While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
Since the project is involves replacing an old plant with a new plant within the same footprint, no land acquisition or involuntary resettlement is required and therefore PS 5 does not apply. PS6: Equally, Biodiversity Conservation and Sustainable Natural Resources Management does not apply. There are no Indigenous People – PS7 - (as defined in the IFC Performance Standards) and no Cultural Heritage – PS8 – issues have been identified from the documents reviewed and site visits.

Cullinan, like all other Petra operations, has in place an EMS which is based on ISO 140001, regulatory requirements and the site specific conditions at Cullinan. The mine is ISO 14001 and OHSAS 18001 certified. The mining operations were found to be already broadly in compliance with the IFC Performance Standards from observations during the site visit and data provided by the mine.

The mine is an existing brownfield mine and the IFC investment will contribute to the funding of the replacement of a plus 60 year old processing plant with an advanced processing plant with better energy and water efficiencies within the same surface footprint. Thus, the investment will not result in any significant new impacts. Pre-existing E&S issues associated with the project include: occupational and community health and safety; dust control; waste management, including hazardous waste and management of mine residue deposits; water management; public safety, hazardous materials management and mitigation of transportation risks on roads leading to the site.

No overall reduction in labor is envisaged in the next five years. Instead there will be redeployment and upskilling resulting in flat employment in near term.

Thus, this is a Category B project according to IFC’s procedures for Environmental and Social Review of Projects because the project only involves replacement of an old plant on an existing brownfield site, within the same footprint, by an existing IFC client with good E&S performance and therefore has limited adverse impacts and risks which are manageable. The project requires a public disclosure period of at least 30 days prior to consideration by the IFC Board.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

Policy: Cullinan has a well-documented health, safety and environmental (HSE) policy. Through this policy the company is committed to protect the environment, prevent pollution and safeguard the health, safety and welfare of its employees. This policy is consistent with Petra’s group-wide policy in which the company is committed to implementing rigorous environmental management processes, developing long-term sustainable practices and meeting international best practice.



Identification of Risks and Impacts: Cullinan has an approved EMP. The mine is legally obliged to undertake performance assessments on the commitments contained in the approved EMP every two years and to submit the report to DMR. In compliance with this requirement, Cullinan commissioned an independent consultant to undertake a performance assessment of its EMP in May 2013. The performance assessment audit report did not identify any non-conformances.



In addition to the legally binding EMP discussed above, the mine maintains its ISO 14001 certified EMS. Environmental-related risks associated with all activities, products and services included in the scope of the EMS are identified, assessed, documented and managed in a way which allows pro-active measurement and analysis to reduce, mitigate or where possible, eliminate significant environmental impacts. Risk/aspect identification and management is applied during all phases from development through implementation and execution of duties whether system or process related. The aspects and impacts are documented in the mine’s Environmental Impacts & Aspects Register database available on the electronic system, IsoMetrix. This is maintained and updated on a regular basis using the Environmental Aspect Identification and Rating Procedure and is reviewed annually or as deemed appropriate. The EMS is subjected to auditing on an annual basis.



Management Programs: The EMP contains agreed management commitments with respect to environmental impacts and mitigation measures arising from the assessment process. Through the EMP, activities that may have a significant impact on the environment are managed with operational procedures and monitoring systems and environmental objectives and targets based on the significance rating of each of the environmental aspects. These objectives are addressed by action plans which form part of the mine’s management system.



The Aspect register forms the core of the EMS. It identifies all of the micro risks. Cumulatively, the micro risks link to the macro risks identified in the EMP, also noted in the aspect register. The current ISO 14001 surveillance audit – August 2014, a copy of which has been reviewed by IFC, concluded that the EMS is implemented effectively and meets the minimum requirements of ISO 14001. Social issues are addressed in the Social and Labor Plan (SLP).



Organizational Capacity and Competence: As an established mining operation, Cullinan has a fully-fledged Health, Safety a
nd Environment (HSE) department which is headed by a manager. The department is broken down into multiple sections covering the following functions: environment; ventilation; industrial hygiene; occupational health; and safety. The manager is supported by a number of HSE officers who are spread across the different functions identified above. The HSE manager reports to the Cullinan mine General Manager and also to Petra Group HSE Manager. There is an SLP coordinator who reports to the mine human resources manager and also by a dotted line to Petra Group Human Resources Development Manager. The SLP coordinator is supported by a Community Development Coordinator.



