Sustainability website / Environment / Life Cycle Management

Policy and approach

Policy and approach / Performance and goals

Xstrata manages metals and mining operations at every stage in the life cycle, i.e. exploration, pre-feasibility, conceptual design, detailed design, procurement, construction, commissioning, operations, decommissioning, closure, rehabilitation, post-closure care and maintenance and disposal. In addition, Xstrata’s strategy is to grow through acquisition, comprising due diligence, execution and integration activities.

We aim to identify and treat sustainable development risks and opportunities at each stage of the life cycle in a timely and integrated manner. This includes comprehensive baseline sustainable development assessments prior to commencing exploration or construction activities, the integration of sustainable development considerations into each phase of the operation’s life, including planning for closure from the earliest stages in an environmentally and socially sustainable manner. Closure plans are required to include a full assessment of all significant sustainable development risks and controls, together with financial provisioning for closure and rehabilitation. Plans are reviewed annually, including a review of assumptions, cost estimates and potential commercial opportunities and in view of any changes in environmental, social or legal circumstances or technological developments. We aim to rehabilitate land progressively and as soon as possible after mining activity has ceased to return land to a post-closure use.

Following the acquisitions completed in 2006 and 2007, Xstrata manages over 120 operations, 15 major greenfield growth projects and over 40 brownfield expansion projects. The Group also assumed management control over 44 closed sites requiring ongoing management in Canada and the US from the former Falconbridge Group in September 2006. To reflect these risks and opportunities, Xstrata’s revised Sustainable Development Standards and Assurance Programme incorporates phase-specific assurance audits for projects and a more comprehensive set of expectations relating to project development and closure planning. Projects that are moving into the next phase of development continue to be audited through the Xstrata Sustainable Development Assurance Programme on an annual basis.

Performance and goals

Policy and approach / Performance and goals

In 2007, Xstrata’s managed operations and projects disturbed 3,822 hectares of land. We progressively rehabilitate land as soon as it becomes available and in 2007, 1,309 hectares were rehabilitated. Xstrata Coal operations accounted for 72% of land rehabilitated and 42% of land disturbed.

Closure plans are in place at all managed operations. Xstrata Coal has developed detailed closure planning guidance for its operations which was rolled out in early 2007. At the end of the year, 44% of sites had implemented the guidance with the remainder scheduled to complete implementation by the end of 2008. Xstrata Zinc is developing detailed closure planning guidance for sites in 2008.

In 2007, four Xstrata Nickel projects at various stages in their development were audited using the prototype project audits which form part of the revised Sustainable Development Assurance Programme. The average score attained by these projects was 67% (satisfactory). Three of the projects attained the minimum satisfactory score. One project scored 64%, just below the 65% minimum and will be reaudited in 2008. All Xstrata Nickel operations will participate in the Sustainable Development Assurance Programme in 2008.

Provisions for estimated costs required to provide adequate restoration and rehabilitation upon the completion of mining activities increased to $1,533 million as at 31 December 2007 ($1,080 million at 31 December 2006). These costs are expected to be incurred over the next 25 years. Some jurisdictions also require a bond, typically a bank guarantee, which is provided to government to cover closure costs or maximum liability over the term of the operating plan. In South Africa the rehabilitation trust fund is used to accumulate funds for rehabilitation liabilities relating to South African coal operations. Following completion of rehabilitation work and approval from the Department of Minerals and Energy, amounts are paid out from the fund. The trust fund is carried in our accounts at fair value and in 2007 amounted to $43 million.