Presentacion Informe de Sostenibilidad-English-XS-0502-03 - Xstrata

Expansion in Peru:
Progress and Sustainable Development
José Marún
Executive General Manager
South America Operations Division
1

Contents
PART 1
PART 2 South America Operations Division
PART 3
PART 4
PART 5
Introduction
Peru: Progress and Forecasts
Sustainable Development and Social Investment
2011 Sustainability Report
2

PART 1
Introduction

Xstrata Operations and Structure
Organic growth
Xstrata Copper
World’s fourth copper producer
Xstrata Coal
World’s largest exporter of thermal coal and
important producer of hard and semi-soft
coking coal
Xstrata Nickel
World’s fourth largest nickel producer and
one of the world’s largest cobalt producers
Xstrata Alloys
World’s largest ferrochrome producer and
leading producer of primary vanadium
Xstrata Zinc
One of the world’s largest refined zinc
and zinc concentrate producers;
important lead producer
Xstrata is a global diversified mining group,
listed on the London and Swiss stock Exchanges.
Headquartered in Switzerland. Present in more than
20 countries.
Employ over 70,000
people at more than 100 operations and
projects around the world.
4

Financial and Operational Results
Contribution of XCu to Group’s EBIDTA
Xstrata Copper’s Share in Group’s
EBITDA in 2011: 42%
Nickel
11%
Zinc
11%
Copper
42%
Alloys
3%
Coal
33%
Again, XCu made the largest
contribution to the global
results of the Group.
5

Xstrata Copper Overview
• Headquarters in Brisbane, Australia.
• World's fourth largest copper producer.
• Total production in 2011: Approximately 890,000 tonnes of copper.
• More than 20,000 employees and contractors worldwide.
• Operations in five countries (Australia, Argentina, Canada, Chile and Peru).
• Five world-class copper projects under development (two under construction).
• Participation in recycling sector in Canada.
6

We have a strong portfolio of geographically
diverse assets and growth projects.

Xstrata Copper
Commitment to sustainability is vital to our success
• Our Mission sets out our goal to make a lasting, positive contribution to society
– Ability to create shared value is essential for a successful business over the long term
• Our five core values include our commitment to act with care in all that we do
• We are committed to respect the environment and work in partnership with stakeholders to
create lasting benefits for the communities and countries in which we live and work
• Our robust Sustainable Development framework ensures all operations are managed to our
industry-leading standards
Sustainable
Development Policy
17 Sustainability
Management
Standards
Statement of Business Principles
Bribery, Fraud and
Corruption Policy
Third Party Due
Diligence Standards
Code of Conduct
Risk Management
Policy
Code of Conduct
Implementation
Standard
INDEPENDENT, INTEGRATED ASSURANCE PROGRAMME
8

Xstrata Copper
Our global commitment
• Member of ICMM (from May 2006)
• Signatory to UN Global Compact
• Voluntary Principles on Security and Human Rights
Applying VPs at higher risk sites: formal plenary
application in 2012
• UN Universal Declaration of Human Rights
• UN Global Compact’s CEO Water Mandate
• ILO Tripartite Declaration of Principles concerning
Multinational Enterprises and Social Policy
• Global Reporting Initiative compliant (A+)
• Publicly support Extractive Industries Transparency
Initiative
• OECD Guidelines for Multinational Enterprises
• Global Business Coalition on HIV/AIDS
• Member of Dow Jones Sustainability Indexes
• Sector leader for past five consecutive years
9

.
Reinforced by Sustainability
Reinforced by Sustainability Safety performance
• Injury-free, safe work environment.
• Proven leadership in environmental
performance.
• Reputation for social responsibility.
• Realisation of the full potential of our
people.
Xstrata plc - Mining Sector Leader
for the fifth consecutive year in the
Dow Jones Sustainability Index for
2011-2012
TRIFR and LTIFR
20
15
10
5
0
TRIFR
LTIFR
DISR
2007 2008 2009 2010 oct/11
250
200
150
100
Xstrata Copper:
28 awards for sustainability good
practices at regional and national levels
50
0
DISR 10

Safety performance
South America Operations Division - Peru
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
LTIFR
Lost Time Injury Frequency Rate
2005 2006 2007 2008 2009 2010 2011 2012
As of April 2012
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Total Recordable Injury Frequency Rate
TRIFR
2006 2007 2008 2009 2010 2011 2012
11

