ΜΕΤΚΑ | SUSTAINABILITY REPORT 2015 - page 68-69

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MYTILINEOS HOLDINGS SUSTAINABILITY REPORT
2015
The Group has defined “risk” as a sum of uncertain and unpredict-
able situations that may affect all its activities, its business opera-
tion, its economic performance as well as the implementation of
its strategy and the achievement of its goals. A specific approach
to risk management through regular internal audits has been es-
tablished in all activity sectors, in order to ensure the appropriate
and effective implementation of the procedures for:
• Identifying and assessing risk factors.
• Planning the risk management policy.
• Implementing and evaluating the risk management policy.
The Group has established specific and comprehensive Risk Man-
agement Processes. All Management Executives are involved in
the identification and initial assessment of risks, so as to facilitate
the work of the Management Councils of each business sector, as
well as of the Board of Directors of each legal person, in planning
and approving specific actions in the context of the approved Risk
Management Processes.
In addition, the Internal Audit Department, which forms an inde-
pendent organisational team that reports to the Board of Direc-
tors, evaluates and improves the risk management and internal
audit systems, while also ensuring that MYTILINEOS HOLDINGS
S.A. complies with the established policies and processes, as
these are laid out in the Internal Operation Regulation, the legisla-
tion in force and the legal and regulatory provisions.
With activities in three key business areas– Metallurgy & Mining,
Energy and EPC Projects – the Group is faced with many different
risk factors. Of these, the table below mentions the most impor-
tant ones which could directly impact on our economic perfor-
mance and overall evolution towards sustainable development.
Finally, The Board of Directors in a continuous and consistent way
re-examines the corporate strategy and the principal business
risks, in particular in a constantly changing financial and busi-
ness environment.
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Moreover, in regular time intervals, it
receives reports on what is done regarding the audits made by the
Auditor Committee, based on the annual program of the specific
audits of the administration of Internal Audit of the firm. The above
mentioned allow the Board of Directors to formulate a complete
opinion on the effectiveness of the systems, processes and regu-
lations of the firm.
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Availability of Greek
bauxites and Market
Concentration
To meet the needs of Alumina the Group is significantly dependent on the availability of Greek
bauxites. With the operation of its own mines, through the 100% subsidiary “Delphi – Distomon”,
the group meets 38-40% of its needs for Greek bauxites. However, in the coming years there may
be difficulties in terms of licensing or drilling (finding) new bauxite deposits in Greece. Moreover,
the Greek bauxite market is already concentrated in a small number of suppliers. On top of that,
the possibility of a further concentration of the market will have a negative impact on the cost that
the Group will have to bear for the procurement of bauxite in the future.
For these reasons, the Group aims at negotiating multiyear bauxite contracts and strategic
alliances with the Greek producers.
Health, safety and
environmental laws
and regulations
The Group’s activities fall under the laws and regulations that are relevant to health, safety and
environmental protection.
The compliance cost with such regulations involves, among others, either investments or
the significant spending for actions relating to the safe management of industrial wastes and
measures for remedying environmental damages.
Environmental issues within our responsibility might arise in the future in relation to our current
facilities, facilities that we owned in the past or facilities where we conducted our operations even
if the Management has not been or could not be aware of such issues up to date or these issues
have not been present yet.
Climate change,
relevant laws and
regulations and
greenhouse effects
As a result of the EU regulatory amendments, the Group’s operating margins might be affected
by the changes that could be put in place in its production facilities having increased emissions
of greenhouses gases and in its facilities with high energy needs. Given the width of the scope
of such changes, the assessment of the eventual impact of the future legislation and legislative
framework for the climate change, as well as of the European and international conventions and
agreements is unclear. The Group might be obliged to undertake significant investments in the
future in order to comply with the new, amended legislation and the new regulations.
Finally, the Group, as a result of an eventual deficit or surplus in terms of CO
2
emission rights
management and due to its large energy consumptions mainly because of the production of
aluminum, might recognize significant cost or revenue in future.
On the other hand, due to anyone of the aforementioned legislative changes relating to the climate
change, the Group might be given opportunities in the EPC sector.
Failure of achieving
the expected long
term benefits from
productivity and
the cost reduction
initiatives.
The Group has undertaken and will pursue initiatives relevant to productivity and cost reduction
in order to improve the performance and reduce the overall production cost. All such actions may
not be fulfilled or the entire estimated savings might not be achieved for various reasons beyond
the Group’s control.
Political, legal and
regulatory issues
The Group’s activities in Greece relevant to energy remain regulated, in a significant degree, by
the government and depend on political decisions or legal and regulatory framework matters.
The developments within this environment, which could be translated into delays in the essential
deregulation of the energy market, might affect the activities of the Group and its future results
as well as the value of its energy assets or assets, the operation of which requires an important
consumption of energy products.
Moreover, the Group may be affected by adverse political developments or developments relating
to the regulatory framework that could be connected to its EPC activities in areas outside Greece
and mainly in countries with political instability.
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