Air emissions

We are committed to measuring, controlling and reducing harmful emissions to air. Protecting air quality helps us maintain good relationships with local communities and we abide by a number of different regulatory regimes to control air quality.

Xstrata operations have plans in place to minimise and control emissions to air, where necessary according to their activities and the emissions they produce. Our most significant emission to air, apart from greenhouse gases, is sulphur dioxide (SO₂), which is produced by our metallurgical operations. We emitted 380,000 tonnes of SO₂ in 2009. Our largest source of SO₂ is Mount Isa Mines which is a large multi-installation site comprising a copper and a lead smelter together with copper, zinc and lead mining operations in north west Queensland, Australia.

Our operations also emit dust and we implement a broad range of initiatives at every operation to minimise dust emissions, including regular spraying of mine access roads, stockpiles and mining areas using predominantly recycled water, the use of dust monitors to alert mine supervisors when dust levels are increasing and the use of misting and sprinkler systems on stockpiles.

We also emit small quantities of nitrous oxides (NOx), largely associated with the equipment and vehicles we use. We use modern equipment and vehicles which include technology designed to minimise NOx emissions, meaning our emissions are not material in a Group context 1,810 tonnes in 2009 versus 2,024 tonnes in 2008.

This section presents our efforts to reduce emissions of SO₂ as well as dust and heavy metals.

Global Carbon Capture and Storage (CCS) Institute

Xstrata Coal is a Foundation Member of the Global CCS Institute, launched in April 2009 with support from industry and the Australian government. The Institute will:

• Bring together international knowledge and expertise to create a focal point for CCS initiatives worldwide;
• Help to coordinate the development and delivery of safe, economicallyviable and sustainable commercial-scale CCS projects;
• Provide advice on technologies for CO2 capture, transport and storage, as well as the costs and benefits of CCS and the implication of regulations and legislation;
• The Global CCS Institute's Project Funding and Support Programme will provide approximately AUD50 million annually for direct support of large-scale CCS projects around the world, assisting them to move through the critical stages of project development, towards operation. The programme is focused on removing barriers facing specific projects, as well as assisting with delivering regulatory frameworks that enable quicker deployment, and linking potential project partners and investors. While the Global CCS Institute will receive applications for its Project Funding and Support Programme on an ongoing basis, the initial successful applicants are expected to be announced in May of 2010; and
• Xstrata Coal attended the members meeting in the US, scheduled in May 2010.

COAL21 Fund

Xstrata participates in the COAL21 Fund, an industry initiative that imposes a voluntary levy per tonne produced by the Australian coal industry. Its aim is to raise nearly AUD800,000 to support the demonstration of lowemissions technologies in Australia. Xstrata Coal expects to contribute over AUD143 million to the fund over 10 years. Through the COAL21 Fund we are helping to support initiatives including:

• The Callide Oxyfuel project (see below);
• IGCC feasibility and implementation projects in Queensland;
• A post-combustion capture demonstration project in New South Wales;
• A geosequestration assessment in Queensland; and
• A national low-emission coal research body in collaboration with Commonwealth and State governments.

Over and above our voluntary contributions to a broad range of projects through the COAL21 Fund, Xstrata independently contributes additional
funding and support to the following initiatives:

Callide Oxyfuel project

Xstrata Coal has made an AUD800,000 commitment to the Callide Oxyfuel project, in addition to our support through the COAL21 Fund. The project aims to demonstrate oxy-firing, which enables coal to be burned in a mixture of oxygen and recirculated flue gases, to produce a highly-concentrated stream of CO2 that is suitable for CCS. The technology could be retro-fitted to existing power generation plants, or incorporated into new-build plants.

In 2009, the project continued to develop a pilot CCS facility, retro-fitted to a power plant, that will store up to 50,000 tonnes of CO2. The storage facility is due to be completed in 2011, when the project will begin a trial injection of greenhouse gas over a two-year period.

