Environment

Xstrata’s SD policy sets out our aim to preserve the long-term health, function and viability of the natural environments affected by our operations. We have ISO 14001 compliant management systems in place to ensure all Xstrata operations reach the high environmental standards we demand and that are expected by governments, industry bodies and society as a whole. Our SD policy sets out our commitment to identify, reduce and, where possible, eliminate all significant impacts of our mining, metallurgical and exploration activities on the environment. Our principal environmental impacts are in respect of:

• use of resources, particularly water and energy;
• climate change, due to direct and indirect greenhouse gas emissions at our operations and the carbon emissions associated with burning the coal we produce to generate energy;
• other emissions, including sulphur dioxide and heavy metals from metallurgical plants;
• land disturbance and biodiversity impacts;
• waste material produced from our operations; and
• environmental impacts associated with our products and supply chain.

Our SD policy states our commitment to reduce direct and indirect greenhouse gas emissions and to work with governments, industry and academia to help develop policies and technologies to address climate change, in particular to mitigate emissions from burning coal to generate power. Climate change presents a significant long-term risk to our business because of increased regulation, rising energy costs, taxation of carbon emissions and physical threats from changes to weather patterns. Xstrata Coal continued to fund a number of development projects into low emissions technologies and continues to play a key advocacy role in engaging with government and industry bodies on carbon legislation and support for new technologies.

We aim to continually improve the efficiency with which we use raw materials, energy and natural resources. In 2008 our businesses continued to implement initiatives to improve energy efficiency and we significantly increased our use of recycled water to replace fresh water use where appropriate. In line with our policy commitment to reduce harmful emissions to air, water and land, we initiated a number of capital projects to improve sulphur dioxide and heavy metals capture at our metallurgical operations in 2008. An extensive Smelter Emissions Project is under way at our Mount Isa operations to achieve significant reductions in emissions by 2012.

We avoid net losses or degradation of natural habitats, biodiversity and landscape functions. Additional biodiversity offset areas were implemented during the year to set aside land for flora and fauna conservation and a number of monitoring programmes were implemented to assess potential biodiversity impacts in higher risk regions.

Further progress was achieved in the Sudbury Soils Study in Canada and the Whole of Emissions studies at Mount Isa, Australia, both of which were initiated to examine potential human and ecological risks from heavy metals. Soil remediation projects to address historic contamination were successfully undertaken at a number of sites in Australia and Canada in partnership with local authorities and industry participants. We also increased the capacity of our recycling operations to process additional base and precious metals, prolonging the life cycle of metals and reducing waste to landfill.

In 2008, Xstrata did not achieve its target of zero fines or penalties and incurred four environmental fines totalling $25,300. Two of the four incidents occurred at Australian operations and two at our Chilean operations. All incidents subject to fines were categorised as category two (minor impact requiring minor remediation) or lower and remediation plans have been implemented to prevent reoccurrence.

Our performance against key environmental indicators is provided on Non financial KPIs and a description of our performance against environmental indicators is provided on Performance against KPIs.