HSEC Assurance Programme

Xstrata’s HSEC Assurance Programme independently audits every managed operation every one to three years against Xstrata’s sustainable development framework, including our Business Principles, HSEC policy and 17 Management Standards. The frequency of audits is determined by previous audit performance and risk profile. Audits in any given year also focus on operations or projects undergoing significant changes (for example moving from a project to an operation, or implementing a closure plan).

The audit team is led by an independent auditor and also includes a senior Xstrata operational manager from a different region or commodity business, to facilitate cross-learning and sharing of good practices. Each operation is scored against Xstrata’s 17 HSEC Standards, receiving a score for systems and a score for performance. Performance is assessed through a number of criteria including interviews with approximately 10% of each operation’s workforce, which also provide a valuable indication of the extent to which sustainable development principles are embedded into our business.

We require each operation to achieve a minimum overall score of 65% (‘satisfactory’) in its first HSEC Assurance audit and 80% (’good’) within three years. Every operation receives a detailed audit report with clear improvement recommendations to meet this standard or to progress to the next level. Operations that do not achieve a ‘satisfactory’ score are re-audited annually, or more frequently depending on the assessed risk, until this standard has been attained.

Every managed operation within Xstrata’s portfolio in 2005 was audited by the end of that year (a total of 64 sites), to provide a comprehensive baseline of the Group’s performance and systems.

In 2006, a total of 21 audits were carried out, excluding the rapid assessment audits undertaken at each former Falconbridge operation. This included the 15 sites that did not attain the minimum ‘satisfactory’ standard in the baseline audits in 2005. All but one of these operations achieved or surpassed the ‘satisfactory’ standard in 2006, with most achieving average scores in the ‘good’ range. The remaining site (McArthur River Mine in Australia, which achieved a score of 61%) will be re-audited in 2007, together with a further 27 sites or complexes, including five former Falconbridge operations.

Average scores for each HSEC standard from the baseline audits in 2005 compared to average scores for 2006 (using the most recent audit score achieved by each operation) are shown in the chart above, together with the range of scores achieved for each standard.