Environment | Rehabilitation and closure

Land rehabilitated/disturbed

Xstrata manages 1,174,579 hectares of land, including 615,989 hectares of land owned freehold (internal and external to mining leases) and 558,590 hectares of land leased. All operations are required to rehabilitate disturbed land progressively. With the exception of sealed sites, such as smelters and refineries, all our operations have procedures in place to ensure that disturbance is minimised and once activities cease, land is rehabilitated to an agreed land use.

In 2006, Xstrata’s operations and projects (excluding Falconbridge) disturbed 1,734 hectares of land, 19% less than in the previous year. A total of 992 hectares rehabilitated in 2006. Xstrata Coal operations accounted for 86% of land rehabilitated and 78% of land disturbed. Falconbridge operations rehabilitated 400 hectares of land in 2006, compared to 28 hectares of land disturbed.

Closure planning

Every managed operation maintains a closure plan which is reviewed at least annually and includes closure cost estimates. The anticipated costs of rehabilitation and restoration of mining activities are provided for throughout the life of operations. As the anticipated closure date of the mine approaches, comprehensive plans are integrated into the closure plan to address identified social, labour, environmental and economic issues associated with closure. Closure plans for each managed operation are independently assessed through the Xstrata HSEC Assurance Programme. Detailed closure guidance for sites is developed by each commodity business, in line with Group expectations. In 2006, Xstrata Coal implemented a detailed mine closure planning standard for its global operations. This sets the requirement for closure plans including social, physical and economic aspects. All managed coal operations will comply with this standard by the end of July 2007. Xstrata Copper is currently developing a closure plan guide for all operations to be rolled out this year.

Provisions for rehabilitation costs increased to $1,080 million as at 31 December 2006, including $656 million from acquisitions in 2006. These costs are expected to be incurred over the next 24 years.

Some jurisdictions also require a bond, typically a bank guarantee, which is provided to government to cover closure costs or maximum liability over the term of the operating plan. In South Africa, the rehabilitation trust fund is used to accumulate funds for rehabilitation liabilities relating to South African coal operations. Following completion of rehabilitation work and approval from the Department of Minerals and Energy, amounts are paid out from the fund. The trust fund is carried in our accounts at fair value and in 2006 amounted to $36 million.

Closed sites

A total of 44 closed copper, aluminum, zinc or nickel operations sites requiring ongoing management were acquired as part of the Falconbridge acquisition. All but four closed sites are situated in Canada, with the remainder located in the United States.

The majority of costs associated with these closed sites relate to the ongoing collection and treatment of water. Over 90% of closed site costs are associated with nine closed operations and two operations that are planning for near-term closure.

During the integration of Falconbridge, Xstrata’s teams assessed closed sites and found that a strong formal closure plan development and review process existed for Falconbridge operations. The former Falconbridge business managed closed sites through a dedicated, centralised reclamation group.

In line with our devolved management model, which emphasises the responsibility of global commodity businesses for all elements of operational performance, we decided to devolve the reclamation process and existing closed sites into the relevant commodity businesses. This management model provides greater ownership and a ‘whole of business’ approach.

Xstrata’s commodity businesses are mandated to identify commercial opportunities and potential risks, to minimise the financial, environmental and reputational liability associated with the management of closed sites. This includes examining alternative technologies for ongoing environmental management, assessing commercial options for future site use and engaging with government, local communities, the scientific community and other stakeholders to review and improve management procedures.

Cacti at El Morro copper project, Chile