Iluka conducts its business in accordance with the highest standards of corporate governance.

The Board, comprised of five independent, non-executive directors and one executive director (the Managing Director) has established a corporate governance framework which complies with the Australian Securities Exchange Corporate Governance Council Principles and Recommendations. This encompasses policies, procedures and charters. The framework is reviewed regularly and revised in response to changes in law, developments in corporate governance and changes to Iluka’s business. It is available on our website.

The Board is responsible for the overall corporate governance of Iluka including approving and overseeing Iluka’s strategic direction, strategies and financial objectives, assessing the performance of management and reporting on performance, including for Sustainability.

The Board has three established committees: Audit and Risk Committee; Nominations and Governance Committee; and People and Performance Committee.

The Board has a commitment to ongoing improvement of its governance practices. In 2017, focus areas included:

  • restructuring agendas to ensure that the Board’s attention is primarily focused on strategic matters impacting Iluka’s business;
  • updating the Nominations Committee charter to expressly include governance responsibilities and thus renaming the committee to the Nominations and Governance Committee ;
  • development of a formal Director Conflicts of Interest Policy;
  • completion of an external review of the performance of the Board and its committees, with recommendations to be implemented in 2018; and
  • reviewing the incentive payment structure, including increasing the weighting of the sustainability component as described below.

Commencing in 2018, the weighting of sustainability related objectives within the incentive payment structure will increase from 10% to 15%. Performance measures will continue to include lagging measures such as reduction in TRIFR and environmental incidents. They will also now include leading measures relating to a closing out of actions and a metric which seeks to estimate the closure risk associated with all open areas. Closure is a key risk to the business and this metric seeks to measure and compare the closure risk associated with open areas across the Iluka Group as at the beginning and end of the reporting year. Further information on the incentive payment review is available in the Remuneration section of the Annual Report which can be viewed on our website, www.iluka.com.

Greg Martin

BEc, LLB, FAIM, MAICD
Chairman Joined Iluka 2013

Murchison Metals Ltd, Australian Gas Light Company Ltd, Santos, Western Power

Tom O’Leary

LLB, BJuris
Managing Director and Chief Executive Officer Joined Iluka 2016

Wesfarmers Chemicals, Energy and Fertilisers, Wesfarmers Ltd

Marcelo Bastos

BEng (Mechanical) (UFMG), MBA (FDC-MG), MAICD
Independent Non-Executive Director Joined Iluka 2014

Vale, BHP, MMG, Aurizon Holdings, Golder Associates

Xiaoling Liu

PhD, BEng, GAICD, FAusIMM, FTSE
Independent Non-Executive Director Joined Iluka 2016

Newcrest, South 32, Rio Tinto Minerals, Australian Aluminium Council

James (Hutch) Ranck

BSE (Econ), FAICD
Independent Non-Executive Director Joined Iluka 2013

Elders Ltd, CSIRO, DuPont

Jennifer Seabrook

BCom, FCA, FAICD
Independent Non-Executive Director Joined Iluka 2008

Gresham Advisory Partners Ltd, MMG, Australian Rail Track Corporation, IRESS Ltd, Western Australian Treasury Corporation

Iluka’s sustainability approach and performance is overseen by the Board and integrated to all levels of the business. Monthly Sustainability Performance Reports are provided to the Board and sustainability is a standing agenda item for all meetings. In addition, the Board reviews this annual Sustainability Report including Iluka’s material issues and targets.

Iluka maintains an Executive Sustainability Forum chaired by the member of the Executive responsible for Sustainability. This forum met three times in 2017 to consider and determine sustainability initiatives and direction. Group health, safety, environment and community performance is also reviewed monthly by the
Executive.

Performance incentive payments for the Managing Director and eligible employees are, in part, linked to sustainability related objectives. The targets are set based on a combination of industry best practice and improvement versus prior year performance. In 2017 these objectives were targeted at reducing both the Total Recordable Injury Frequency Rate (TRIFR) and the number of moderate and above environmental incidents, and improving the incident reporting culture for Sierra Rutile. Performance in 2017 versus incentive targets is provided in the Performance Data section.

Sustainability Framework

Iluka’s sustainability framework is underpinned by a series of policies that guide behaviour and business practice within the company.

Code of Conduct Iluka seeks to maintain a high standard of conduct.

Anti-bribery and Corruption Policy Iluka has zero tolerance for bribery or corruption in its business.

Risk Management Policy Iluka’s risk management framework, aligned with the International Standard for risk management ISO 31000, sets out the structured and systematic processes for the identification and management of risks in areas such as environment, injury, illness, reputation, stakeholder relations, compliance and finance.

People Policy Iluka fosters employee accountability, commerciality and engagement by recruiting, developing and retaining a high performing, diverse workforce.

Health, Safety, Environment and Communities Policy Iluka pursues industry leading practice in the areas of environment, health, safety and community.

Tax Risk Policy Iluka manages its tax affairs globally in a responsible manner recognising that meeting its tax obligations is integral to being a responsible corporate citizen.

To advance IIuka’s sustainability framework, we have committed to progressively aligning our sustainability practices with the ICMM Sustainable Development Framework. As illustrated in the targets, Iluka plans to achieve alignment with the ICMM framework by 2020.

Progress against alignment with the ICMM principles is shown in the table.

