Workplace and our people | Safety

Our commitments and framework

Ensuring the safety of our employees and contractors in the workplace is of primary importance. We aim to operate with ‘zero harm’ to our employees and contractors and believe that all work-related illnesses and injuries are preventable.

Xstrata’s HSEC policy sets out our commitment to eliminating illnesses, injuries and fatalities from our business. All Xstrata operations maintain comprehensive safety management systems which are fully aligned to OHSAS18001 and AS/NZS 4801.

Our 17 HSEC management standards encompass a number of areas which are critical to achieving our aim of zero harm at work, including:

• effective leadership and accountability (Standard 1);
• adequate resources (Standard 2);
• comprehensive and ongoing training and competency testing of personnel (Standard 3);
• effective communication (Standard 4);
• appropriate risk identification and management procedures (Standard 5);
• catastrophic hazard management (Standard 6);
• appropriate systems and legal compliance (Standard 7);
• operational integrity (Standard 8);
• appropriate selection and monitoring of contractors (Standard 11);
• effective reporting, investigation and response to safety incidents (Standard 16); and
• appropriate emergency response and crisis management procedures (Standard 17).

Xstrata’s HSEC Assurance Programme measures performance and systems in place at each operation and at the commodity business level, to provide assurance to the Board that our standards are being met and to assist under-performing sites to identify actions for rapid improvement.

Health and safety agreements are routinely included in union and collective agreements. Joint management and employee representative health and safety committees are in place at the commodity business, divisional and operational levels and represent over 90% of operational employees.

Key challenges

A continuing challenge for the Group is the elimination of fatal and critical incidents, particularly in South Africa. A further challenge for 2007 is to achieve rapid improvements in the risk management and safety performance of the former Falconbridge operations, where our initial assessment through the integration process highlighted a compliance-led culture and areas of under-investment in operational integrity.

Fatal incidents

In 2006, one fatality occurred at Xstrata’s operations. This incident occurred in October at the South Witbank colliery in South Africa, when a maintenance employee sustained fatal injuries from being caught between a pulley and moving conveyor.

Tragically, in 2007 to date, a further four fatal incidents have occurred at managed operations, three of which have occurred in South Africa and one in Spain.

At managed operations, full investigations to determine the direct and underlying causes are carried out for every fatality and reviewed by the GM Sustainable Development. At non-managed operations, investigation findings are reviewed by the joint venture Board which include Xstrata members. All fatalities are discussed by the Executive Committee and the Board. Remedial actions are undertaken and progress against these is subsequently reported on a quarterly basis to the Executive Committee and Xstrata’s Board.

Fatality prevention

A significant proportion of the causes of fatal incidents and high potential risk incidents relate to behavioural safety issues. Other primary causes are falls of ground and vehicle incidents (in particular collisions between pedestrians and mobile equipment underground). Over 90% of fatal incidents sustained at Xstrata’s operations since the Group’s inception in 2002 have occurred in South Africa, with a higher proportion occurring in underground mining operations.

To address these factors, Xstrata’s South African businesses implemented intensive fatality prevention programmes in 2004 which have continued to evolve since then, to respond to specific identified risks. Updates on progress are provided every six months to the Xstrata Board. These programmes focus on addressing the following causes of critical and fatal incidents, identified through an analysis of fatalities, high potential risk incidents and other critical incidents:

• Safety leadership, especially at the supervisor level (see Safety Training and Leadership on page 36);
• Hazard awareness and at-risk behaviour (see Safety Training and Leadership);
• Falls of ground in underground mining operations (see Case Study: Xstrata Alloys adopts new approach to fall of ground management); and
• Interaction between pedestrians and mobile equipment or vehicles (see Case Study: Xstrata Alloys develops leading practice collision avoidance system in 2005 Sustainability Report).

The challenges that face us, particularly in South Africa, remain very demanding. Among these are: a long-standing culture of an instructional management style from supervisors with little opportunity for feedback from workers; communications challenges arising from generally lower levels of literacy; a wide range of different languages spoken; and ingrained, inaccurate workforce perceptions of the primacy of productivity over safety. All require a sustained effort over the medium to long term before lasting improvements will be achieved. These challenges are common to all industrial companies operating in Southern Africa.

