Health and Safety

Management Approach

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

To clearly articulate our expectations for health and safety performance across the business, we have 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 – such as Light Vehicles, Heavy Mobile Equipment, Working at Heights, and Confined Spaces, among others – which are currently being implemented. We also have a Significant Potential Incident Standard in place. It requires tracking and specific management actions for any workplace incident that, under slightly different circumstances, could have resulted in a fatality.

The full suite of health and safety standards is being developed and implemented, in accordance with our multi-year implementation schedule.

In addition to implementing standards, we conduct safety culture assessments at our operating sites, and track a series of leading indicators designed to increase hazard awareness, improve performance and strengthen safety culture. These indicators include leader walks around sites to set the tone from the top, proactive health and safety communication activities, workplace inspections and training hours. At the corporate level, we monitor health and safety performance through regular executive reviews, peer comparisons and independent assessments.

We are working to embed 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.

Sherritt launched an enterprise-wide Operational Excellence (OE) program in 2015. OE is a business-improvement process that focuses on team-based problem solving and process improvement, leading to meaningful results, including a safer, more efficient workplace. To date, more than 200 employees from the corporate office, Moa, Fort Saskatchewan and Ambatovy have participated in OE events, including 50 project teams focusing on areas such as logistics, maintenance and production. Examples of the types of results achieved through OE so far include:

  • Rearranging the leach maintenance shop at the Fort Saskatchewan site to reduce the walking distance for millwrights undertaking pump repairs from 2.35 km per repair to 0.45 km
  • Reduction of truck refuelling times at Moa to save approximately $500,000 per year
  • Identification of business improvements that could result in cost savings valued at $24 million for Ambatovy

OE projects will continue as part of the company’s overall objective to create a safer, more efficient workplace.

Performance

Fatalities

While we made important strides to improve our safety culture and performance in 2016, we were deeply saddened by four work-related fatalities near our mining operation in Moa in November. These fatalities were the result of a municipal bridge that collapsed while under repair. The bridge was damaged during October’s Category 4 Hurricane Matthew and is the main access point to the mine site from the port. These were the first fatalities at Moa in a decade.

As part of the corrective actions plan, site management has increased the presence of safety advisors in the field, increased safety communications and enforcement, undertaken a re-training program for all safety standards and procedures, identified additional fatal risks and systematically corrected less-safe behaviours.

Community Fatalities

Regrettably, in 2016 there were also three non-work-related fatalities involving community members – two in Madagascar and one in Cuba. In the first incident in Madagascar, a local villager was fatally injured while attempting to secure donated scrap wood that was being unloaded from a company truck. In the second, a local cart driver suffered fatal injuries after he lost control of his cart and collided with a company light vehicle. In Cuba, a community fatality resulted from an automobile accident that involved a company vehicle travelling along a highway. We have investigated the root causes of these incidents and as a result modified the way in which community-bound material leaves the site and is delivered, and incorporated enhanced highway driving rules and defensive driver training into Sherritt’s Light Vehicle Fatality Prevention Standard.

Lost Time and Recordable Incidents

In addition to the four fatalities, we reported 14 lost time incidents (which are recorded when a worker misses at least one shift following a workplace injury) and 31 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 2016 was solid and achieved improvements over 2015, with a lost time incident index (total number of lost time injuries per 200,000 work hours) of 0.11 (compared to 0.14 in 2015) and a total recordable incident index (total number of recordable injuries per 200,000 work hours) of 0.25 (compared to 0.41 in 2015), both of which are peer and industry leading results.

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)

During 2016, both Ambatovy and Fort Saskatchewan went LTI and TRI free for a 12-month period, which is an incredible milestone. Much of this success can be credited to our focus on safety and continuous improvement in behaviours and performance at the two sites, thanks to a greater focus on leadership and safety culture assessments.

