Sustainability
Our approach to sustainable development
Xstrata's approach to sustainable development is embedded within our strategy to achieve sustainable growth which creates shareholder value at each stage of our corporate development.
We do this by managing and growing a diversified, balanced portfolio of metals and mining operations, providing the basic materials necessary for social and economic development, through mutually beneficial, long-term partnerships with our stakeholders and in an environmentally responsible manner. In addition to minimising the impact of our own operations on the environment, we aim to use resources as efficiently as possible, reducing waste and input materials to limit the environmental impacts associated with our supply chain.
To ensure our strategy is successful in the long term and that our growth is sustainable, we seek to:
- operate efficiently and profitably by maximising revenue, minimising costs and investing to achieve long-term growth and value creation;
- operate a safe, healthy and non-discriminatory workplace with progressive development opportunities;
- ensure a sustainable environment and operate in harmony with local communities, governments and other stakeholders through using resources efficiently and contributing to the conservation of the natural environment;
- operate ethically, legally, transparently and responsibly, as the stewards of our shareholders' assets and in line with our Business Principles; and
- ensure access to new resources, an ongoing licence to operate and protect Xstrata's value over the long term by managing our operations to the highest environmental standards and by working with our stakeholders to provide mutual, lasting social and economic benefits.
Black Star Open Cut. Environmental Advisor, Anne Moore, with truck driver, Rob Morrison
Manuel Winkelsesser skimming zinc ingots at Nordenham
We maintain a lean corporate centre, minimising the burden of overheads and interference from head office. We believe this directly benefits our operations and helps us to achieve our strategic objectives by creating a strong sense of local ownership, where entrepreneurial managers are empowered and incentivised to address local, regional or site-specific challenges and opportunities. Every operation and commodity business exercises this autonomy within the framework of our Group Policies and Management Standards, which ensure that our operations adhere to international best practice, irrespective of their location. Xstrata's HSEC Assurance and Internal Audit Risk Management Programmes audit our operations against this framework of policies and standards.
HIV/AIDS sign at South Witbank colliery
Xstrata has grown from a market capitalisation of $800 million at the beginning of 2002 to a market value of more than $18 billion at the beginning of 2006 and has achieved total shareholder return from initial public offering to 1 March 2006 of 278%, compared with 26% for the FTSE100 index over the same period.
This rapid growth and value creation has been achieved through two major, company-transforming acquisitions in 2002 and 2003, smaller 'bolt-on' acquisitions and the development of a number of efficiency improvements and major growth projects from our portfolio. In each case, we have improved performance efficiency and created value, including substantial improvements to health, safety and environmental performance, enhanced risk management systems and community partnerships.
Since our acquisition of the Duiker South African coal operations in 2002, Xstrata has:
- implemented an industry-leading HIV/AIDS voluntary testing, counselling and treatment programme, including a process to establish a private-public partnership with government and NGOs to provide HIV/AIDS testing and treatment and primary healthcare services to the local community – a second clinic is under construction in 2006 and Xstrata Coal's HIV/AIDS initiatives received a commendation from the Global Business Coalition on HIV/AIDS Awards in 2005;
- improved the lost time injury frequency rate at these operations from 2.4 in 2002 to 0.8 in 2005;
- introduced comprehensive safety management programmes including a focus on leadership, accountability and behavioural safety;
- implemented comprehensive environmental management systems and plans at every operation and reduced the number of significant (category 3) environmental incidents from eight in 2002 to none in 2005;
- established formal community feedback mechanisms and regular dialogue with communities, government and other stakeholders;
- improved the financial performance at the South African coal operations, increasing revenue from $380 million in 2002 to $790 million in 2005; and
- made considerable progress towards achieving meaningful empowerment for historically disadvantaged South Africans (HDSAs) including increasing the proportion of HDSAs in management positions to 32% of all management and, together with African Rainbow Minerals, creating a new, black empowerment coal company ARM Coal, to facilitate broad-based empowerment in our business.
Our ongoing challenge and over-riding priority in this business, as at all operations, is to eliminate fatalities. In 2005, this was not achieved and tragically, two employees lost their lives at our South African coal operations. All South African operations are undergoing significant investment to address critical incidents, and we are committed at every level of the organisation to achieving zero harm at our operations every year. Further details of our improvement programmes in South Africa are provided in the Safety chapter.
In June 2003, Xstrata acquired MIM Holdings in a transaction which doubled Xstrata's size.
Through the integration process and through subsequent initiatives, Xstrata has:
- improved the lost time injury frequency rate by more than 50% at the former MIM operations globally, in part facilitated by the redeployment of safety and other functional personnel from corporate offices to the operations;
- engaged in comprehensive consultation with employees at Mount Isa Mines, the largest single site in the Group, to formulate a transformation programme which has yielded around $50 million of cost savings each year in 2004 and 2005 at Mount Isa and substantial improvements in productivity;
- signed an enterprise bargaining agreement with the union at Mount Isa within six months of Xstrata's acquisition, following over two years of negotiations with previous management;
- created more than 350 new jobs at Mount Isa and safeguarded in excess of 1,000 positions at an operation previously earmarked for closure;
- benefited local businesses by increasing local purchasing through decentralised procurement; and
- developed comprehensive corporate social involvement plans for each operation and regionally, including a commitment to spend AUD4 million over three years from 2005 on a range of community initiatives in north Queensland, expanded in March 2006 to commit a further AUD2.48 million over the next three years for State-wide initiatives in Queensland from 2006.
In each case these improvements have been achieved primarily by former MIM employees, operating within Xstrata's devolved management structure.
Tony McGrady, Speaker of the Queensland Parliament and Member for Mount Isa
"This is precisely what good corporate citizenship is all about – creating jobs for Queenslanders, boosting the State's economy and giving back to the community wherever possible. This is exactly what Xstrata is doing."
Knowledge-sharing: Xstrata Sustainability Conference
In October 2005, around 100 of Xstrata's health, safety, environment and community managers and operations managers gathered in Johannesburg to discuss sustainability issues and share leading practices. The inaugural three-day Sustainability Conference covered a broad range of health, safety, environment and community topics including key findings from critical incident investigations in South Africa; applications of behavioural theory; community relations; supervisor training, bonus and incentive schemes; HIV/AIDS initiatives; climate change and biodiversity and land management programmes. The feedback was extremely positive. Xstrata Executive Director Corporate Development Eric Ratshikhopha said: "The conference enabled our employees to realise that South African initiatives are similar to those being undertaken in other countries in a number of respects, and that the challenges – and in some cases the solutions – are similar despite our different circumstances."