Sustainability website / Community engagement / Social engagement

Policy and approach

Policy and approach / Performance and goals

Our Statement of Business Principles sets out our aim to seek ongoing, broad-based support for our activities from the communities associated with our operations. We identify and address the social impact of our activities, community concerns, needs and the social risks to our operations through the effective implementation of community relations strategies which uphold and promote human rights and respect cultural considerations and heritage, as set out in our Sustainable Development Standards.

(see SD Standard 12: Social and Community Engagement and SD Standard 4: Communication and Engagement).

Every operation is required to identify the communities and other stakeholders associated with our operations and actively engage with them in a culturally appropriate and transparent manner as early as possible and throughout the life cycle of our operations to establish relationships based on mutual benefit and active participation. We identify and prioritise community concerns, needs, opportunities and the risks and impacts of our operations in consultation with the communities concerned, as an integral part of our risk management and business planning process. Equitable and culturally appropriate processes are implemented and maintained to engage external stakeholders in respect of their sustainable development concerns and expectations with regard to Xstrata’s operations, activities and developments.

Performance and goals

Policy and approach / Performance and goals

Assurance audit results

In 2007, the average assurance audit score against SD Standard 12 was 79% (satisfactory), just below the ‘good’ range of >_80%. Results in 2007 include some scores below the satisfactory level from baseline audits undertaken at acquired operations.

Complaints, enquiries and grievances

Each operation and project is required to maintain a system to record any complaints or enquiries from community members or other external parties, including Xstrata’s response. Xstrata’s revised Sustainable Development Framework requires all managed operations to implement an external stakeholder grievance and conflict resolution mechanism that allows external stakeholders to directly or anonymously raise issues and make complaints and that includes clear mechanisms for registering, evaluating and resolving all issues and complaints.

In 2007, Xstrata’s managed operations and projects (including acquired operations from the date of acquisition) received 577 complaints and enquiries, compared to 391 in 2006.

The most frequent causes of complaints or enquiries were in respect of noise or dust which together accounted for over 40% of the total number received in 2007. Complaints were most frequently received at Xstrata Coal’s operations in New South Wales which are in close proximity to a number of communities. Xstrata’s Mount Owen operation in New South Wales received 160 complaints, the majority of which were lodged by one local resident. This property is being acquired by Xstrata Coal at the complainant’s request and in accordance with the Development Consent. Consequently there has been a significant reduction in complaints received at this operation in 2008.

Complaints at Xstrata Copper operations primarily related to air emissions at Mount Isa Mines, Australia and the Horne smelter in Canada. Complaints at Mount Isa Mines rose by 24% compared to the previous year during the planned 20-day maintenance shutdown of the third-party owned Incitec Pivot Acid Plant which converts SO₂ from the copper smelter into sulphuric acid to manufacture fertiliser, and following the promotion of the community information telephone number in the Mine to Market newsletter and local media during the year. Complaints at the Horne smelter decreased by 38% due to improvements in the capture of fugitive gases and improved stoppages of desulphurisation processes during critical dispersion periods.

Cerrejón Independent Social Review

Xstrata acquired a one-third share in the Cerrejón thermal coal operation in Colombia in March 2006 from Glencore International. Anglo American and BHP Billiton each own a one-third stake and the operation is managed by an independent joint venture management team.

In 2007, Xstrata and its partners, together with Cerrejón management, initiated an independent third-party review of Cerrejón’s past and present social engagement policies and practices. The independent review panel was chaired by Dr John Harker, President of Cape Breton University in Canada, and included Nick Killick of conflict prevention NGO, International Alert; Salomón Kalmanovitz, Dean of Economics and Business Administration at Jorge Tadeo Lozano University in Colombia and Elena Serrano of the Chilean NGO, Casa de la Paz Foundation. The Panel members were supported in their fieldwork and research by Social Capital Group, an independent Peruvian consultancy and undertook extensive engagement with local communities as well as international stakeholders.

In July 2007, BHP Billiton received notice from the Australian Foreign Investment Review Board alleging a breach of the OECD Guidelines for Multinational Enterprises. BHP Billiton and Cerrejón submitted a formal response to the complaint. A meeting was subsequently held in London between BHP Billiton, the complainants and the relevant OECD representatives. Anglo American and Xstrata representatives attended this meeting as co-shareholders in the operation. In early October 2007, a Swiss NGO lodged an identical complaint to that issued against BHP Billiton against Xstrata.

The principal concern related to the resettlement of the Tabaco village in 2000-2001 which occurred over five years before Xstrata had any interest in the operation. While some families accepted compensation from Cerrejón and resettled, a number of families did not accept compensation. Other concerns related to the process currently under way to resettle the Roche, Patilla, Chancleta and Tamaquito villages as part of the expansion of the mine’s activities.

While we believe that there is no basis for a complaint against Xstrata in respect of the OECD Guidelines, we accept that as a current shareholder in the operation, we have a responsibility to ensure that Cerrejón addresses ongoing stakeholder concerns and that current and future resettlements are carried out in accordance with World Bank and leading practice standards.

The Independent Review Panel’s report was published in March 2008 and is available from the Xstrata website. The report highlights a number of areas of good practice by Cerrejón including:

• the operation’s contribution to the local and national economy;
• its commitment to contributing to the sustainable development of local communities;
• its extensive human rights training programme for employees, contractors, police and army representatives; and
• its objective of raising performance standards in the mining sector.

The report also identifies areas in which the mine could enhance its social practices, including recommendations to:

• strengthen the presence and capacities of civil society groups in the region;
• improve revenue transparency;
• facilitate reconciliation between the disparate groups formed by the former inhabitants of the village of Tabaco and address the current situation of all former residents through a consultative, participatory process;
• consider more broadly the impact of resettlement on neighbouring communities such as Tamaquito and Media Luna;
• increase the access of Wayuu indigenous peoples to economic opportunities created by the mine; and
• Change aspects of the way in which it administers social investment.

Cerrejón’s management team is preparing a response and action plan to address the recommendations set out by the Panel, due to be published in April 2008. A key element of the recommendations was an emphasis on the need for all stakeholders in the operation to work constructively together to address outstanding issues including those raised in the OECD complaints. The action plan will aim to facilitate this constructive engagement, building on the operation’s current initiatives to assist former Tabaco residents to improve their socio-economic position and identify opportunities for development, in partnership with local municipalities and supported by the Cerrejón Foundation.