Tampakan Mining – Case Study

Tampakan Project Sustainability Report 2010 Contents 1 1 2 4 6 10 12 16 20 22 About the Tampakan Copper Gold Project Map of operations Executive General Manager’s message General Manager’s message Targets and Scorecard Scope of the report Our sustainable development strategy and corporate governance Corporate governance and Sustainable Development management system Our economic contributions Case study: Training in high-value crop production boosts income, prepares farmers for Tampakan Project 24Our people and their workplace 24 Employing locally 24 Employee training and education 25 Labor relations 25 Non-discrimination policy 28 29 29 29 29 29 29 29 29 30 31 Safety and Health behavioral based Safety (bbS) Safest mine award Occupational health Health control and services Health and hygiene monitoring First Aid and emergency response Health promotion and awareness Health impact assessment Case study: Hazard reporting Case study: Tampakan Project promotes safety culture inside and out 32 32 32 33 33 33 33 34 34 34 35: 36 37Sustainable communities Corporate Social Involvement Socio-economic sustainability Environment programs Cultural sustainability Stakeholder consultation and engagement Community sustainability management systems Community grievance Free and Prior Informed Consent and resettlement Artisanal and small-scale mining Case study: mobile Community Information and Resource Center Case study: SMI supports innovative education programs Case study: SMI trains barangay health workers 38 38 38 39 39 39 39 40 40 40 40 40 41 42 43 43 43 45 46 47Environmental performance Environmental incidents Reforestation program Environmental Management System Environmental Impact Assessment Water management biodiversity Climate change Waste management Energy Mine closure and rehabilitation Ongoing rehabilitation post mine closure Case study: Training on production of high-quality seedlings Case study: Study on Lake buluan completed Product stewardship Coppe r and Sustainable Development Copper and health Summary of key sustainability data Global Reporting Initiative Index Glossary About Xstrata plcXstrata is a global diversified mining group, listed on the London and Swiss stock exchanges. Headquartered in Zug, Switzerland, Xstrata maintains a meaningful position in seven major international commodity markets: copper, coking coal, thermal coal, ferrochrome, nickel, vanadium and zinc, with additional exposure to gold, cobalt, lead and silver. The Xstrata Group also comprises a growing platinum group metals business, iron ore projects, recycling facilities and a suite of global technology products, many of which are industry leaders. The Group’s operations and projects span 20 countries.About Xstrata Copper Xstrata Copper is the world’s fourth largest copper producer. In 2010, its attributable mined production of copper contained in cathodes and concentrates reached 931,500 tonnes. It is also one of the world’s large st producers of smelter and refined copper, including from third-party materials. Headquartered in brisbane, Australia, Xstrata Copper is one of the commodity business units within the major global diversified mining group, Xstrata plc. Its mining and metallurgical operations and development projects span eight countries: Argentina, Australia, Canada, Chile, PapuaNueva Guinea, Peru, the Philippines and the United States. Its operations and projects are administered through a regional divisional management structure, which ensures that critical decisions are taken close to the related businesses. Xstrata Copper also has a recycling business (Xstrata Recycling) with plants in the United States and offices in Canada and Asia. b TAMPAKAN PROJECT About the Tampakan Copper-Gold Project The Tampakan Copper-Gold Project is located on the southern Philippine island of Mindanao, approximately 40 kilometers north of General Santos City.The Project is situated on the boundaries of four province s: South Cotabato, Sarangani, Sultan Kudarat and Davao del Sur, and represents one of the world’s largest undeveloped copper-gold deposits. The Tampakan Project is a 2. 4 billion metric ton deposit, containing 13. 5 million metric tons of copper and 15. 8 million ounces of gold at a 0. 3 % cut-off grade. The Project is operated by Philippine-based affiliate Sagittarius Mines, Inc. (SMI), whose 40% controlling equity is a joint venture between Xstrata Copper (62. 