Significant Potential Incidents

2016 was the first full year that we recorded significant potential incidents (SPIs) – defined as actual or near-hit incidents that, under different circumstances, could have reasonably resulted in at least one fatality – in conformance with our standard, which had been developed in 2015. There were 29 SPIs reported over the course of the year. 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. The most common types of SPIs in 2016 related to light vehicles, heavy mobile equipment and working at heights. As a result, we are focusing on efforts to identify and strengthen critical controls in these areas at all our operating sites. Examples of specific SPIs from the year include:

  • A light vehicle that was travelling suffered brake failure, and the driver had to intentionally crash to stop.
  • An unmanned 60-tonne crane rolled from its parked position through a barrier and into a canal.
  • An employee using a telehandler to deliver scaffolding moved backwards in an elevated position and snagged an overhead telecommunication wire.
  • An employee conducted repairs on a roof without proper fall protection.
  • A steam coil rolled off a boom truck, narrowly missing a group of workers.
  • A pulley on a feed pump failed catastrophically, launching pieces 200 m in all directions.

“We can’t become complacent on safety performance. We have to strive to be better every day.”

– David Pathe, President and Chief Executive Officer

Public Safety

Management Approach

As good neighbours, it is critical to us that we ensure our operations, transportation activities and other business practices avoid unintended or adverse effects on the public. We follow the regulations of our operating jurisdictions, strive to meet the expectations of nearby communities and regularly engage and collaborate with local stakeholders on health and safety–related 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 all of us safer. Through these efforts, we contribute to building a strong safety culture in the communities near our operating 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 the public, the environment and infrastructure, 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 and Training

All operating sites have up-to-date emergency response plans in place, and conducted some form of crisis/emergency preparedness training in 2016.

Every site has established timelines to review emergency response plans and conduct training exercises at least annually, to ensure plans are up to date and applicable, and response teams are prepared.

In October, Fort Saskatchewan conducted a full-scale emergency simulation exercise, involving employees, more than 50 emergency responders, the municipality of Fort Saskatchewan, neighbouring facilities, and the Northeast Region Community Awareness Emergency Response association (a mutual aid emergency response group). The purpose of the drill was to train employees and partners, with the intent of improving integrated response capabilities on site and regionally. Large-scale exercises such as this one take place every five years at the Fort Saskatchewan refinery.

Ambatovy provided first responder training for emergency situations at the mine site. Ambatovy also conducted a drill which simulated a public train colliding with a light vehicle near the plant site. The drill aimed at detecting unnoticed risks that are likely to aggravate an emergency situation and included participation from external organizations, including Madarail (the national rail company) and International SOS.

In Cuba, multiple training exercises occurred in 2016 at our Moa mine site, as well as our Oil & Gas and Power facility in Yumurí. Exercises such as these are part of the regular preparedness training in the event of an incident. These drills also inform any updates needed to plans.

Post-Incident Community Support

In 2016, there were two incidents that presented a threat to the health and safety of our employees, operating sites and the surrounding communities. A Category 4 hurricane made landfall on the eastern side of Cuba in early October. Thankfully, the preparation and response actions of the Cuban Civil Defense authority and our partner, Cubaniquel, prevented fatalities and serious injuries in the country and at our site at Moa. That is a truly impressive accomplishment and demonstration of leadership, which was commended by then-UN Secretary-General, Ban Ki-moon. Unfortunately, there was serious property damage, including the loss of roads, bridges and homes, especially in the hardest-hit community of Baracoa. The Moa site responded first by providing tradespeople and engineers to find solutions to the transportation challenges. For example, the hurricane caused the collapse of a bridge over the Toa River that connects the municipalities of Baracoa and Moa, leaving thousands of residents isolated. In response to a request from local authorities to develop a viable and safe means of crossing the river, a team of 32 employees from the Moa site designed and built a raft with a 40-passenger carrying capacity. The raft met all the design and safety criteria required by the local port authorities. In addition, Sherritt donated $105,000 to the United Nations Development Programme to fund reconstruction efforts in the country and $4,000 to the Bahamas Red Cross to support relief efforts in the Bahamas, where the company has a marketing office.