Nonetheless, almost three years after commencing our intensive fatality prevention programmes in South Africa, we are beginning to see tangible progress in how our employees, supervisors and management approach safety in the workplace. In addition, innovative solutions are being implemented to overcome the specific challenges we have identified to control major hazards and build the required competencies in our workforce at every level.

Both of our businesses with operations in South Africa (Xstrata Alloys and Xstrata Coal) continue to report on their progress every six months to the Board HSEC Committee. These reports track key performance indicators and progress against fatality prevention plan objectives and have shown clear and rapid improvements in all areas since the programme’s inception. Significant progress has been made in reducing serious incidents amongst Xstrata’s permanent employees; however contractor performance remains less consistent and is an area to which we are dedicating increased attention and resources in 2007.

In other regions, our fatality prevention programmes are also focusing on improved contractor management, selection and supervision, increased security to protect employees and contractors from intruders (particularly in the Dominican Republic, Tanzania and South Africa) and behavioural safety training.

Specific initiatives with regard to safety leadership and training, contractor management and behaviour-based safety, are outlined below and in the case studies included in this section.

Injury frequency rate performance

Xstrata reports total recordable injuries per million hours worked. This measure includes all injuries except first-aid treatment, and as such, provides a more comprehensive indication of injuries sustained in the workplace than lost time injuries alone. While the total recordable injury frequency rate is recognised in many other industries, Xstrata was one of the first mining companies to use and report this measure. Other large diversified mining companies are starting to adopt the total recordable injury frequency rate (TRIFR) as a key measure, and Xstrata is actively participating in ICMM to encourage further take-up. We continue to report the lost time injury frequency rate to provide a basis for comparison with our peers. Full definitions are provided in the glossary on page 92.

Our businesses have made significant improvements in safety performance in the five years since Xstrata plc was established. From our baseline in 2002, our TRIFR has improved by 61% and the lost time injury frequency rate has improved by 74%. Year-on-year the frequency of total recordable injuries improved by 13% to 13.0 per million hours worked.

As part of the integration process, we have recalculated total recordable injuries at former Falconbridge operations for the 12 months to 31 December 2006 according to Xstrata’s and international standards, to determine a baseline from which to measure improvement. This analysis determined a TRIFR of 24.3, compared to 13.0 for the Xstrata Group over the same time period. Including the acquired operations for the full year on a pro forma basis increases the Group TRIFR to 16.6 per million hours worked. This is the baseline from which we aim to make further improvements in 2007. Xstrata has set an overall 15% improvement target in the TRIFR in 2007.

To achieve this, our businesses are implementing an intensive safety effort at all operations, and in particular to address specific areas identified in the site HSEC risk reviews of acquired operations. These include addressing areas of under-investment in operational integrity and ensuring appropriate safety resources, training and systems are in place.

Mine rescue team training at McArthur River mine, Australia.

The graphs on this page show TRIFR and the lost time injury frequency rate for Xstrata on a standalone basis since 2002. 2006 performance for the Xstrata Group including Falconbridge from the date of acquisition is also provided. Injury frequency rate performance by commodity business (for Xstrata excluding Falconbridge) is shown in the table below.

Xstrata Alloys recorded significant improvements in safety performance in 2006, as a result of the intensive major hazard management and safety improvement programmes under way in South Africa since 2004. Xstrata Coal Australia reported a higher frequency of medical treatment injuries compared to the previous year, primarily from contractors employed to construct two new coal preparation plants.

*Excluding Falconbridge
†Including Falconbridge from date of acquisition

Xstrata Zinc reduced total recordable injuries by 8% in 2006, but injury rates remain above the Group average. This is due to fewer employees being able to undertake alternate duties following an injury, due to union agreements in Spain, and the fly-in, fly-out nature of the workforce at McArthur River mine in the Northern Territory, which results in injured workers remaining away from the workplace for a prolonged period, compared to operations where the workforce lives locally. The rapidly declining severity rate for Xstrata Zinc (down 62% year-on-year excluding the former Falconbridge sites) shows the effect of targeted safety initiatives and improved injury management. It also indicates that a large number of minor injuries sustained contribute to a higher total recordable injury frequency rate for this business.

Xstrata’s disabling injury severity rate improved in 2006 to 399 (including Falconbridge) and has more than halved since 2002, indicating that fewer serious injuries are being sustained.

