Workplace and our people | Employees

Our approach and policy

Xstrata’s commitment to equality and non-discriminatory recruitment and employment practices, together with our support for the United Nations Universal Declaration of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work, are set out in our Statement of Business Principles. It is our policy to communicate honestly with employees and encourage consultation between employees and management. No form of workplace discrimination is tolerated.

Xstrata employs approximately 43,000 people, comprising approximately 27,000 permanent employees and 16,000 contractors. Following the acquisition of Falconbridge, approximately 20% of Xstrata’s workforce is based in North America (predominantly Canada), with 16% in South America, compared to 6% in the Americas as a whole in 2005. Australia and South Africa remain important regions for Xstrata’s employees and operations.

Labour relations and union representation

Within Xstrata there are examples of various workplace relations models, including individual agreements and collective bargaining agreements, reflecting the circumstances of any given site, individual choice and Xstrata’s devolved management structure. All employees are free to join a union of their choice and to be represented collectively.

Labour relations are a fundamental responsibility of operational management. We always seek to have a direct relationship between our employees and line management founded on quality leadership, effective communication, mutual respect and trust. We strive to ensure and believe that all of the Group’s operations have, in general, good relations with their employees and unions.

Xstrata’s workforce is predominantly unionised and 70% of permanent employees are represented by collective workplace agreements. Estimations of union membership by commodity business and region are as follows:

We consult with employees in advance of any significant operational change. Minimum notice periods vary across the Group and range from four shifts in some Xstrata Copper operations, to six months in some Xstrata Alloys operations. Notice periods are generally specified in collective agreements.

Non-discrimination

Xstrata’s business principles state that we do not tolerate any form of workplace discrimination, harassment or physical assault. In 2006, 12 incidents of discrimination were reported, reviewed and resolved. None of these incidents are subject to further action.

Management and responsibility

In 2006, Xstrata appointed a Group General Manager, Human Resources who reports to the Group CEO. The GM Human Resources is responsible for the administration of group policy on remuneration, performance appraisal, career development and succession planning, recruitment and expatriate management and for the alignment of human resources management and policy with international best practice. Each commodity business is fully resourced to manage its human resources requirements, within the Group’s policies and procedures.

Recruitment and retention

Recruitment, development and retention of employees are critical to the success of our business. In certain regions, including Australia and South Africa, competition for skilled mining employees is currently very strong and the retention of talented employees is a key issue for our operations. Employee turnover by commodity business is reported in the graphs on this page. In 2006, turnover fell to 5.2% including the operations acquired from the date of acquisition, compared to 10.3% in 2005.

We aim to attract and retain the best people at every level of our businesses and to provide them with the resources they require to achieve and maintain our operational excellence. We provide industry-leading career development opportunities, competitive remuneration and fair and non-discriminatory workplaces. We believe our devolved management structure and supportive environment for rational risk-taking offers unparalleled opportunities for development and entrepreneurial leadership, minimising bureaucracy and allowing every employee to play an active part in our success.

We provide fair and competitive remuneration globally, by ensuring salary reviews take into account cost of living adjustments, by participating in industry salary surveys and by maintaining a fair system for measuring performance and delivering rewards to employees. Remuneration is closely aligned with Xstrata’s strategy to grow and create long-term shareholder value in a sustainable manner. We link a significant element of employees’ variable reward to the performance of the Group, in terms of production, safety and a range of personal and business-wide criteria.

A high proportion of total remuneration for executive and senior management is ’at risk’ and performance-related, incorporating financial and non-financial performance measures. These performance measures are determined on an individual basis and include absolute performance (e.g. return on capital employed), relative performance (e.g. performance in comparison to peers) and non-financial performance measures (e.g. safety performance), in line with international best practice. Further information is provided in the remuneration report on pages 126 to 139 of the 2006 Annual Report and in the Governance and Ethics section of this report.

In 2006, Xstrata made 204 compulsory redundancies as a result of the Falconbridge and Tintaya acquisitions. We seek to avoid compulsory redundancies where possible and provide all employees with assistance programmes, retraining and support as appropriate.

A total of 94 employees lost their positions in 2006 due to non-compliance with Xstrata’s corporate policies and expectations. Non-compliance with health and safety procedures accounted for 52 terminated positions and one termination occurred due to non-compliance with environmental procedures and policy. The remainder were due to transgressions of Xstrata’s Business Principles.

Training and Education

We offer employees ongoing training and education in the workplace or through external institutions. A number of initiatives are under way across our businesses to identify and develop existing employees and to recruit and train new colleagues. At supervisor level and above, every employee’s performance is jointly reviewed and assessed at least annually to identify areas for improvement, development and additional support.

In 2006, Xstrata’s businesses spent over $39 million on training, an average of approximately $1,400 per permanent employee. On average, Xstrata’s employees undertook 69 hours of training in 2006, a similar level to the previous year.