The second incident that took place in 2016 involved the collapse of a bridge near the Moa site. The bridge was damaged as a result of Hurricane Matthew. Four employees were undertaking repairs when it collapsed, resulting in their death. Internal and external investigations are ongoing. Efforts are underway to collaborate with local authorities on repairing the bridge, and responding to the psychological impact of this tragedy.

Stakeholder Awareness and Collaboration

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

In 2016, Ambatovy supported urgent needs in the communities near our operating sites and elsewhere in the country. For example, a state of emergency was declared in March for southern Madagascar due to extreme food insecurity. In response, Ambatovy, with other industrial partners, made a joint contribution of food rations.

In early 2016, an unfortunate community boating accident occurred on a river near the mine site, resulting in many fatalities. Although unrelated to our operations and employees, Ambatovy wanted to ensure a preventable accident like this would not occur again, and donated life jackets and provided training on their use to local boatmen in the area.

In addition, this year, Ambatovy rehabilitated and reequipped two health kiosks to facilitate medical aid for members of the community living near the plant and tailings management facility.

In Moa, we received approval from Cuban authorities to refurbish two public health clinics near the mine site. Construction will take place in 2017.

The Fort Saskatchewan site continued participating in key multi-stakeholder forums related to crisis and emergency preparedness. Our team there works actively with the Northeast Region Community Awareness Emergency Response (NRCAER) association, and participated in a joint-training exercise in 2016. We also work with Life in the Heartland on building community awareness about operational risks. Throughout the year, the employees at the site met several times with local authorities and first responders to update emergency scenario plans and response procedures.

International Recognition

Ambatovy recently 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. 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).

We are a member of 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 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. We have an enterprise-wide security policy and management system for meeting the requirements of the Voluntary Principles. The system – which supports flexible application 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 and Fort Saskatchewan have implemented most of the Voluntary Principles requirements, and the other divisions/operating sites will endeavour to address gaps over the next few years. Application in Cuba requires 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 operating sites employ full-time 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 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 public security force and require security and human rights training for public security officials who patrol our sites.

Performance

Security Incidents

In 2016, the theft of fuel and other supplies at Ambatovy was the only noteworthy security concern across Sherritt. Ambatovy did, however, record a 24% decrease – from 143 to 109 – in the number of thefts during the year compared to 2015; and only 12 were recorded in the last quarter of 2016. Ambatovy attributes this positive trend to adjustments made to its approach to private security management and surveillance.

Our operations in Cuba and Canada – two jurisdictions with well-established systems of governance – did not record any significant security incidents in 2016. Across the entire company, Sherritt experienced a 15% decrease in the number of incidents of theft during the year, compared to 2015.

Security and Human Rights

In 2016, there were no security incidents involving allegations or claims of human rights’ abuse anywhere across Sherritt. Ambatovy’s security and human rights training results remained comparable to 2015: 75% of full-time security personnel, 90% of contract security personnel, and 100% of public security officials based near our operations were trained. Throughout the year, Ambatovy also participated in security- and human rights–related workshops, training sessions and awareness-building events with other members of the Voluntary Principles Initiative, including Rio Tinto, Search for Common Ground, and the British and American governments. Learn more about Ambatovy’s efforts to conform to the Voluntary Principles on Security and Human Rights (VPSHR) in this case study.

At Fort Saskatchewan, security officers continued to receive basic human rights training through the provincial licensing process in Alberta. The site also trained 100% of its security personnel on the Voluntary Principles, as well as private security contractors and emergency services personnel. Sherritt also engaged in discussions with security representatives from a nearby Shell Canada facility to explore opportunities to collaborate on VPSHR-related training and awareness-building initiatives. Discussions will continue in 2017.

In addition, Sherritt began engaging with security personnel at Moa on use-of-force training, community relations, and other site-level security considerations that relate to the Voluntary Principles.

Throughout the year, Sherritt also developed standardized tools for conducting a site-level gap analysis against the company’s Security and Human Rights Standard and implementing plans to address identified gaps. These tools were rolled out to the sites as part of Sherritt’s broader Sustainability Framework Implementation Plan for designing and implementing company-wide minimum standards across sustainability-related functions, including security.