CO2CRC and Otway Basin Project

We contribute nearly $200,000 annually to the Co-operative Research Centre for Greenhouse Gas Technologies (CO2CRC). Participants in the Centre include Australian and international companies, universities, research bodies and government agencies. In 2009, the Centre secured further support that will fund research until 2015.

Our support helps fund initiatives such as the CO2CRC's flagship Otway Basin project in south-west Victoria, Australia, one of the largest geosequestration demonstration projects in the world and the first in Australia. Launched in 2008, the project has already injected 60,000 tonnes of CO2 into a depleted gas well. In 2009, drilling began on another well that will allow a purified stream of CO2 to be injected into a saline aquifer at the same location.

FutureGen

Xstrata Coal has committed $25 million over four years to the FutureGen project, a public-private partnership to design, build and operate the world's first coal-fuelled, near-zero emissions CCS plant in the US. The project aims to prove the technical and economic feasibility of producing low-cost electricity and hydrogen from coal, while eliminating over 90% of emissions through CCS. It is now being supported by the US government, under the Obama administration.

The plant would produce 275MW of electricity while capturing one million tonnes of CO2 annually. In 2010, the project will conduct sequestration studies and revise its costing for the plant, which is due to be completed in 2012.

Wandoan IGCC power plant

Xstrata Coal is collaborating with GE Energy and Stanwell in the potential development of a new Integrated Gas Combined Cycle (IGCC) CCS plant at our Wandoan site in Queensland, Australia. If approved, the Wandoan Power Project will generate over 330MW of power and store 2.5 million tonnes of CO2 annually. In 2009, the Wandoan Power Project was shortlisted for the Australian government's AUD2 billion CCS Flagships Programme. Xstrata Coal will be the coal supplier to the power plant, and will lead the development of the CO2 transport and storage component of the project.

Sulphur dioxide

Operations that emit SO₂ have implemented annual or longer-term targets to reduce their emissions and increase the proportion of emitted gas they capture. Activities include:

• At Mount Isa, Australia, our Copper and Zinc businesses are working together to assess the feasibility of increasing the capture and treatment of SO₂ from their smelters to 95% by 2012 for the copper smelter and 98% by 2012 for the lead smelter;
• At Sudbury, Canada, Xstrata Nickel aims to reduce SO₂ emissions to less than 25,000 tonnes per year by 2015, as well as cutting particulate emissions to less than 250 tonnes per year - a 40% reduction on 2006 levels; and
• At Altonorte, Chile, Xstrata Copper achieved its target to capture 95% of the SO₂ emitted. This is largely due to the construction of a new, more efficient acid plant that converts SO₂ into sulphuric acid. We have invested $130 million at the site, for the acid plant as well as for remediation of historic arsenic contamination and other environmental improvement initiatives.

Xstrata Copper has already achieved its goal to capture over 95% of SO₂ at Horne and has maintained capture rates at or above these levels in 2009.

Dust and heavy metals

We manage dust and emissions of particulates containing heavy metals on a site-by-site basis. For example:

• We have commissioned an independent study of the pathways of lead into the community at Mount Isa, Australia;
• Xstrata Copper's Horne smelter in Canada is improving local air quality by halving its arsenic emissions from 2004 levels by 2010, at a cost of over $15 million. We have implemented a series of measures to reduce emissions and avoid contamination, including installing a new concentrate storage facility and furnace hoods designed to capture fugitive emissions. We also installed a truck wheel washing station and purchased a vacuum sweeper truck to clean arsenic dust from on-site roads. We hold periodic meetings with local community representatives, to explain the steps we are taking and obtain feedback; and
• At our copper smelter at Altonorte in northern Chile, we recycle stockpiled metallurgical dust generated during copper processing. The dust was stored in bags so it did not cause air pollution - we don't feed the dust back into the smelter, it gets processed first, in a smelter dust processing plant that we built.