5%) and Indophil Resources NL (37. %). The 60% non-controlling equity shareholders of SMI are the Tampakan Mining Corporation and Southcot Mining Corporation (known as the Tampakan Group of Companies). SMI submitted the Mining Project Feasibility Study for the Tampakan Project to the Philippine government in April 2010 and is progressing with the Mine and Off-site Environmental Impact Assessments (EIAs). SMI expects to submit the Mine Environmental Impact Statement (EIS) to the government by the second half of 2011. I n December 2010, the Project employed 372 employees and 1,185 contractors.The Tampakan Project is managed by Xstrata Copper and adheres to the Xstrata Group’s industry-leading Sustainable Development (SD) Policy and Standards, business Principles, Code of Conduct and Policy on bribery, Fraud and Corruption. Map of operations Manila Catanduanes Mindoro Masbate Samar Ley te Cebu Negros Palawan MINDANAO Zamboanga Davao Tampakan General Santos SUSTAINAbILIT y REPORT 2010 1 Executive General Manager’s message Xstrata Copper’s Asia Pacific projects made significant progress in 2010, achieving a number of important milestones.The strong recovery in global demand for copper in 2010, together with robust copper prices, enabled Xstrata Copper to finish the year with a solid set of operational and financial results. The business was well positioned to take advantage of these favorable economic conditions as a result of the actions taken by our management teams during 2009 in response to the global financial crisis, including prudent cost reductions in the context of an unwavering focus on sustainable development and on our growth strategy.Xstrata Copper’s commitment to sustainable development remained firm in 2010 and was reflected in the 22 national and regional awards presented to our sites during the year for excellence in this field. At the Group level, Xstrata retained its position as Mining Sector Leader on the Dow Jones Sustainability Index in 2010/11, for the fourth consecutive year, and was named as the Super Sector Leader for basic Resources industries. As part of the Xstrata Group, the principles of sustainable development are integral to our business model and guide our daily decision-making.We take a systematic approach to setting targets, monitoring performance and reporting, both internally and externally, against our sustainable development policy, standards and targets. Throughout the year, our sustainable development performa nce was closely monitored and evaluated by the Xstrata Copper Sustainable Development Committee. Our sites also participated in a range of internal and external audits to provide assurance against the sustainability standards of Xstrata Copper and those of the Xstrata Group.Following an annual review of our management policies, we launched an integrated Xstrata Copper Sustainable Development Policy in May which: strengthened our published position on human rights; improved the alignment between the policy objectives of the Xstrata Group, Xstrata Copper and our operations; and simplified our overall sustainable development framework. Due to the significant advancement of our project development pipeline, in early 2010 Xstrata Copper restructured the organization of our project development activities to capitalize on our regional synergies in South America and Asia Pacific.Under the new structure, Executive General Manager – Project Development South America, bob Drabik, assume d responsibility for the development our Antapaccay, Las bambas and El Pachon projects in Peru and Argentina. As Executive General Manager- Project Development Asia Pacific, I retained responsibility for the Tampakan project in the Philippines and Frieda River project in Papua New Guinea. Our Asia Pacific projects made significant progress in 2010, achieving a number of important milestones. In April, the Tampakan project submitted its Mining Project Feasibility Study to the Philippine government.The project also completed its mine site Environmental Impact Assessment (EIA) in December, for public consultation and submission during 2011. In addition, the project commenced the EIA process for its offsite infrastructure, including the port, power station, filter plant, transmission lines and pipelines, in the second half of the year. The Frieda River project delivered its pre-feasibility study in October 2010 and commenced a drilling program and technical studies for a feasibility stu dy which is TAMPAKAN PROJECT scheduled for completion in January 2012. The project also continued to undertake extensive environmental baseline studies and stakeholder engagement activities for its ESIA which is scheduled for completion in 2011. The health and well-being of our employees, contractors and visitors continued to be a key priority for the Asia Pacific projects throughout the year. In 2010, the projects achieved their Lost Time Injury Frequency Rate (LTIFR) target of