Environmental targets

In addition to addressing site-specific issues, Xstrata's operations improved their water management plans and surface and groundwater monitoring in 2004. Recycling of water increased during 2004 by 4%.

Water is discharged off site only under licence conditions. Five Xstrata Coal operations in New South Wales are members of the Hunter River Salinity Trading Scheme, a licensing scheme for discharges of saline mine and power station water into the Hunter River catchment, aimed at minimising impacts on irrigation, other water uses, and on the aquatic ecosystems of the Hunter River catchment.

The increase in recycled water in 2003 is partly due to the acquisition of MIM Holdings Limited, a mining and metals group that doubled the size of the Group.

A number of the Group's operations have excess water and are in a position to export water to adjacent operations. In South Africa, Xstrata Coal has divided its mines into three divisions, with common water storage areas in each division. This approach enables the operations to share and reuse water between our operations, promoting sustainable water management practices. ATCOM and Tavistock mines pump their excess water to operations that are experiencing water shortages.

In NSW, Ulan coal mine's Bobadeen irrigation scheme is a unique solution that uses surplus mine water to irrigate 242 hectares of land specially planted with perennial pastures, which is maintained at an optimal level by beef cattle. Surplus mine water is first pumped to a holding dam and then to five-centre pivot irrigators. The pasture is kept at an optimal level by carefully monitored rotational grazing by beef cattle and the production of fodder.

An industry first, this AUD7 million scheme uses approximately seven megalitres of water per hectare each year and has been heralded as an outstanding and truly sustainable solution to a complex water management problem.

In New South Wales, several operations share excess water. In 2005, a final section of pipeline between Cumnock and Narama will be established which will complete a water integration initiative, enabling saline mine water to be recycled between operations. This initiative also decreases the need for raw water consumption. Desalination investigations will be carried out at several mines and a highwall drop structure will be completed at Baal Bone and Narama.

No excess water is available for export from the Queensland coal operations due to the arid environment and the distance between the operations. At Mount Isa, recycled water is exported for use in community facilities.

In 2004, the Vantech vanadium operation in South Africa began remediation of an underground pollution plume (which occurred under previous ownership) through a salt recovery plant. Although the Vantech operation is now permanently closed, Xstrata Alloys is removing impurities from the water and is making it available for reuse at the adjacent Lion Project - Xstrata's new 360,000 tonnes per annum ferrochrome smelter. Construction of phase one of the Lion Project began in December 2004, after the completion of the associated environmental impact study. Initial production is expected to commence in the second half of 2006, ramping up to full production in the first half of 2007.

The Rustenburg and Lydenburg chrome smelters continued efforts to neutralise hexavalent chromium by dosing. Hexavalent chromium is a toxic substance and a human carcinogen (IARC classification), formed under certain conditions during the production of ferrochrome. Water catchment facilities were constructed at a number of Xstrata Alloys' operations to improve the management and capture of water, and these facilities are expected to increase the capacity of these operations to recycle water.

Xstrata Coal South African operations conducted groundwater balance studies and surface water studies in 2004. Reduction of raw water usage, increasing the quantity of water recycled on site and improved water management and conservation initiatives were also priorities. Xstrata Coal New South Wales introduced group water meetings to discuss synergies between the operations and on-site monitoring of water balances.

At Xstrata Copper, implementation of the Stormwater Environmental Management Programme at the Townsville copper refinery continued in 2004. The programme includes strategies to improve the quality of storm water released from the site, such as installing new sedimentation traps around the main plant area, and a remediation strategy for soil contamination on site.

The new mining plan for the Mount Isa copper and zinc-lead operations details proposals to improve water consumption, recycling and capture. The mine intends to construct a freshwater containment dam to improve the separation of clean and dirty storm water, thereby enhancing the quality of storm water released off site during periods of intense rainfall. The Mount Isa copper and zinc-lead operation is committed to minimising the use of freshwater and has achieved an 80% reduction in fresh water use over the past three years in the mining operations.

Our Mount Isa mining operations have reduced freshwater use by 80% over the past three years

Xstrata Copper has recently joined the International Copper Association which is working on the voluntary risk assessment for copper and its commercial compounds in Europe. The European Commission has changed its policy on conducting environmental and health risk assessments, whereby industry is required to demonstrate the safety of its products.

In Australia, Xstrata Copper has been involved with a range of research projects, including:

• the bioavailability and tolerance to heavy metals of selected native and exotic species;
• methods for water quality assessment of temporary stream and lake systems; and
• robust guidelines and assessment procedures for metal-contaminated sediments.

At Xstrata Zinc, the Northfleet lead refinery has improved effluent water treatment at its water treatment plant. Closure of the battery recycling facility and reductions in some of the discharge consent limits gave rise to difficulties in first-pass treatment success. These difficulties have been overcome and there have been no incidences of treatment failure requiring recycle/rework subsequently. The McArthur River zinc mine has increased the capacity of its anti-pollution surface run-off pond to cope with extreme rainfall events, increased recycling of on-site process water and minimised the use of borewater (water extracted from an underground aquifer through a borehole) by recycling a mixture of rainwater and runoff from the tailings.

In 2004, Xstrata addressed a number of water-related issues across the Group:

• With the completion of its water-related environmental management programme, Collinsville Coal submitted a final status report and annual return to the Queensland Environmental Protection Agency for closure of the programme. Collinsville Coal has also applied to the Department of Natural Resources and Mines for licences to construct a weir and seepage collection system on Strathmore Creek, which will enable Colinta Dam seepage to be collected and pumped to an on-site dam for reuse at the mine or back into Colinta Dam, depending on the water quality.
• In 2003, a local family instigated a civil case against Alumbrera alleging groundwater contamination in the Rio Vis Vis, downstream of the operation. An external consultant completed a statistical analysis of the groundwater quality data taken from monitoring bores in the Rio Vis Vis and found that the mineralised plume is being contained by the current pumpback system. The analysis enabled Minera Alumbrera to monitor the plume and identify any off-site sulphate releases. In 2005, Alumbrera will recalibrate the Rio Vis Vis predictive transport groundwater model. We have recently completed isotopic testing of the groundwater to confirm the model and the pumpback system assumptions. Preliminary results have indicated that there is no connection between the tailings dam water and the alleged contamination and that the plume is reducing as the tailings dam increases in height. We will continue to sample the area and have commissioned a number of further studies to confirm the preliminary data.
• A drawdown of the water table in some areas caused by extracting water from the Ernest Henry open-cut mine in Queensland may require Xstrata to provide additional supplies to neighbouring landholders in 2005 through upgrading pumps, deepening bores, providing alternative bores or water supply.
• The Townsville copper refinery is conducting investigations into appropriate methods for remediating contaminated groundwater including injection and abstraction systems. A remediation plan will be prepared and begin implementation in 2005.