Sustainable Development Policy
12

PART 2
South America Operations Division

South America Operations Division
• Created in February 2011.
• Based in Peru, office in Lima.
• Integrates three mining operations in the
region:
− Tintaya Antapaccay (Peru)
− Las Bambas (Peru)
− Lomas Bayas (Chile)
− Minera Alumbrera (Argentina)
• Strong coordination of opportunities in our
operations, and in corporate and social affairs.
• Synergy capitalisation.
14

Chile: Lomas Bayas
• Lomas Bayas is located in the Atacama Desert, 135 km northeast of the port of
Antofagasta.
• Employs approximately 1,700 people, including permanent contractors.
• Annual production capacity: 75,000 tonnes of copper cathodes from a SX-EW plant.
• Annual extraction rate: 70 million tonnes of mined ore from an open pit mine.
• A US $293 million investment was approved in October, 2009. This will allow a 12-year
mine life extension until 2024.
• In December 2010, an increase in mineral resources in the sulphide copper deposit
located under the current Lomas Bayas pit was announced. This project is known as
Lomas Sulphides, currently under pre-feasibility study.
15

Argentina: Minera Alumbrera
• Xstrata Copper owns a 50% share, while Goldcorp and Yamana Gold from Canada own
37.5% and 12.5%, respectively.
• Bajo de la Alumbrera is located in Catamarca province at 2,600 metres of altitude.
Minera Alumbrera entailed an initial investment of US $1.3 billion.
• Annual production totals 140,000 tonnes of copper in concentrate, 350,000 ounces of
gold in concentrate, 45,000 ounces of gold doré and 960 tonnes of molybdenum
concentrate.
• Slurry pipeline transports concentrate in pulp along 317 km.
• Minera Alumbrera owns and operates port facilities in Santa Fe province.
16

Argentina: Agua Rica Project
• Xstrata Copper and Goldcorp Inc. came
to an agreement with Yamana Gold Inc.
This agreement grants Minera Alumbrera
an exclusive option over Yamana's 100%
share in the Agua Rica copper and gold
project, located in Catamarca province.
• Xstrata Copper and Goldcorp Inc. will
make all option payments on a 57.14%
and 42.86% basis, respectively.
• Minera Alumbrera will manage the Agua
Rica project and fund a final feasibility
study and all development costs.
• This project would extend current mine
life by approximately 25 years.
17

Operations in Peru
• Las Bambas project in Apurimac Region from 2004
• Acquired Tintaya in Cusco Region in 2006 from BHP
Billiton
• Acquired 33.75% stake in Antamina in Ancash Region
in 2006 via Falconbridge acquisition
• Commitment to sustainability underpins business
strategy and social licence to operate
• All operations and projects managed to Xstrata’s
sustainability standards, with strong focus on
community engagement
− Overwhelming community support during Public
Consultation on Las Bambas and Antapaccay
Environmental Impact Assessments
• Since 2004, Xstrata has committed investment of
US$10 billion in Peru (including Antamina) and
employs 11,200 people including contractors
• We have contributed US $1.44 billion in social
funds/projects, taxes and royalties over same period
18

PART 3
Peru: Progress and Forecasts

Potential Production Growth Profile
POTENTIAL PRODUCTION KT CU
2010
100,000 t 120,000 t 120,000 t 130,000 t 250,000 t +600,000 t
August 2009
Tintaya Resources:
117Mt @ 1.15% Cu
3Q10
Antapaccay
construction commences
2011 2012 2013
3Q11
Las Bambas construction
commences
4Q12
Antapaccay
commissioning
Resource:
817Mt @ 0.5%
Annual average
life of mine production:
143ktpa Cu over 22
years
2013
Tintaya open pit closes
2014
2016
Coroccohuayco
production utilising Tintaya SxEw
infrastructure
Resource:
320Mt @ 0,92%
2H 2014
Las Bambas
commissioning
Resource:
1.71Bt @ 0.6%
Annual average life
of mine production:
315ktpa Cu over 18
years
2015
20

