Sustainability website / Sustainable Development / SD Assurance Programme

SD Assurance Programme

Xstrata’s 17 HSEC Standards and associated independent assurance programme were introduced in 2004. Every managed operation was independently audited against the Standards and Xstrata’s HSEC Policy by the end of 2005 to provide a baseline.

Xstrata’s independent Sustainable Development Assurance Programme is the key mechanism through which the Xstrata Board and management gain assurance that the Group’s policies and standards are being met or exceeded by each operation, project and commodity business. It has been refined and enhanced each year since its introduction and differs from most assurance programmes in its extensive scope, involvement of executive and senior management combined with interviews with knowledgeable process owners among the site’s workforce, focus on performance in addition to systems and in the expectation that participation in audits should form an important part of training and education. The Assurance Programme has played an integral role in enabling Xstrata to rapidly assess acquired operations and align acquisitions with Xstrata’s framework and performance expectations.

To minimise site-level disruption, the format and structure of the 17 Standards have remained largely intact. Revisions to the Sustainable Development (SD) Standards and Assurance Programme include:

• Extending the predominantly site focus of the previous framework and SD Assurance Programme to more comprehensively cover expectations at the divisional, commodity business and Group levels;
• Clarifying expectations for development projects as distinct from existing operations;
• Consolidating content on a particular topic or issue under one management standard;
• Enhancing the SD Assurance Programme to introduce annual site self-assessments for qualifying operations or projects, combined with risk and verification SD audits of sites and projects;
• Introducing six project phase-specific audits, reflecting Xstrata’s significantly enhanced portfolio of major growth projects and the risks inherent in their development; and
• Designing a specific post-acquisition integration audit protocol.

The SD Standards continue to focus on the Group’s expectations and, in line with the Group’s devolved structure and emphasis on encouraging innovation and an entrepreneurial spirit, do not prescribe how these requirements should be met in detail.

Comprehensive guidance notes have been prepared for each management standard to provide practical advice or further reference material as necessary. A Good Practices Guide is developed each year to list the leading practices identified through the Sustainable Development Assurance Audits each year.

Under the revised SD Assurance Programme, operations and projects which achieve set SD performance criteria, including previous audit performance, will be selected to move to annual self-assessments in 2008. Operations and projects not meeting this standard will continue to have the audit protocol independently applied. All operations and projects will undergo an independent risk and verification audit at least every three years based on risk. The revised SD audit protocols will be used for all Assurance Audits at managed operations and projects in 2008. A copy of the revised SD Standards is provided in the pocket on the inside back cover of this report.

SD Assurance Audits

In 2007, 33 operations were independently audited under Xstrata’s HSEC Assurance programme, including four audits at Xstrata Nickel’s Kabanga, Koniambo, Araguaia and Nickel Rim South projects, which were used to test the newly developed specific project stage audits. Two-thirds of the operations audited in 2007 achieved the “good” standard, with an overall score in excess of 80% across Xstrata’s 17 Standards. Two Xstrata Coal Australia operations attained the “optimum” level, (>90%), while five former Falconbridge copper operations were found to be below Xstrata’s minimum “satisfactory” level. These operations will be re-audited in 2008 in line with Xstrata’s commitment for all acquired operations to reach a minimum “satisfactory” level within 24 months of acquisition.

Average scores across the Group are shown for each standard, based on the most recent audit undertaken at each operation and project, compared to the previous audit. These results include the first audits undertaken at acquired operations.