Health, Safety and Environment Committee report

Karl Gruber
Each year, we evaluate our HSE strategy’s strengths and weaknesses to ensure that our performance measures up to our stakeholders’ expectations and addresses their concerns. EVRAZ’ HSE initiatives continue to bring life-saving improvements to our facilities. We monitor the leadership team’s activities to understand accountability and the overall efforts to change the safety culture. Identifying and evaluating environmental risk continues to guide measurable improvements related to air emissions, water consumption and discharge, as well as reducing and recycling solid waste streams. I believe the EVRAZ team demonstrates a willingness for continuous improvement, and as a committee, we believe the progress over the last few years will provide long-term value-creation for our stakeholders.
Karl Gruber Independent Non-Executive Director Chairman of Health, Safety and Environment Committee

Committee members

The members of the Health, Safety and Environment Committee at 31 December 2016 were Karl Gruber (chairman), Alexander Frolov and Olga Pokrovskaya.

Role of the Health, Safety and Environment Committee

The Health, Safety and Environment Committee leads the Board’s thinking on health and safety issues, as well as maintaining responsibility for environmental and local community matters.

Responsibilities of the Health, Safety and Environment Committee are:

  • Assessing the Group’s performance with regard to the impact of health, safety, environmental and community relations decisions and actions upon employees, communities and other third parties, and on the Group’s reputation;
  • On behalf of the Board, receiving reports from management concerning all fatalities and serious incidents within the Group and actions taken by management as a result of such fatalities or serious incidents;
  • Reviewing the results of any independent audits of the Group’s performance in regard to environmental, health, safety and community relations matters, reviewing any strategies and action plans developed by management in response to issues raised and, where appropriate, making recommendations to the Board concerning the same;
  • Making whatever recommendations it deems appropriate to the Board on any area within its remit where action or improvement is needed.

The committee met on two occasions during 2016, on 3 February 2016 and on 10 August 2016 at EVRAZ’ headquarters in Moscow, Russia.

As per the 2016 plan, the committee chairman together with the HSE vice president has visited Evraz North America production sites to review HSE practices, as well as a European safety workshop conducted in Helsinki.

In addition to scheduled meetings, Committee members receive a monthly HSE summary report and a quarterly HSE report is provided to the Board.

The committee has considered and approved the matrix with roles and responsibilities of the corporate HSE team, reviewed HSE initiatives implemented during 2011-2016, and generally supported the initiatives carried out by the Group in recent years.

Since August 2016, the committee has started the practice of inviting divisional (operational) vice presidents to discuss the current challenges, as well as division-specific HSE initiatives.

The committee has reviewed the HSE reporting procedure and noted the effort taken by EVRAZ to improve the quality and transparency of health and safety reporting. It has recommended to improve the report by shaping it to be more target oriented, both for each division and for EVRAZ globally. The committee has also supported the decision to extend the reporting focus on micro injuries (first aid cases and medical treatment cases taken together).

The following sections summarise how the committee has fulfilled its duties in 2016.

HSE Performance Assessment of the Group

Health & Safety Performance

Health & Safety performance is measured by the following metrics:

  • Fatal incidents
  • Lost Time Injuries (LTI)
  • Lost Time Injury Frequency Rate (LTIFR), which is calculated as the number of injuries resulting in lost time per 1 million hours worked
  • Cardinal safety rules enforcement
  • Progress of H&S initiatives

The HSE Committee has continued to review the causes of all fatalities and serious property damage incidents within the Group, as well as the follow up actions taken by the management. On the HSE Committee’s suggestion, each fatality case was animated using video format to provide a detailed description of the incident scene, sequence of events, root cause analysis and corrective actions taken. This practice will continue further if any fatality occurs.

The committee members have reviewed the status of 2016 H&S initiatives, and decided that priority HSE initiatives are generally on track. It was noted separately that extra focus should be added to improving the quality of safety conversations.

The committee has reviewed the alcohol testing process at various Group facilities and has suggested steps for further improvement of the procedure.

Additionally, the committee has reviewed the Coal Division’s HSE initiatives, presented by Sergey Stepanov, the division vice president. The committee has noted that key initiatives have been developed to mitigate the major industrial safety risks related to coal mining:

  • Improvement of ventilation and gas monitoring system
  • Five-year gas drainage program development
  • Prevention of spontaneous combustions
  • Prevention of caving
  • 20% face delays reduction because of rock tension

The committee has reviewed the plan and procedures for industrial safety audits of processes and structural units at EVRAZ facilities. Its suggestions include improving the existing plan for audits at steel and ore mining facilities: the audits shall be organised as cross-audits by representatives of similar operations from other EVRAZ facilities, as decided by the HQ Industrial Safety Team; the audit intensity should correlate with the risks highest on the risk matrix.

Environmental Performance

In 2016, the committee reviewed EVRAZ’ environmental performance twice, including its progress in achieving the environmental targets set in 2012:

  • Air emissions (nitrogen oxides – NOx, sulphur oxides – SOx, dust and volatile organic compounds)
  • Non-mining waste and by-product generation, recycling and re-use
  • Fresh water intake and water management aspects

The Committee has focused on the management of air, water and waste issues, as well as related projects designed to minimise environmental risks (such as air emissions reduction, water usage and discharged water return into production, metallurgical waste recycling), and has concluded that in most areas the initiatives that have been started need to be implemented further.

The committee has reviewed the risks and opportunities related to introduction of new Russian regulations. It was noted that the risk related with additional financial commitments due to environmental regulatory changes have been reviewed in the framework of the Russian Steel HSE Committee and consolidated positions have been provided to the regulator.

In addition, the extent of the Group’s environmental compliance has been evaluated by analysing a set of compliance metrics:

  • Non-compliance related environmental levies (taxes) and penalties
  • EVRAZ environmental commitments and liabilities
  • Major cases of environmental litigations and claims
  • Coverage of assets by environmental permits/licenses
  • Cases of public complaints
  • Potential environmental incidents and prevention actions

In order to improve environmental compliance management, the committee has discussed a new approach in assessing the probability of environmental risks, and has agreed to update the Risk Assessment Methodology by adding a Time Factor coefficient that takes into account time limits for possible risk realisation. This is intended to help management review and set priorities for environmental CAPEX expectations.

The committee has reviewed the corporate environmental initiatives and site risk mitigation projects introduced during ­2011-2016.

It was noted that the corporate environmental management system has been developed to prevent and mitigate environmental risks, as well as coordinate environmental liabilities, to ensure regulatory compliance and improve environmental performance. It was noted that the risk level has decreased due to the implementation of mitigation measures.

The committee members have reviewed the five-year environmental forecast representing environmental performance: key air emissions, freshwater consumption and non-mining waste recycling. The model that was presented was developed taking into consideration the future effects of environmental projects and investment projects with environmental effects (baseline scenario). Long-term enterprise development scenarios and asset disposal plans affecting the reduction of emissions and freshwater intake were also taken into account (alternative scenarios).

For more details on HSE performance, see the Corporate Social Responsibility section on this page.

HSE audit results review

EVRAZ operations are subject to HSE compliance inspections undertaken by governmental supervisory agencies. The consequential risks of violating HSE regulations might be regulatory fines, penalties or – in the worst-case scenario – withdrawal of mining or plant environmental licences, which would halt operations.

The committee members reviewed:

  • Findings of industrial safety audits performed by the Internal Industrial Safety Department
  • Findings of audits of the HSE function performed by the Internal Audit Department
  • Status of external environmental inspection carried out by environmental authorities and implementation of corrective actions