Voluntary Principles Initiative. Our decision to formally join the Initiative was based on our investment in Madagascar, a country with governance concerns, high rates of poverty and significant potential for community-company conflict. To mitigate these risks, we wanted to formally align our policies and Ambatovy’s security operations with the highest international standard for security and human rights. In 2015, we took a collaborative approach, with input from all divisions, to developing an enterprise-wide security policy and management system for meeting the requirements of the Voluntary Principles. The system, which allows for flexible application at our sites to account for the disparate risks and realities of each of our operating environments, is based on the following procedures for governing our behaviour and response to different security incidents:

  • Entering agreements with private security service providers
  • Entering agreements with public security forces
  • Reporting and investigation of security-related incidents
  • Use of force
  • Protection of providers of confidential information
  • Apprehension and transfer of suspects to public custody

Ambatovy has already implemented most of the Voluntary Principles requirements, and the other divisions will endeavour to address gaps over the next three years. In Canada, security and human rights–related risks are low and many regulations already align with the Voluntary Principles, so few additional measures will be needed to comply. Application at our divisions in Cuba require a more nuanced and phased approach, including familiarizing our joint venture partners and the Cuban government with the Voluntary Principles before determining how best to move forward.

Our operations employ full-time employees and contract security personnel. We believe that competence and training are the most important elements of effective security management and we evaluate all personnel carefully before selecting them for security detail. To ensure that our interactions with the public are proper and respectful, we provide values- and expectations-based training, including security and human rights training, to our security personnel. At Ambatovy, we have a memorandum of understanding in place with the national gendarmerie and require security and human rights training for public security officials who patrol our sites.

Performance

Security Incidents

In 2015, the only concerning trend in security incidents across Sherritt involved fuel theft at Ambatovy. Fuel theft is not uncommon for mining and energy companies operating in jurisdictions with high rates of poverty and weak governance, like Madagascar. In response, we undertook a full strategic review of our security operations, which led to significant personnel and procedural changes. By the end of 2015, Ambatovy had recorded a 75% reduction in the number of fuel theft incidents, from 63 in the first quarter to 16 in the fourth quarter. Our operations in Cuba and Canada – two jurisdictions with strong respect for the rule of law – did not record any significant security incidents in 2015.

Security and Human Rights

In 2015, there were no security incidents involving claims of human rights abuse anywhere across Sherritt. Ambatovy made important progress on security and human rights training: 75% of full-time security personnel, 90% of contract security personnel, and 100% of public security officials based near our operations were trained. Ambatovy’s training target for 2016 is to reach 100% across all of those groups. Learn more about Ambatovy’s efforts to conform with the Voluntary Principles on Security and Human Rights in this case study. At Fort Saskatchewan, security officers continued to receive basic human rights training through the provincial licensing process in Alberta, and supplementary training materials were developed by site security management.

Our 2015 annual report to the Voluntary Principles on Security and Human Rights is available online.

Labour Relations

Management Approach

Our business cannot operate and thrive without a dedicated, experienced and respected workforce. We work hard to listen and understand the needs and challenges of our employees; take action to improve the workplace; and support employees in reaching their potential. For the purpose of this report, labour relations include employee engagement, talent development, labour rights, workplace diversity, and protection against workplace discrimination and harassment.

Effective and regular engagement with employees is the foundation of our labour relations programs. Every few years, we conduct an employee survey to evaluate engagement across the business. Questions touch on leadership, culture, behaviours, professional development, communication and other areas. Management is held accountable for implementing plans to address key findings.

Ensuring the right programs are in place to support employee development at all levels is crucial for Sherritt’s long-term success and succession planning. In spite of the challenging commodity price environment, we remain committed to employee training and development. We provide a range of technical, management and leadership training in Madagascar, Canada and Cuba, including training on providing feedback to employees. Wherever possible, we leverage opportunities to bring different groups together to build cross-organizational networks and strengthen our shared values and culture. We also roll out awareness- and culture-building initiatives to employees, such as the “Seizing Opportunities Together” campaign described in this case study.

Our compensation programs are aligned with Our Purpose and Our Promises, fostering a company-wide culture of accountability and pay for performance. All salaried employees are eligible for an annual short-term incentive award expressed as a percentage of their base salary. The award is based on company-wide, divisional and individual performance, and the amounts vary depending on the annual performance of each component. Performance goals are established at the beginning of the year, and are assessed quantitatively and qualitatively. Organizational performance is communicated quarterly, and each manager is accountable for providing individual performance feedback to immediate team members.

