Sustainability website / Strategy & Approach / Strategy and Sustainable Development

Our Mission sets out the overall strategic direction for Xstrata, to grow and manage metals and mining businesses in order to deliver industry-leading returns to our shareholders. It emphasises the importance of partnership with our stakeholders and of the core tenets of integrity, co-operation, transparency and mutual value creation which form the basis for the culture we foster throughout the Group.

For Xstrata, sustainable development is about planning and carrying out our activities in a manner that contributes to the long-term success of our business. Robust governance and the integration of sustainable development into our strategy, business planning, risk management and day-to-day operations allows us to minimise risks and costs but, even more importantly, enables us to identify and seize opportunities to create value.

Our operations produce metals and energy products that are essential for social and economic prosperity. However, mining reserves and resources are, by their nature, unsustainable and must be replaced, through acquisition or the development of new resources. The challenges inherent in mining businesses include impacts on the environment from open cast or underground mining, air emissions and energy use from metallurgical operations, impacts on communities in surrounding areas including social disruption from an influx of people, health and safety risks in the workplace and surrounding communities and the ethical issues and conflict that can accompany economic development.

But mining operations also have a unique opportunity to contribute to sustainable development and act as a catalyst for positive change. Often based in some of the most remote and impoverished regions of the world, responsible mining practices, together with sound governance of mineral endowments by host country governments, can create lasting social and economic benefits, foster regional investment from government and other industries and contribute towards infrastructure development in these regions, all of which outlast the long-term but finite lives of our operations.

Since Xstrata’s inception in 2002, we have worked to integrate sustainable development considerations into our strategy, business plans, operational management and day-to-day activities. The Group’s rapid growth through acquisition, together with our highly devolved management model, led us to implement a Sustainable Development Framework of policies, standards and guidance in 2004 that has assisted existing and acquired operations to understand and embed our principles and expectations and provides a tool to drive rapid improvement, education and innovation across our business. In 2007, our Sustainable Development Framework was reviewed and revised in a number of key areas using internal and external feedback. The revised framework reflects society’s evolving expectations of business and has been structured to continue to emphasise ownership and responsibility at every level of the organisation, while encompassing our broader range of risks and opportunities as one of the world’s largest diversified mining groups with an extensive portfolio of organic growth options, and operations and projects in 18 countries.

The business case

The risks and costs inherent in poor environmental management, failing to provide sustainable benefits to host communities and countries and detrimental health or safety standards and performance are clear and threaten our ability to continue to operate. However, our approach to sustainable development recognises that, to achieve our Mission and deliver industry-leading returns to our shareholders over the long term, we must go beyond legal compliance and the minimisation of risk and cost. We believe that operating to leading standards of health, safety and environmental management, contributing to the development of sustainable communities and engaging with our stakeholders in two-way, open dialogue, regardless of our location, offers us a source of real competitive advantage.

Our aim is to lead our industry in our contribution to sustainable development. We want to be recognised as the best company in our sector in delivering value to our shareholders, contributing to the sustainable development of communities associated with our operations, operating safely, contributing to the well-being of our workforce and local communities and preserving the long-term health and viability of the environment in which we operate. If we achieve this aim, we will:

• Gain preferential access to new resources, whether through acquisitions, exploration or project development;
• Attract and retain the best people in our industry;
• Attract a broader range of investors, lowering our cost of capital and diversifying our sources of funding;
• Identify and act upon business opportunities;
• Be a partner of choice for suppliers, customers, business partners, governmental and non-governmental organisations;
• Optimise our management of risk;
• Enhance and maintain our operational excellence;
• Achieve sustainable reductions in operating costs;
• Enhance our corporate reputation;
• Improve our awareness of forthcoming legislative requirements and societal expectations, enhancing long-term strategy and business planning; and
• Maintain our licence to operate from communities, governments and society.