Our 2016 annual report to the Voluntary Principles on Security and Human Rights is available online.

Employee Relations

Management Approach

Our business cannot operate and thrive without a dedicated, experienced and engaged workforce. We are committed to listening to and understanding the needs and challenges of our employees; taking action to improve the workplace; and supporting employees in reaching their potential. (For the purpose of this report, employee relations include employee engagement, talent development, labour rights, workplace diversity, and protection against workplace discrimination and harassment.)

Effective and regular two-way communication with employees is the foundation of our employee relations programs. Every two years, we conduct an employee survey to evaluate engagement across the business. Questions touch on leadership, culture, behaviours, professional development, and communication, among other areas. Senior managers in the corporate office and divisions are 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 Canada, Cuba and Madagascar. Whenever possible, we leverage opportunities to bring different groups together to build cross-organizational networks and strengthen our shared values and culture.

Our compensation programs are aligned with Our Purpose and Our Promises, fostering a company-wide culture of accountability and pay-for-performance compensation. 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 of 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 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 growing focus on diversity and inclusion. In Cuba, all national workers are hired through an employment agency and can report any issues of discrimination. 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

Sherritt conducted an employee engagement survey in 2015. Throughout 2016, we focused on implementing actions identified as our greatest opportunity for improvement, including: developing leadership capability, performance management, and recognition of employee achievements, communication and collaboration.

In 2016, we also conducted a pulse employee survey to measure the effectiveness of communication and action plans resulting from the 2015 survey. Eighty-two percent of employees indicated that they had received communication about the survey results and 56% said they had seen evidence of progress. Our next full employee engagement survey will take place in early 2017.

Organized Labour, Grievances and Strike Action

Approximately 6% of Sherritt’s employee base is unionized. At our Fort Saskatchewan site, about half of employees are represented by Unifor Local 530A. (Sherritt and Unifor have had an effective partnership for more than 60 years without a labour interruption.) In March 2016, the existing agreement expired and the company and union entered into collective bargaining. The new agreement was ratified in November and has a three-year term. 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 2016, the same number as last year. Half of the 2016 grievances were resolved during the calendar year and those that were not will be managed in accordance with the procedures set out in the collective agreement.

At Ambatovy, seven grievances relating to working conditions were reported in 2016, an increase over the two that were filed in 2015. Three cases related to requests for salary increases, two were complaints against direct supervisors, and the other two involved harassment claims that were eventually determined to be invalid. All seven were addressed and resolved during the calendar year.

There were no work stoppages as a result of labour unrest in 2016.

In 2016, we employed 758 women, representing 12% of our employee base. In our Canadian locations (Fort Saskatchewan, Calgary and Toronto), our workforce is 21% female. At Ambatovy, 13% of workers are female. In Cuba, where workers are contracted out by the state, that figure is 7%. All figures are roughly the same as the previous year.

Although our overall gender-diversity percentage is at the upper end of the mining and energy sectors, we remain committed to building a highly inclusive culture, in order to attract and retain a diverse workforce.

In 2016, our President and CEO joined the “30% Club Canada”, whose goal is to ensure that at least 30% of board seats in the country are held by women by 2019. With the recent addition of diversity and inclusion to Sherritt’s Strategic Priorities, we conducted an analysis of both our internal environment and the broader industry to set a current-state baseline for diversity and inclusion at Sherritt. This analysis helped to identify challenges and opportunities, which were used to inform a two-year plan to establish the groundwork for a more diverse and inclusive work environment. The plan received senior executive and board approval. In 2017, we will begin implementation. The first phase will involve the launch of a company-wide Diversity and Inclusion Steering Committee, focus groups to better understand local culture and barriers, and a full review of policies, programs and processes to identify any potential bias.

“Although our immediate priorities focus on lowering costs and strengthening our balance sheet, we need to continue targeted hiring and development to give opportunities to the best talent out there. Our people will ensure we succeed well into the future. That’s why we are strengthening our approach to diversity and inclusion.”

– David Pathe, President and Chief Executive Officer