Although these achievements are an important indicator of safety improvements, we recognise that injury frequency and severity rates are lagging indicators and are not necessarily a reliable indication of whether or not major hazards are being properly identified and managed in our business.

Leading ‘near miss’ indicators

Since 2003, Xstrata’s businesses have implemented high potential risk incident (HPRI) reporting which captures serious ‘near miss’ incidents. Reporting of high potential risk incidents is an important leading indicator of safety performance and major hazard management, and an important learning tool to avoid critical incidents or fatalities. Reporting of near miss incidents has steadily improved across the Group and this system was implemented across the Falconbridge business during the integration process. From September 2006, all former Falconbridge operations are reporting HPRIs in line with Xstrata definitions and reporting requirements. In 2006, 326 high potential risk incidents were reported (including acquired operations), compared to 226 in the previous year.

HPRIs are reported on a monthly basis to the Group Executive Committee and quarterly to the Board and are investigated by a team of senior operational and safety personnel to determine underlying causes and develop preventative action plans. This forms an integral part of safety training, improvements to safety procedures and strategies to address the management of major hazards.

In 2006, the leading cause of all high potential risk incidents remained vehicle incidents, however the proportion of total incidents declined from 25% to 22%, following intensive programmes to address this major cause of ‘near misses’ and injuries. Further initiatives are under way to address additional principal causes of high potential risk incidents, shown in the graph on page 37.

*Excluding Falconbridge
†Including Falconbridge from date of acquisition

Safety leadership and training

One of the most significant early measures taken to tackle safety challenges in South Africa was the transfer of senior safety personnel from our high-performance Australian operations to South Africa. Remuneration was also adjusted, with 40% to 80% of bonus awards dependent on HSEC or safety performance criteria, linked to a balanced scorecard, for both South African businesses. This process was extended to Xstrata Zinc’s Spanish operations in 2006, where European personnel were trained in the recognised Positive Attitude Safety System (PASS), a communication tool to improve the flow of safety information and encourage safety improvement at Australian operations. This recognises the success of this programme in Argentina and Australia and that Spain is experiencing similar challenges to Australia related to older average ages across the workforce.

Xstrata Coal’s first-of-its-kind 28 day supervisor training programme was devised by Xstrata Coal South Africa together with external experts and consultants, to provide a tailored, practical and relevant training programme for mine supervisors. The programme uses a range of learning techniques and modules, including practical exercises, role plays and video technology, to enhance safety knowledge, attitudes and understanding and leadership skills amongst this critical component of the workforce. An overall aim of the programme is to enable supervisors to gain a better understanding of leadership techniques, and to encourage a more consultative and engaging management style in the workplace, which will aid the early identification and resolution of safety hazards.

Approximately 80% of Xstrata Coal supervisors and more than 50 Xstrata Alloys supervisors, including contractors and potential future supervisors, have undergone this innovative training course, which incorporates emotional intelligence, people and team management and conceptual, experiential, concrete and reflective learning. Monthly compliance audits are undertaken following the training course, with results to date showing that supervisors attain an average score of over 80% following completion of the training course, compared with an average of 40% before training.

Behaviour based safety programmes are implemented at every Xstrata managed operation. These programmes aim to reinforce positive safety behaviour, as well as addressing negative or non-compliant behaviour. In South Africa, Xstrata’s operations are using programmes adapted from specific safety programmes developed for use in deep level gold mining, which are tailored to specific requirements for South African operations.

Contractor management

An analysis of safety performance data shows that contractor safety performance in general has lagged that of permanent Xstrata employees. Xstrata’s HSEC Management Standard 11 requires the systematic selection, engagement and management of contractors, suppliers and partners. All suppliers and contractor companies are assessed against specific HSEC criteria. However, we have found that the relevant audits and safety certification may not provide sufficient confidence about specific personnel or relevance to Xstrata’s operations. In 2007, Xstrata’s businesses are focusing on ensuring greater influence over contractor safety training and compliance, together with additional supervision and on-site training for contract personnel, particularly those that may only be on site for several days or less.

The requirement for enhanced contractor management has been identified as a particular focus for our Spanish operations (Xstrata Zinc), where a dedicated Xstrata safety supervisor has been appointed for all contract work.

Occupational Hygienist Amanda McHugh fits personal dust and noise monitoring equipment to George Gabbe at Mount Isa Mines, Australia