Ethics and business principles

Xstrata's Statement of Business Principles is a core document that governs the way we work at operations worldwide. Xstrata's Business Principles set out in detail our commitment to work ethically, responsibly, openly, together and with others. The Business Principles are distributed regularly to employees via printed leaflets available in the nine principal languages spoken by our workforce, and form an integral part of induction and training programmes. All suppliers, contractors and business partners are provided with our Statement of Business Principles, HSEC Policy and HSEC Management Standards before commencing work with Xstrata. Our HSEC Management Standard: Contractors, Suppliers and Partners requires HSEC performance criteria to be used in selection and procurement processes. Commodity business and Group Audit Committees obtain representations of operational, divisional, commodity business and Group management to confirm compliance with Xstrata's Business Principles and Fraud Policy. In 2005, 137 employees were dismissed for breaches of Xstrata's Business Principles, primarily for breaches relating to health and safety standards and procedures, fraud or discrimination.

Ethics line

The Xstrata Ethics Line is a confidential 'whistle-blowing' facility, operated on Xstrata's behalf independently by KPMG, through which any breach of our Business Principles can be reported in confidence. The call line provides a free phone number for every country in which the Group is active and all calls are reported on an anonymous basis to the Head of Internal Audit and Risk, who reports directly to the Board Audit Committee, for appropriate action. There is also a dedicated email address – . Emails to this address are only read by the Head of Internal Audit and Risk and are confidential. The ethics line toll-free telephone numbers are published on the back of the Statement of Business Principles leaflets distributed to every employee, contractor, supplier and business partner. In addition, Xstrata's commodity businesses regularly communicate the ethics line telephone numbers and purpose of the facility through internal briefings and poster campaigns to ensure employee awareness.

Since its inception in July 2004, a total of 26 incidents have been reported to the ethics line. All incidents have been thoroughly investigated and reported to the Board Audit Committee. Incidents investigated related to fraud, procurement practices and supplier conduct, breaches of health and safety policies, discrimination and employment or personnel issues. No employees were dismissed as a result of these investigations and no criminal charges were brought.

During 2005 one incidence of fraud was reported according to Xstrata's Fraud Policy at an European operation, committed by an employee. The employee was dismissed and criminal charges have been laid against the individual concerned. The case is ongoing.