Emmerson Regulatory News (EML)

Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining

28 January 2021

Emmerson Plc

("Emmerson" or "the Company")

2020 Sustainability Brief

Emmerson Plc, the Moroccan focused potash development company, is pleased to provide its 2020 Sustainability Summary with a forward-looking view on the development and construction of its world-class Khemisset Potash Project in Morocco ('Khemisset' or 'the Project').

The Company has been analysing the potential impacts on people, local communities, and the environment in the different Project development workstreams. The highest standards were adopted to reflect on the Company's vision and values, which all can be summarised by the phrase ''Doing the right things in the right way''.

Emmerson CEO, Graham Clarke, commented, "The Khemisset Project will not only contribute to the overarching agenda of enriching agricultural soils to provide affordable food for the world's growing population, but will have a positive impact on the local area because the directors are determined to do it in the right way. We will endeavour to maximise material benefits for all of its stakeholders while mitigating the impact of mining on the environment, both in the construction and production phases.

 ''We are proud that the Project will be such a positive catalyst for economic development in Morocco, which is why we have strong support from the Government and the local communities around Khemisset. Our team is committed to delivering and operating the Project to the highest standards to ensure Khemisset is a national success story in the burgeoning mining sector in Morocco."

Emmerson In-Country Manager, Lahcen Alloubane, commented, "As a team developing a mining project, it is fundamental that we commit to the highest standards of corporate and social responsibility to produce a sustainable future for all our stakeholders while we deliver the highest value for our shareholders. We have an ongoing social license to operate and are committed to keep upgrading our standards as we prepare to build and operate the Project.

"On a broader level, development of the Khemisset Potash Project goes in line with the government efforts to revive the economy in the wake of the COVID-19 pandemic, and the project aligns well with the strategic plan of making Morocco a hub for fertiliser industry, primarily in the context of Africa. The outstanding Project economics, our commitment to the highest operational and environmental standards, and the expertise we have in the team are key factors to make us part of this broader agenda."

Summary of the sustainability Actions

Our People

Given the impact of the COVID-19 pandemic in 2020, the main priority was the health and safety of the team while complying with government sanitary restrictions. It is fortunate for the Company that the field works were completed beforehand, and the team continued progressing the various workstreams remotely. No 'Lost Time Injury' incidents took place in 2020.

The Company witnessed a pivotal change in vision when the feasibility study was released in June 2020 and the mindset shifted from proving the feasibility of the Project to preparing the Project for construction. During this time, Graham Clarke joined as the new Company CEO and Hayden Locke maintained his role as a Board Director focussing on financing and strategic partner discussions. Graham has a strong operational and development track record including taking a large, highly complex, underground potash mine all the way from a concept through to construction.

The Project team was also accordingly strengthened by recruiting additional skills in the domains of administration, geology, and project financing.

Appraisal of the Company policies

In preparation for the definitive design workstreams prior to construction, an appraisal was performed for the Company's policy pack.

The policy pack contains a list of all the corporate policies that will shape the way things are done as a responsible Company. These policies are referenced to the IFC Performance Standards and they explicitly integrate social and environmental concerns in the Project development, operations and interactions with stakeholders.

A clear vision, mission, and values are set out for the Company. which are fundamental to define what the Company is to achieve and how. The vision being to be the first and leading potash producer in Africa in a way that delivers lasting sustainable outcomes to stakeholders with no compromise on the safety of any of Emmerson's workers.

In addition, a Livelihood Restoration and Resettlement Policy ("LRRP") was adopted by the Board of the Company. This policy outlines the processes and procedures that the Company will follow in relation to the acquisition of land and the management of any related economic and/or physical displacement. Preparation and content of this LRRP is guided by IFC Performance Standards on Social and Environmental Sustainability.

The ESIA study

The Environmental and Social Impact Assessment package (the "ESIA") was completed in compliance with both the Moroccan legislation as well as the International Finance Corporation performance standards ("IFC Standards") and the Equator Principles. The package consists of the ESIA, the Environmental and Social Monitoring Programme ("ESMP"), and the Stakeholder Engagement Programme ("ESP").

The work was completed following two comprehensive concurrent phases: an extensive baseline programme that commenced in the early stages of the Project and which consisted of monitoring in the field and consultations with the government and the community; then the ESIA study that consisted of modelling the expected impacts and projecting them on the surveyed baseline before the mitigation measures were proposed.