Although senior management carry the responsibility for ensuring the successful implementation of the EMP and EMS, E&S management is part of the day-to-day operational activities and is regarded as a line function.



Emergency Preparedness and Response: Cullinan has a comprehensive Emergency Response Plan (ERP) which is updated on a continuous basis with help from specialist companies and government departments. The ERP contains procedures for specific emergencies such as petrochemical/chemical spillages, fires, fine tailings (slimes dam) spillages and failures, untreated effluent spillages, and surface flooding. Emergency drills are scheduled regularly and conducted to identify potential areas for improvement. Records of these drills are kept. Some of the emergency related procedures at the mine are:



- Maintenance activities, breakdowns and emergency cleanups,

- Emergency preparedness procedure for # 7 dam,

- Surface and underground flooding,

- Surface and underground fires, and

- Spill management.



All employees and contractors are responsible for reporting any emergency incident to their supervisor or the responsible person of the area or to the Resources Protection Services Control Room immediately.



Monitoring and Review: Cullinan applies a number of mechanisms to monitor the effectiveness of the EMP and EMS and these include: external certification and performance audits; internal audits; annual management review meetings; review of the aspects and impacts register; physical monitoring (water quality and quantity, dust fallout, noise, waste generation, rehabilitation, etc.); legal compliance audits and updating of the legal register; and incident and accident reporting and addressing external complaints. All these mechanisms have clearly defined procedures.



The non-conformance and corrective and preventive action procedure is seen as one of the most important mechanisms on the mine used to ensure the effective use and implementation of the EMP. This system is used to report any environmentally related non-conformances, investigate the non-conformance, identify appropriate corrective and preventive action and implement these actions to prevent occurrence and recurrence.

Human Resources (HR) Policies and Procedures: Cullinan currently employs 2 436 employees of which 1 081 (about 44%) are contractors and 251 (about 10%) are women. The mine has established comprehensive HR Policies and Procedures which conform to South African labor laws and are consistent with requirements of IFC PS2. All employees are issued with contracts which specify the terms of employment and employee working conditions (e.g., recruitment, training, remuneration, termination, hours of work, etc.) and benefits (e.g. salary details, allowances, pension, leave entitlements, etc.). In compliance to the MPRDA, the mine has an approved SLP which outlines commitments relating to the workforce, including training, grievance mechanisms and reporting and monitoring. Cullinan does not employ child or forced labor anywhere at the mine.



The mine is currently engaged in agreements with several contractors based on a defined scope and outsourcing of services such as transport, repair and maintenance of underground trackless mining equipment, maintenance of the slimes dams, electrical works, and building maintenance etc.



With the exception of about 75 employees currently accommodated in a block of flats (former hostels), Cullinan does not provide accommodation to its employees. The mine, like all other Petra operations, is in the process of implementing a housing strategy which is geared towards home ownership by employees. There are two accredited labor unions active at Cullinan: NUM – 850 members; and United Association of South Africa (UASA) – 237 members. All workers are guaranteed Freedom of Association as part of a formal agreement between the mine and these unions. Cullinan signed a Recognition/Collective Agreement on the 05th August 2011 with the NUM at the Central level and with UASA on 12 July 2012. The key objective of these legally binding agreements is to lay down principles and procedures which will regulate industrial relations between the mine, Petra and the unions. Under the auspices of these agreements, Cullinan concluded a Wage Agreement on the13th of August 2014 with UASA. At the central level, Petra concluded a Wage Agreement on the 5th of September 2014 with NUM. The NUM wage agreement covers all employees within the specified bargaining unit at Petra’s current mines and any other mine which the group may purchase in future. The wage agreement with UASA covers the period 01 July 2104 to 30 June 2015 whilst the wage agreement with NUM covers the period 01 July 2014 to 30 June 2017. The key objective of these legally binding agreements is settle all the matters that relates to wages and other substantive issues in order to maintain industrial peace.



