Sustainability / Economic contribution / Economic

Economic

We are committed to contributing to social and economic development in the communities surrounding our operations.

Overview

The mining industry creates prosperity in many ways: by providing jobs, skills and training, paying taxes, buying goods and services from local businesses, and helping to develop and improve infrastructure in local communities. The difference this makes in people’s lives is especially significant in remote or developing regions where the mining industry may be one of the only employers and government infrastructure may be less developed. At the same time, it is important that communities do not become solely dependent on our operations and that potential competition for and impacts on local services, resources and infrastructure are carefully managed.

Our Sustainable Development Policy commits us to contributing to social and economic development in the communities surrounding our operations. We aim to put in place community strategies and social involvement plans at all our sites to facilitate these socio-economic contributions.

We also aim to anticipate and mitigate any negative impacts our operations might have on the prosperity of a community. We want to ensure that our presence creates sustainable benefits that continue once we cease operations in the area. We complete baseline studies and risk assessments to identify and evaluate socio-economic impacts on local communities and the surrounding region at each stage of the operation’s life cycle.

When well managed, the development of a country’s mineral wealth makes an important and sustainable contribution to improved health, prosperity and standards of living. Helping countries and communities to reap these benefits is critically important to our continued ability to operate and access new resources.

Many of our operations are in developing regions with high unemployment or little state support. These include parts of Colombia, Peru, the Philippines and South Africa. We also operate in remote areas of Australia, New Caledonia and Canada.

Mining may be one of the only industries and sources of foreign investment in these regions, and is often the country’s primary income generator. In many cases, countries would be unable to benefit from their mineral resources without foreign investors. However, the wealth a nation’s natural resources should provide does not always reach the country’s wider population or mining communities, resulting in social and political conflict or economic stagnation. This so-called resource curse can deter further investment and slow progress, as well as preventing communities from lifting themselves out poverty.

Taxes and royalties

The taxes and royalties Xstrata pays are a significant element of our contribution to socio-economic development. At the same time, we have a legitimate responsibility to our shareholders to put in place an efficient capital structure and ensure our Company provides an attractive return on investment. In addition to taxes, we also pay mineral royalties to governments and sometimes have profit-sharing or other financial agreements with local communities. For example, the Raglan agreement between Xstrata Nickel and local Inuit communities in Quebec commits us to pay a fixed annual sum plus a share of profits to the Raglan Trust.

We are committed to the maximum transparency possible in financial reporting without compromising our competitiveness, as stated in our Business Principles. We publicly report our financial, operational and sustainability performance in accordance with all relevant legislation and leading practices. We support the Extractive Industries Transparency Initiative (EITI), which promotes transparent reporting of company payments and government revenues in the extractives sector. Peru is the only EITI candidate country in which Xstrata currently operates.

In addition to the direct economic contribution we make through taxes and royalty payments, our operations and projects often develop and maintain infrastructure such as roads and utilities for their own use which benefit local communities.

Last Modified on September 18 2009, 13:42:12 PST

top