Tintaya Antapaccay
Objective:
• To extend the Tintaya mine life by 20+
years and expand production by 60%
through the development of the
Antapaccay deposit, 10km from Tintaya.
Operation details:
US $1.47 billion investment.
Concentrator throughput: 70ktpd.
Copper production: 160ktpa Cu in
concentrate over the first 10 years;
average life of mine: 140ktpa over 20
years.
21

Tintaya Antapaccay
Approvals granted:
• Positive feasibility completed Oct 2009.
• EIS submitted Dec 2009.
• Public consultation for EIS successfully
completed March 2010.
• EIS approval granted.
• Corporate approvals granted.
• Mining permit granted March 2012
Current status:
• Construction: 3Q10-3Q12.
• Current status: 74% completed
22

Tintaya Antapaccay
23

Las Bambas
Objective:
• To build a major new, world-class, long life
mining complex, by using the Tintaya
Antapaccay synergies.
Project details:
• Concentrator throughput: 140ktpd.
• Copper production: 400ktpa for first nine
years; average life of mine: 315ktpa over
a minimum of 18 years.
• Molybdenum production: 5ktpa.
24

Las Bambas
Major milestones:
• Resettlement agreement signed Jan
2010.
• Feasibility Study completed Dec 2009
and approved Aug 2010.
• EIS submission: Public consultation
July 15, 2010.
• Nueva Fuerabamba cornerstone laid
Aug 20, 2010.
• Option Exercise: Transfer Contract
executed Sept 2, 2010.
• EIS approval: March 7, 2011.
Next steps:
• Construction: 3Q11 – 3Q14.
• Pending permits:
− Beneficiation concession (start of works)
− Mining transport concession
• Commissioning: 2H14.
25

Las Bambas
Nueva Fuerabamba
26

Cía Minera Antamina – Joint Venture
• Antamina is located in the Ancash region, 270 km northeast of Lima, 4,200 to 4,700
metres above sea level. (Cu concentrate: 1,185,934 dmt, Zn concentrate: 460,227 dmt).
• The partners in this joint venture are: Xstrata (33.75%), BHP Billiton (33.75%), Teck (22.5%)
and Mitsubishi Corporation (10%). Xstrata Copper and Xstrata Zinc have representation
on the company’s Board of Directors and Advisory Committee.
• Antamina has become one of the largest national producers of copper and zinc
concentrates.
• It has the support of the Ancash Association for the implementation of sustainable
development projects
• The company has approximately 2,400 employees and 5,000 contractors.
• Investment of US $1.28 billion to expand the capacity of the concentrator by 38 percent.
Commissioning is scheduled for the first quarter of 2012.
27

Cía Minera Antamina – Joint Venture
Expanding Resources - Driving Growth
28

PART 4
Sustainable Development and Social Investment

We work with all stakeholders
OPINION
LEADERS
CENTRAL,
REGIONAL AND
LOCAL
GOVERNMENT
MEDIA
CLIENTS
LOCAL
COMMUNITIES
MINING
SECTOR
PUBLIC
CONTRACTORS
SHAREHOLDERS
CIVIL SOCIETY
(NGO’s, churches,
universities)
EMPLOYEES
30

Social Funds, Contributions At Local, Regional,
And National Levels:
OPERATION CONCEPT MANAGEMENT SCOPE
ANTAMINA MINE
(these figures only account
for Xstrata’s 33.75
percent)
TINTAYA
ANTAPACCAY
LAS BAMBAS
Local Mining Fund
[2.75% of profits after
taxes]
Regional Mining Fund
[1% of profits after taxes]
Canon [50% of
Income Tax]
Local Mining Fund
‚Framework Agreement‛
[3% of profits before taxes]
Regional Mining Fund
[1% of profits after taxes]
Canon [50% of
Income Tax]
Royalties
Tintaya Foundation
and other donations
Investment in Social
Development
Las Bambas Social
Trust Fund
The Company
The Company
Local and Regional
Government
The Company
The Company
Local and Regional
Government
Local and Regional
Government
The Company
The Company
Trust Fund / FOSBAM
[2004-2011]
Local
Regional
Local and Regional
Local
Regional
Local and Regional
Local and Regional
Local and Regional
Local and Regional
Local
2010 Amount
US$ 188,486 M
13,613,000
4,950,000
75,637,000
10,649,733
2,329,918
60,470,999
12,714,599
2,680,682
5,440,226
US $ 63,500,000
2011 Amount
US$ 213,016 M
106,380,000
10,374,015
65,081,369
20,451,602
2,443,940
8,285,000
(this amount has not been considered for the annual amount)
31