In keeping with its policy of fair and equitable employment practices, Cullinan is committed to complying fully with the requirements of the Mineral and Petroleum Resources Development Act, 28 of 2002 (MPRD Act) and the Employment Equity Act, 55 1998. The MPRD Act puts a premium on
the employment of historically disadvantaged South Africans (i.e. non-whites), and has set targets which companies must comply to. The mine aspires to the inclusion, continuous employment and recruitment of disabled individuals towards the manpower of the operation. The disability progress is monitored on a monthly basis through a graph that shows overall mine wide progress and departmental progress. The quarterly employment equity meetings are also used to track progress and also to seek solution in addressing this challenge. The mine currently has about 6% women within the women in mining category against a 10% legislated target.



Occupational Health and Safety (OHS): Cullinan has an established health and safety management system which is consistent with the mine’s integrated HSE policy and Petra’s approach to health and safety. The management system is OHSAS 18001 certified and is thus subject to surveillance audits on an annual basis. Identification of OHS risks and hazards is implemented through a clearly defined procedure and occurs during various HSE committee meetings held on a monthly basis and HSE talks before shifts. The HSE committee comprises of supervisory, union and management members. Any concerns emanating from these meetings are elevated to HSE collective meetings which consist of senior management and employee representation where the issues are further attended to. OHS risks and hazards are also identified when writing work programs. From the risk register and also from issues identified from audits or other inspections and safety meetings, the company sets targets and objectives. These form part of a time based Action Plan Register with assigned responsibilities. These are reviewed in the collective HSE meetings and are minuted.



In addition to the health and safety management system described above, and as with all other Petra operations, Cullinan has adopted the Mining Industry Occupational Safety and Health – MOSH principles, an initiative by the South African Chamber of Mines to improve health and safety standards across the industry through the identification, promotion and application of best practice.



Awareness and training requirements are documented as per the HSE training and awareness procedure. HSE training and awareness needs are determined by the shortcomings identified in the risk assessment process, work area task requirements and legal requirements. The Training department keeps all training records.



Personnel Protective Equipment dedicated to the particular workplace is provided and worn by workers. This may include safety boots, protective gloves, hard hats, and ear or eye protection, according to workplace risk. If there is a workplace injury, formalized systems of review are used, with the objectives to identify the type of risk, nature of the accident, injured area of the body, causes of the accident, and areas of follow-up which are allocated to individuals and tracked until completed. The
LTIFR statistics for Cullinan are excellent with an LTIFR of 0.27 which compares favorably with an average for Petra of 0.32. Unfortunately there was a fatality at the mine in January 2014 as a result of an electrocution accident at an electricity substation on surface. A full investigation was carried out in conjunction with the DMR.



The mine has in place a comprehensive anti retroviral treatment programme for its employees and their life partners. Voluntary HIV/AIDS testing is conducted with counseling and education programmes.

Resource Efficiency: The mine is served by the Eskom power grid from which it draws an average of 173 643 188 kWh of electricity per year based on the actual yearly consumption between 2012 and 2014. The corresponding average electricity consumption is 33 kWh per total ton ore (kWh/t) processed. During the same period, the diesel consumption averages just over 2.1 million liters per annum which translates to an average of 0.41 liters per ton of ore mined and processed. The bulk of the diesel is consumed by mobile vehicles. Petrol consumption over the same period averages 17 000 liters per annum which translates to 0.003 liters per ton of ore mined and processed.



The mine has embarked on a number of initiatives to reduce electricity consumption. These include the ongoing replacement of old generation light fittings with LED light fittings in the plant and workshops; continuous roll-out of high efficiency motors; installation of variable speed drives where applicable; load management; installation of heat pumps and solar heating systems at change houses including the replacement of old shower heads with energy efficient (low flow) heads; and continual focus to repair and reduce compressed air leaks underground, etc. Preliminary indications are that energy efficiency will improve with the commissioning of the new plant.



Cullinan has a permit to use water from the dewatering of the mine. The average amount of water pumped from underground for the three years from 2012 through 2014 is about 300 000 m3. Raw water is abstracted from the Wilge River Dam situated approximately 45 Km from Cullinan. The average abstraction between 2012 and 2014 is about 500 000 m3. Potable water is supplied by the Magalies Water Board at an average of about 450 000 m3 per annum. Based on these water use figures the average water consumption per ton ore processed is about 0.25m3. This compares favourably to an industry average of about 0.96 m3 ton ore processed. Preliminary design simulations indicate that water use efficiency will increase significantly with the commissioning of the new plant.