Across our company, we have both unionized and non-unionized workforces. We recognize and encourage the right to engage in free association and collective bargaining. As with all our relationships, we strive for productive and mutually beneficial outcomes in our discussions with employees and organized labour representatives. When labour grievances do occur, we investigate and work to reach an acceptable solution for all parties concerned. In certain cases, we may opt for third-party arbitration. Once grievances have been resolved, the management team evaluates all of the issues that were raised and determines what process improvements, if any, can be made to ensure we learn from each one.

We have a zero-tolerance policy for workplace discrimination and have in place discrete policies on human rights, business ethics and diversity that meet legal requirements and best practices. We are committed to continuous improvement in these areas, with a particular focus on diversity. In Cuba, all national workers are hired through an employment agency and can report any issues of discrimination to the agency. The agency will undertake an investigation in conjunction with management. Any actions taken are governed by the same types of standards that would apply in Canada.

Performance

Employee Engagement

We conducted an employee engagement survey in 2015 as a follow-up to our first survey in 2011. We are pleased to report a participation rate of 79% (71% in 2011) and an increase in the aggregate engagement score of 11%, from 44% in 2011 to 55% in 2015. We communicated results internally and involved employees in finalizing the action plans to address improvement areas. Action plans are focused on enhancing leadership capability, our performance management approach, recognition of employee achievements, communication and collaboration.

Organized Labour, Grievances and Strike Action

Approximately 5% of Sherritt’s employee base is unionized. At our Fort Saskatchewan site, 49% of employees are represented by Unifor Local 530A. (Sherritt and Unifor have had an effective partnership for over 60 years without labour interruption.) A process has begun at Ambatovy, which has only been operating for a few years, to put collective bargaining agreements in place with elected employee representatives. In Cuba, all organized labour considerations are mandated by the Cuban state and many of the systems and tools that are common in other jurisdictions, including collective bargaining, are not employed there.

Our Fort Saskatchewan site received 18 grievances relating to labour practices in 2015. All but five were successfully resolved in the calendar year, and the remaining grievances will be managed in accordance with the procedures set out in the collective agreement, which may include arbitration. While the Fort Saskatchewan site received one less grievance than in 2014, significantly more are being forwarded to arbitration. This increase is a reflection of changes to the union makeup and approach – following the amalgamation of the Communications, Energy and Paperworkers Union of Canada with the Canadian Auto Workers union – as well as the increased use of disciplinary measures as a part of the performance management process.

At Ambatovy, two grievances relating to working conditions were reported in 2015: one at the mine and one at the plant. These grievances led to two separate strikes – totalling 27 days – which were successfully resolved:

  • On March 16, a group of mine workers went on strike and blocked access to the mine. A negotiation process, undertaken with the assistance of the Malagasy authorities, led to an agreement with staff representatives on March 31. Mine employees returned to work on April 1.
  • On April 13, approximately 200 employees demonstrated at the plant site. An agreement was reached on April 23, following a series of negotiations, and work resumed shortly afterwards.

Employment Suspensions at Ambatovy

Although Ambatovy made significant progress ramping up in 2015, the operation continues to run at a loss because of the extended period of very low commodity prices and below-target production resulting from equipment-reliability issues and the consequences of 27 days of strike action.

Since 2013, Ambatovy’s management has been making significant cost reductions to remain viable. The number of non-Malagasy personnel was reduced by 15%. Contractors also demobilized personnel, including expatriates. Still, Ambatovy had to make the difficult decision in mid-2015 to suspend approximately 450 local employees (96 of whom have since returned to work). All said, approximately 900 jobs were impacted in 2015. The total remaining workforce – employees and long-term contract personnel – numbers more than 7,400.

Given the broader socio-economic challenges in Madagascar, Ambatovy put in place a series of special measures to support impacted employees, including a special allowance and family medical coverage for an additional six months.

In 2015, we employed 765 women, representing 12% of our employee base. In our Canadian locations (Fort Saskatchewan, Calgary and Toronto), our workforce is 18% female. At Ambatovy, 13% of workers are female. In Cuba, where workers are contracted out by the state, that figure is 8%. Although our overall gender diversity percentage is at the upper end of the mining and energy sectors, we remain focused on attracting a more diverse workforce, in terms of both gender and ethnicity. We currently track diversity metrics and, in 2016, will develop a three-year plan to improve diversity across the enterprise.