ICMM principles Alignment Alignment commentary
1 Apply ethical business practices and sound systems of corporate governance and transparency to support sustainable development

  • The Code of Conduct, Anti-bribery and Corruption Policy and Whistleblower Procedure govern Iluka’s ethical business practiceTraining on these standards continues to be implemented
  • Tax Transparency Report published
  • Sierra Leone taxes paid integrated into disclosure reporting
2 Integrate sustainable development considerations within the corporate decision-making process

  • Sustainable development principles are integrated through corporate policy and decision-making processes
3 Respect human rights and the interest, cultures, customs and values of employees and communities affected by our activities

  • Human rights work program commenced in 2016, with an internal human rights risk assessment
4 Implement effective risk management strategies and systems based on sound science and which account for stakeholder perceptions of risks

  • Risk management framework, aligned with International Standard for risk management ISO 31000, is implemented throughout the organisation
5 Pursue continual improvement in health and safety performance with the ultimate goal of zero harm

6 Pursue continual improvement in environmental performance issues, such as water stewardship, energy use and climate change

7 Contribute to conservation of biodiversity and integrated approaches to land use planning

  • Biodiversity research partnerships have been maintained and research progressed
8 Facilitate and support the knowledge base and systems for responsible product design, and the use, re-use, recycling and disposal of products containing metals and minerals

  • Product stewardship approach defined
  • Participation in life cycle assessments conducted by the Zircon Industry Association and Titanium Dioxide Manufacturers Association
9 Pursue continual improvement in social performance and contribute to the social, economic and institutional development of host countries and communities

10 Proactively engage key stakeholders on sustainable development challenges and opportunities in an open and transparent manner; effectively report and independently verify progress and performance

  • Publication of external Sustainability Report aligned to GRI (this report)
  • HSEC Policy and Social Performance Standard provide commitment and directive for transparent and meaningful stakeholder engagement

•  Aligns with principle requirements

•  Partially aligns with principle requirements and actions are in place to address gaps by 2020

  Does not align with principles

The identification and management of risk is fundamental to achieving Iluka’s objectives.

Iluka’s Risk Management Policy is supported by a risk management framework which is aligned to the International Standard for risk management, ISO 31000. This framework provides a whole of business approach to the management of risks and sets out the process for the identification, management and reporting of risk to the achievement of our plans and objectives.

The Board, through the Board Charter, delegates responsibility for identifying and managing risks to management. Management is required to report to the Board on those risks which could have a material impact on the company’s business. The Audit and Risk Committee assists the Board with regard to oversight of the company’s risk management practices.

Through the risk management framework we seek to:

  • embed a culture of risk awareness by integrating risk management into our business activities and processes;
  • identify, assess and manage risks in a structured and systematic manner;
  • enable prudent risk taking in line with business objectives and strategies;
  • establish and monitor appropriate controls in line with agreed risk tolerances;
  • ensure material business risks, including sustainability risks, are effectively identified, communicated and appropriately elevated throughout all levels of management and to the Board; and
  • continue to fulfil governance requirements for risk management.

Iluka applies a structured and systematic approach to assess the consequence of risk in areas such as environment, health, safety, people, reputation, stakeholder, compliance, financial and company objectives.

Company risks, and how they are being managed, are reviewed by the Executive regularly and reported to the Board on a twice yearly basis.

Pages 40 and 41 of the Annual Report provide further detail on key risk areas than could impact on the company.

Code of Conduct

Iluka seeks to maintain the highest standards of conduct and has adopted a Code of Conduct that identifies the standard of ethical conduct expected of all Iluka employees and contractors. The Code of Conduct describes the objectives, values and standards of behaviour that employees and contractors must apply to all business practices. In addition, the Board has specifically adopted a Directors’ Code of Conduct which establishes standards for appropriate ethical and professional behaviour for directors.

Iluka treats actual or suspected breaches of its Codes of Conduct and policies seriously and has adopted mechanisms to ensure that suspected breaches are reported and acted upon fairly and effectively. The Codes of Conduct are supported by Iluka’s Anti-bribery and Corruption Policy and Whistleblower Procedure.

We encourage all employees, directors, contractors and consultants to raise concerns regarding any misconduct that they believe constitutes a breach of the Code of Conduct, Iluka’s policies or the law. Our Whistleblower Procedure sets out the mechanism by which staff can confidently, and anonymously if they wish, raise concerns in a responsible manner without fear of discriminatory treatment, recrimination or reprisal, and with Iluka’s commitment to properly investigate any issues.

Copies of the Code of Conduct, Directors’ Code of Conduct and Whistleblower Procedure can be found in the Governance section of Iluka’s website, www.iluka.com.

Bribery and corruption

Iluka has a zero tolerance for bribery or corruption in its business. The Anti-bribery and Corruption Policy, supported by the Anti-bribery and Corruption Procedure sets out the standards and behaviour Iluka expects of its directors, officers, employees, agents, contractors and representatives, and links with the Whistleblower Procedure for the reporting of any actual or suspected breaches of the policy.

Iluka also maintains a Gift Register which management are required to complete and retain as a record for the receipt of entertainment or gifts.

Any policy breaches or material incidents are reported to management and the Audit and Risk Committee.

Sierra Rutile has adopted its own Anti-bribery and Corruption Policy which replaced the policy in place at the time of the acquisition. This policy, is tailored to reflect operating conditions and local laws in Sierra Leone. It contains the key elements of Iluka’s Group policy, including zero tolerance for bribery and corruption.

Anti-bribery and Corruption training has been provided to key personnel via direct and on-line training.

The only identified breaches of our Anti-bribery and Corruption Policies related to conduct that occurred prior to Iluka taking control of Sierra Rutile in December 2016. Consistent with standard practice, upon taking control, Iluka undertook a review of Sierra Rutile with the assistance of external accountants and lawyers to identify any inappropriate conduct. Following this review, the company reported conduct that was inconsistent with Iluka’s Code of Conduct to the appropriate regulatory authorities for further investigation. These investigations are ongoing. Please refer to August 2017 ASX Notice: Media Reporting on Sierra Rutile Regulatory Investigations, for further information.

A copy of Iluka’s Anti-bribery and Corruption Policy can be found in the Governance section of our website, www.iluka.com.