The mine is committed to a water management system that is guided by the requirements of applicable legislation such as the National Water Act, 1998 and the Regulations GN 704, dated 1999. A list of the general management commitment and specific commitments pertaining to the IWWMP are also included to indicate the mine’s commitment towards continuous improvement in water management on site. A significant amount of water is recycled and reused at the mine.



Pollution Prevention: Waste at Cullinan is managed according to the mine’s waste management procedure for which the main objectives are to dispose of waste in a safe manner to prevent contamination of the environment so as not to pose a health hazard. Cullinan has an inventory of the wastes generated at the mine where identification and characterization is an on-going process subject to continual revision. Waste is separ
ated at source as far as possible into hazardous, domestic, scrap metal and garden waste and mine mineral processing waste. Hazardous waste such as used oil, toner cartridges, lead acid batteries, etc. is further classified according to the South African National Standards - SANS Code 10228 which specifies minimum requirements for the handling, classification and disposal of hazardous waste. The volumes of all waste produced at the mine including waste that is recycled are recorded. Waste recycled includes scrap metal, paper and used oil.



As part of the waste management system there are several waste management facilities at the mine which include the waste management yard and general waste landfill site. The waste management yard is a designated managed site for the receipt, collection and control of waste generated at the mine. The yard includes a hazardous waste storage area and a general waste disposal landfill. A monitoring system is implemented in order to monitor seepage from the site. The Department of Environmental Affairs (DEA) have authorized the disposal of general waste to this landfill.



The mine has a Sewage Treatment Works (bio-filter sewage treatment system) which is operated according to the required SANS standards and well maintained by suitably trained employees. The works are also regularly monitored by an independent external consultant. A monthly report is generated by the consultant and non-conformances are discussed and actioned appropriately by the Engineering Services section of the mine. Sludge from the sewage treatment system is registered as fertilizer by the department of agriculture and is given to the local community to use as such.



Biomedical waste and sanitary waste is collected and treated offsite by a reputable and approved hygiene services company. The mine does not have an incinerator.



The mine is committed to the systematic management of all of its residue deposits (coarse and fine residue) and waste rock in a consistent, environmentally sustainable and safe manner. Residue deposits are managed according to a regulated Code of Practice which is integrated with mining operations. All mine residue deposits at Cullinan are inspected and monitored for the ongoing raising and operation on a quarterly basis by an independent consulting engineering firm.



Diesel and petrol fuel is supplied and managed by a reputable international oil company. The fuel is stored in a combination of above and below ground storage tanks. The above ground tanks are installed with adequate bunding whilst the below ground storage tanks are fitted with appropriate double-skin leak protection lining and leak detection devices.



Cullinan records its greenhouse gas emissions generated in terms of fossil fuel consumption and indirectly from electricity purchased. The average greenhouse gas emissions for between 2012 and 2014 is about 190 000 tCO2e per year.



The mine maintains an extensive monitoring program for various a
spects such as surface and groundwater quality, groundwater levels, noise and dust fallout. Apart from slightly elevated fluoride levels at the last release point of the surface water sampling program the water quality results indicate that the water is generally close to neutral with limited contamination. Groundwater level monitoring results, complimented by a geohydrological model, also indicate limited impacts on groundwater levels.



Mine Closure and Rehabilitation: Cullinan has an updated rehabilitation plan which focuses on the end state of mine for closure. The closure costs make provisions for immediate closure and Life of Mine closure, and include decommissioning and restoration costs. These plans are updated on a regular basis and were developed according to the requirements of MPRDA. The mine’s rehabilitation and closure obligations are fully funded via a financial guarantee that is lodged with the Department of Mineral Resources.

Community Health and Safety: In addition to ongoing monitoring described under PS3 above, the effects of noise, and water pollution on surrounding communities are monitored by independent consultants on a regular basis and presented to the mine and the relevant authorities. The potential dust sources include the mine residue deposits, mining activities, haul roads and conveyor belts. There are procedures in place on the mine to minimize these occurrences.



Noise is generated by traffic, earth moving machinery and the processing plant. All vehicles and earth moving equipment are fitted with standard exhaust mufflers in order to minimize noise. All the machinery of the processing plant is contained in buildings to reduce noise. Noise surveys have indicated that the noise projected to the outside of the mines is minimal and does not affect the nearby population.