Xstrata runs a Group-wide leadership development programme, and most commodity businesses have programmes to identify potential future business leaders, who are mentored by members of senior management and provided with opportunities for additional training, support and further career development within the Group. Development programmes include the opportunity for rotational secondments to different parts of Xstrata’s business and regular performance reviews.

Apprenticeships, bursaries and scholarships

In recognition of the importance of encouraging students to enter and remain in mining-related courses at Universities and to address the current shortage of employees with mining, engineering and related skills, we offer a significant number of trades apprenticeships, graduate trainee positions, work placements for students, bursaries and financial assistance and scholarships across our global operations.

Xstrata’s programmes include:

• Trades apprenticeships, including partnerships with technical schools and universities;
• Participation in undergraduate development programmes and work placements for students;
• Graduate professional training and development programmes across a range of disciplines;
• Bursaries, scholarships and financial assistance provided in Europe, Australia, Argentina, Canada and South Africa;
• Participation in the Federation of European Mineral Programmes;
• Two university chairs funded by Xstrata: Chair of Geology at Rhodes University, South Africa and Chair of Metallurgical Engineering, the University of Queensland, Australia;
• A contribution of C$5 million from Xstrata Nickel for the creation of the Centre for Excellence in Mining Initiative in Sudbury, Canada;
• $2.1 million funding over five years by Xstrata Zinc to the Institute of Minerals Industry Education at the University of Ballarat, Victoria, Australia, to enable a metallurgy degree course to be re-established and to support further minerals education courses;
• A scholarship on the European Mineral Engineering Course through the Federation of European Minerals Programmes.

In South Africa, we have implemented a systematic approach to investing in the skills of our future workforce, working with provincial government to strengthen institutions at the primary, secondary and tertiary education levels, in addition to offering scholarships, bursaries and financial assistance for students to enter higher education. Xstrata is also investing over ZAR103 million in 2007 in skills development, as part of our commitment to the South African government’s ‘accelerated and shared growth initiative for South Africa’, to halve poverty and unemployment by 2014.

Diversity and Equal Opportunity

We seek to employ a diverse workforce, to benefit from a varied range of skills, backgrounds and perspectives. We employ people based on the skills and experience required for each particular position, without discrimination according to gender, race, age, sexual orientation, religion, nationality or any other factor. No formal diversity targets are in place, with the exception of South Africa, where our businesses are actively recruiting, training and fast-tracking historically-disadvantaged South Africans and female candidates to achieve, and where possible exceed, targets set by the South African Mining Charter. These targets stipulate that women must represent 10% of the workforce and 40% of managers must be historically-disadvantaged South Africans (HDSAs) by 2009.

At the end of 2006, HDSAs (including women) represented 35% of all management positions in Xstrata Coal South Africa and 39% of all management positions in Xstrata Alloys. Excluding white women, HDSAs represent approximately 30% of all South African managers. Women accounted for 12% and 9% of Xstrata Coal South Africa and Xstrata Alloys workforces respectively, and 10% and 12% of management positions at the end of 2006. Both South African businesses are on track to exceed the targets set out by the Mining Charter by 2009.

Globally, women comprise 11% of the total workforce and 7% of all managers. A number of initiatives are under way to increase diversity and achieve a better gender balance within our workforce.

A geologist measures core samples at the Araguaia nickel laterite project, Brazil

Xstrata South Africa is actively promoting increased diversity in the workforce

In Xstrata Nickel, a Diversity Council has been established, with the support of external specialists, to guide Xstrata Nickel’s strategy in building an inclusive working environment and expand opportunities for all employees. Six female managers have been selected to participate in the Women’s Executive Network’s groundbreaking mentoring programme in Canada, which links female business leaders with high potential female candidates to support their growth and development.

Xstrata Coal South Africa initiated a ‘women in mining’ recruitment drive in early 2005. To date, 140 women have been employed through this programme into various mining occupations.

We are also implementing a number of ‘family friendly’ policies and practices. These include the introduction of flexible or shorter rosters to attract individuals with childcare commitments, and support to increase childcare facilities within local communities, to enable parents to join and remain in the workforce. In Australia, the Queensland Resource Council has set a target of 10% female representation in the resource sector. Xstrata Coal is participating as a committee member of this working party task group. Compassionate, family and extended parental leave is also provided to support employees with family commitments.

We give full consideration to applications for employment from disabled persons, where the requirements of the job can be adequately fulfilled by a handicapped or disabled person. Where existing employees become disabled, it is Xstrata’s policy wherever practicable to provide continuing employment under normal terms and conditions and to provide training and career development and promotion to disabled employees.

Our businesses offer equal pay to male and female candidates of equal experience and aptitude.