Corporate & Social Responsibility

Initial baseline investigations undertaken as part of the ESIA process identified the presence of two key fauna species in a river adjacent to the Project site. These species include the Eurasian Otter and the Brown-Throated Martin. Given the significance of these species both nationally and internationally, the Company offered to fund two post-graduate scholarships in partnership with the Rabat Scientific Institute for a 24 months research program. Although the fauna species are not expected to be impacted by the proposed mine the funding has allowed researchers to better understand the ecology, habitat and distribution of these key species in the Khemisset basin. Funding research of this nature highlights the Company's commitment to the broader region.

Diversion of the powerline route

The initial proposed route for the 15km 225Kv powerline over the northern area of the Project site was changed following identification of an area of ecological interest along the route. This is an explicit example of how early ESIA planning has influenced the decision-making process in the development of the Khemisset Potash Project resulting in a positive project outcome and a reduction in environmental impact.

Carbon footprint study

A carbon footprint study was completed by the Company to compare the expected emissions of the Khemisset Project relative to its peers and to identify opportunities for improvement. The results of the study show a relatively low carbon footprint from the project.

o Total CO2 kg / kg of potash product delivered to Brazil = 0.23

o Total CO2 kg / kg of potash product at gate = 0.16

o Including salt in the product mix from the project brings down the CO2 emissions to 0.08Kg/Kg of potash and salt products combined

Key factors identified for reducing Green House Gas ("GHG") emissions from the Project are:

o Maximising the use of electricity powered machinery rather than fuel, and sourcing of renewable electricity. The Company is under a Memorandum of Understanding ("MoU") with an internationally renowned renewables developer that is installed in Morocco and discussions continue with the objective of finalising a supply contract in 2021.

o Use of Liquid Petroleum Gas (LPG) rather than other low-cost combustibles to reduce GHG emissions from the hot leaching and crystallisation circuits of the processing plant. The Company is under an MoU with a leading gas provider in Morocco and assurance was given that installation and supply of LPG presents no operational risks.

Socio-Economic Impact Study

The Khemisset Potash Mine is a project of national significance in Morocco and is expected to deliver significant direct and indirect benefits to local, regional and national stakeholders. The Company commissioned a renowned professor of economics to undertake a socio-economic impact study, which has confirmed that the Project will potentially have a substantial positive impact on the local area. Notwithstanding that the Project will support the challenge of feeding the ever-increasing population from shrinking arable lands and keeping the roads safe by providing low cost de-icing salt, the following is a summary of the material potential impacts:

o Jobs

- Construction Phase: 2800 jobs including 1500 direct jobs

- Production Phase: 1212 jobs including 760 direct jobs

o The Project will increase GDP per capita by 40% at the local area and 0.42% at the national level.

o The additional tax contributions resulting from the Project represent around 176% of the tax revenues generated locally and almost 1% at the national level.

o Export earnings from the Project will contribute an additional 8% to Morocco's mineral export earnings and will have a significant positive effect on Morocco's balance of payments.

Through these impacts, and with effective policies in place, the study concluded that the Project has the potential to directly impact 8 of the 17 United Nations Sustainable Development Goals in Morocco.

**ENDS**

For further information, please visit www.emmersonplc.com, follow us on Twitter (@emmerson_plc), or contact: 

Notes to Editors

Emmerson's primary focus is on developing the Project located in Northern Morocco. The Project has a large JORC Resource Estimate (2012) of 537Mt @ 9.24% K2O and significant exploration potential with an accelerated development pathway targeting a low capex, high margin mine. Khemisset is perfectly located to capitalise on the expected growth of African fertiliser consumption whilst also being located on the doorstep of European markets. This unique positioning means the Project will receive a premium netback price compared to existing potash producers. The need to feed the world's rapidly increasing population is driving demand for potash and Emmerson is well placed to benefit from the opportunities this presents. The Feasibility Study released in June 2020 indicated Khemisset has the potential to be among the lowest capital cost development stage potash projects in the world and also, as a result of its location, one of the highest margin projects. This delivered outstanding economics including a post-tax NPV8 of approximately US$1.4 billion using industry expert, Argus', price forecasts.