The HIV and Aids Initiatives are driven though an HIV Policy as well as Occupational Medical Procedures which are communicated to all employees on a regular basis and reviewed continuously in order to address the changing health scenario at the mine as well as in the country.



Should an emergency situation arise at the mine there is a well-established communication system to notify local authorities such as Police, Fire and Emergency Department, Environmental authorities and surrounding communities.



Security Personnel: Due to the high value of diamonds with risk of potential robbery, Cullinan employs a full time in-house security department consisting of more than 50 well trained security officials. The security department is responsible for the protection of personnel, diamonds and assets. They are supported by high-tech integrated security systems. The department is licensed, equipped and trained in the use of firearms. Firearms are primarily used for product shipments and high risk situations.



The entire diamond recovery process is automated, sealed with security seals and takes place under constant camera surveillance. Diamonds are hand sorted/separated from waste material inside sealed glove boxes. After each production sort, diamonds are locked in a (Category 5) safe. Diamond shipments, from mine to final destination, are executed by a combined in-house and outsourced security service.



A security vetting policy is in place, which addresses security vetting of all prospective and current employees, contracts employees and companies conducting business with Cullinan. The aim of the policy is to identify and adequately manage risk at Cullinan.



A security intelligence capability exists which is aimed at preventing product and asset theft by destabilizing individuals, groups or syndicates who show criminal intent against Cullinan property and product. This function is complimented by external service providers who work in sync with the Cullinan in-house human and electronic Intelligence capability.



The security department complies with all relevant legislative requi
rements and all actions on mine are governed by policies and procedures.

Cullinan has developed a stakeholder database for its areas of influence as part of various approval processes such as new order mining rights, EMP and SLP update, Water Use License Applications, etc. In addition to local communities, municipalities and government departments, the database includes other registered intersected and affected parties (I&APs) such as non-governmental and civic organizations. In compliance with the requirements of the SLP, the management of Cullinan actively engages with the key stakeholders in its area of influence. The collaborative nature of the SLP necessitates that external and internal stakeholders are kept abreast and consulted at all times. Stakeholder Engagement forums/meetings are convened regularly and are specifically aimed at informing stakeholders about the implementation of the Local Economic Development Plan (LEDP). The social compliance department coordinates with all key stakeholders including the City of Tshwane Metropolitan Municipality, departments of Education and Health, unions, etc.

Petra, as a group, is committed to Corporate Social Responsibility (CSR) that includes mandatory spend such as LEDP spend and discretionary spend on Corporate Social Investment (CSI) initiatives that will improve the lives of the community members in labor sending areas and address individual operations unique developmental needs. The CSI component focuses mainly on education. The LED Plan for Cullinan is aligned to the mine’s social investment strategy, and the requirements of the MPRDA. The LEDP is also aligned with the City of Tshwane Metropolitan Municipality broad community development needs.

Current and proposed LEDP projects are at different levels of implementation and engagement and include amongst others: an agricultural co-operative; expansion of a nearby school; and expansion of a local nearby clinic. There are also ongoing community development initiatives under implementation via the Petra Diamonds bursary scheme, annual internships and implementation of a Maths and Science Centre at 3 local schools.

Specific consultation and disclosure relating to environmental & social documentation prepared for operational purposes during the EIA/EMP process includes the dissemination of Background Information Documents to key stakeholders, site notifications and newspaper advertisements publicizing the consultation process, registration of I&APs and public meetings. As already noted under PS1 above the construction of the proposed new plant does not require an EIA but approval from DMR through the updating of the existing EMP. This process requires public participation and specialist studies which is scheduled to take place on the 15th of April 2015 at the same time as the EIA for construction of a new return water dam that the mine is progressing. The final EMP is scheduled for submission in August 2015 and approval is expected in November 2015.

The complete set of Category B documentation associated with Cullinan’s operations have been disclosed at the following location in South Africa:

Cullinan Diamond Mine,
Oak Avenue, Cullinan, 1000
Office Tel no. +27(0)12 305 2213

Main Contact:
Cathy Malins
Telephone: +44 20 7494 8203
Email: mailto:cathy.malins@petradiamonds.com

Broad Community Support is not applicable for this project