Safety

Mining activities and minerals processing require the management of significant hazards, including controlling rock strata, operating high voltage equipment, heavy machinery and large mobile equipment, working underground, at height or in confined spaces, and using explosives and chemicals in pressurised systems. Nonetheless, we firmly believe that every safety incident is preventable and our objective is to operate without any fatalities or injuries.

Our operations maintain formal safety and risk management systems aligned to the international standards OHSAS 18001 and ISO 31000. The Executive Committee of each commodity business reviews detailed sustainability performance on a monthly basis, including safety performance, and receives regular sustainable development assurance audit reports. The Group Executive Committee and Board HSEC Committee receive monthly management reports that include safety performance including details of all actual and high potential incidents.

We have integrated the identification, evaluation, control, monitoring, reporting and management of safety risks into Xstrata's overall enterprise risk management framework and approach. This reinforces senior management's ownership and accountability for safety risk management as a standard part of management responsibilities and improves our identification and understanding of the links between safety risks and other operational and business risks. See Governance section for further information about Xstrata's enterprise risk management system.

Health and safety is included in formal agreements with trade unions. At the local level these cover specifics of safety management and employee engagement. At commodity business level, agreements cover adherence to International Labour Organisation principles, performance standards and grievance procedures.

Contractor management

Our businesses rely on contractors to provide additional labour and specialist skills and services. We value the safety of contractors in exactly the same way as we do our own employees. Contractors are included in our safety data and must comply in full with our safety standards and procedures. In recent years, we have reviewed our contractor management practices to ensure greater supervision and communication with contractors on site. Where appropriate, we have minimised the number of different contractor companies used, to improve accountability and enable us to ensure safety standards that are consistent with our own.

We assess the safety record of a contractor when awarding contracts and during reviews. We monitor high risk activities closely, provide regular feedback on performance and act on any failures by contractors to comply with our procedures. The action taken reflects the severity of the issue, but in all cases the senior management of the contractor company is expected to address the issue personally. Serious incidents require the direct involvement of the contractor CEO with the chief executive of our commodity business and may lead to the termination of contracts.

Our strategic approach to safety

Our approach to safety has evolved over time to reflect the changing nature of our business. From Xstrata's inception in 2002 to 2008, the Group's growth strategy was predominately delivered through acquisitions. During this period, our focus was on the rapid integration of acquired operations into Xstrata's management and reporting processes, the swift improvement of overall safety resourcing and performance and the establishment of clear accountability for safety through the Group's devolved management structure.

The next phase of Xstrata's evolution is dominated by the construction and commissioning of several major mining and metallurgical operations to deliver production growth from our portfolio of growth projects. In this phase, our priorities are to:

• Incorporate best available safety design, construction and maintenance techniques in the development of new operations and facilities;
• Manage the major hazards inherent at these major construction projects and in our existing business to eliminate fatalities and serious injuries;
• Improve contractor management and performance;
• Continue to integrate the lessons learned from all incident investigations, including near miss incidents, to improve major hazard controls and keep our safety management systems effective; and
• Prevent less severe but more frequent injuries, particularly in regions with an ageing workforce.

Management accountability

Our formal management structure documents responsibility for safety from the Xstrata Board down to each individual employee and contractor. We recognise that our senior leaders are ultimately responsible for providing the leadership, systems and processes for the prevention of incidents, and that their actions are fundamental to the elimination of fatalities. Whenever a fatality occurs, the Chief Executive of the commodity business responsible makes a detailed presentation of the circumstances to the Xstrata Executive Committee and separately to the Board Health, Safety, Environment and Community (HSEC) Committee.

Xstrata's directors are accountable for safety performance through Xstrata's Board HSEC Committee, chaired by independent non-executive director Ian Strachan. The Chief Executive of each commodity business chairs a commodity business board Sustainable Development Committee.

Safety performance forms a significant component of variable remuneration for executive and senior and operational managers, supervisors and mineworkers.

Leadership, culture and behaviour

While systems and procedures are important, achieving and maintaining leading safety performance depends on the day-to-day behaviour of our employees and contractors. Safe behaviour depends on many different factors, including corporate culture, leadership and management styles, employees' personal circumstances and beliefs, training, systems and procedures and the nature of relationships between employees, contractors and management.

For a number of years we have been working hard to embed an authentic safety culture across Xstrata's businesses. This includes expecting our leaders to demonstrate visible safety commitment, for example, in prioritising safety over production or other considerations, personally endorsing safety initiatives and engaging with different levels of employees to discuss safety issues and priorities. We aim to facilitate a culture in which employees and contractors feel able to challenge unsafe behaviour and where our people take personal responsibility for their own safety and that of their colleagues. The environment in which our employees live can also play a part in determining risk tolerance or awareness and so our training programmes are increasingly seeking to address broader cultural issues and personal beliefs as part of behavioural safety training programmes. For example, in 2009, we engaged Professor Andrew Hale, a world-renowned safety expert to run workshops with senior managers on how to manage exceptions to rules.

Building our safety culture relies on establishing a just culture (as opposed to a blame culture), enabling our people to come forward and report incidents, errors and mistakes knowing they will be treated fairly. We assess accountability, responsibility and consequences in the context of each situation and determine the underlying systemic causes of incidents.