Our Strategy

We continue to work towards fully integrating sustainable development (SD) into our strategy and the way we manage our business. The concept of sustainable mining and its achievement is both complex and challenging. While our core business involves the extraction and processing of finite non-renewable natural resources, the minerals that we make available for society’s use are critical for socioeconomic advancement around the globe. Without careful management, mining activities can have significant negative environmental and social impacts, including pollution, habitat disturbance, occupational injuries and disruption to neighbouring communities. However, responsible development of a nation’s mineral wealth in a manner that addresses economic, environmental and social considerations can provide significant and lasting social and economic benefits at a national and local level, raising standards of living for existing and future generations in a sustainable manner.

At Xstrata, we have always recognised that our long-term success depends on our ability to secure broad-based support for our activities. That means demonstrating that we are responsible stewards of the natural resources we mine and use in our operations, and the broader natural environment in which we operate, and that our presence delivers sustainable benefits to communities and host nations that extend beyond job creation and paying taxes.

Our SD principles are integral to achieving our core business objectives as follows:

• Gaining access to new resources;
• Maintaining a ‘licence to operate’ from society;
• Managing risk and reducing cost;
• Attracting and retaining the best people;
• Accessing diverse and low-cost sources of capital; and
• Identifying new business opportunities.

Our underlying strategic approach to sustainability has focused on establishing clear commitments, including risk management and performance targets aligned to our material issues and industry-leading standards.

We regularly track and review performance and progress against our policy, commitments, targets and standards and aim to do so in a manner that fosters a culture of learning, continuous improvement and best practice sharing (see Sustainability assurance).

Strategy to deliver organic growth

Xstrata is now in the midst of an extensive period of organic growth, which will see production volumes increase by 50% over 2009 levels through the development of a global portfolio of major brown- and greenfield projects. The successful delivery of this growth is to a large extent dependent on our ability to apply our world-class SD Framework to manage the SD risks and opportunities inherent in an intensive period of organic growth.

Some of the risks specific to the development of large-scale projects include:

• Safety risks associated with managing significant numbers of temporary contractors on-site, particularly when multiple languages and cultures are present;
• Safety and health risks associated with construction activities, including the coordination of different engineering works and trades, working at heights, electrical hazards, load-shifting, a high volume of heavy and light vehicle activity, excavation, vehicle and pedestrian access control, temporary electrical installations, arrangements for medical and other emergencies and workplace amenities;
• The competition for skilled and experienced workers;
• Additional noise and dust impacts for neighbouring communities;
• Potential social impacts from the influx of a large, temporary workforce into a region or community;
• Potential displacement of communities or impacts on access to resources or livelihoods;
• Habitat disturbance and impacts on ecosystems, in particular for greenfield projects;
• Risks of water, air and land pollution from construction, mining or drilling activities; and
• Potential cumulative environmental and social impacts, particularly in regions with a significant number of existing mines or mining developments.

We have reviewed our governance and assurance processes to ensure effective oversight of the risks and opportunities that arise from our programme of organic growth.

Our SD Framework has been amended to respond to these challenges by introducing additional, separate audit protocols for the pre-approval and post-approval phases of major project developments. We have enhanced the reporting of progress on major projects at Executive Committee and Board level to track the progress of expenditure and risk management. The Group Internal Audit programme has also been focused on assessing the identification and effectiveness of controls in place to enable the successful execution of major projects. Group Internal Audit also uses third party specialists to perform in-depth audits on specific SD risks that have been selected as part of our annual risk reviews.