Tintaya Antapaccay

Xstrata Tintaya’s Social Management
Tintaya Antapaccay
Framework
Agreement
2003
Development
Table
Cañipía
Bilateral
Process
Regional
Mining
Fund
Voluntary agreement between Espinar province and Xstrata Tintaya in 2003
Citizen participation process to identify and carry out sustainable
development projects: is the only voluntary profit-sharing agreement of its
kind in Peru - Tintaya has contributed US $70.6m since 2003
Dialogue process between six communities from the direct area of influence;
(Espinar District) CooperAcción; CONACAAI, OXFAM; Xstrata Tintaya
Dialogue process to strengthen the foundations for development and
coexistence with the communities in the direct area of influence of our
operation.
Bilateral dialogue between four communities in the Cañipía Microbasin
(Espinar District) and Xstrata Tintaya
Bilateral process that includes a comprehensive programme to improve
cattle for the livestock farming development of the Cañipía Microbasin.
Representatives of Cusco region, UNSAAC and Xstrata Tintaya
Five-year fund that contributes to the development of the Cusco region,
under the Solidarity with the People Mining Programme, signed with the
central government in 2006.
33

Local Voluntary Contribution:
Framework Agreement
Tintaya Antapaccay
To contribute to the Sustainable Development of Espinar province through social projects
and programmes.
• Infrastructure
• Education
• Agricultural and livestock development
• Tourism promotion
• Health
34

Local Voluntary Contribution: Framework
Agreement
Tintaya Antapaccay
• Signed on 3 Sep., 2003
between Tintaya Antapaccay
and Espinar authorities.
• 756 projects carried out.
• Investment: 169 million nuevos
soles by 2011
• Eight Espinar districts
benefitted.
1,934,309.00
1st
Contribution
6,715,145.48
2nd
Contribution
12,000,000.00
11,000,000.00
3rd
Contribution
4th
Contribution
6,446,280.99
In U.S. dollars
5th
Contribution
8,002,025.00
6th
Contribution
10,374,015.47
10,236,482.38
7th
Contribution
8th
Contribution
35

Tintaya Foundation
Non-profit private institution to promote Sustainable Development
• The Tintaya Foundation has implemented 833 projects since 2004 including its own projects and
on behalf of Framework Agreement (356 projects), Development Table and Xstrata Tintaya
• Xstrata contributes US $1.8m per annum in social projects via the Tintaya Foundation
• The Tintaya Foundation has strengthened the participation of civil society organisations in the
process to carry out projects and provides training before, during, and after carrying out projects
• It has implemented an evaluation, monitoring and follow-up plan for projects completed (expost
evaluation)
Health and
education
promotion
Technical
training and
business
advice for
young people
Research to
promote
natural
resources and
tourist
potential
Social
infrastructure
projects
36

Tintaya Foundation
Implemented more than 140 projects in 2011
• To contribute to the Sustainable Development of Espinar province through social
projects and programmes that will last beyond the date of closure of Tintaya
Antapaccay operations.
37

Las Bambas

Las Bambas: Social Investment
• Fuerabamba T’ikariy Wiñaypaq (Fuerabamba Flourishes Forever) Training and Development
Programme:
− Entrepreneurs in hospitality and cooking, sewing and knitting, bricklaying.
− Construction and heavy machinery maintenance.
− Computer skills, and others.
• Education programmes:
− Improvement of school classrooms, implementation of educational resource centres.
− Training workshops for local teachers
• Health programmes:
− Expansion of the Challhuahuacho Health Centre
39

Las Bambas: Social Investment
• Production projects:
Agricultural and livestock development , improved pastures, production capacity building, fry
breeding and trading, animal health programmes and agricultural mechanisation, community
dining rooms, etc.
• Capacity building:
− SWOT workshops – community development vision.
− Community Development Plans through a participatory process
40

FOSBAM Current Project Status
Las Bambas Social Fund
Status of Committed Projects
Projects Stage Amount US$ %
39 Carried Out 2005 - Nov 2011 18,888,559 38%
27 In Progress 27,898,315 56%
4 Ready to be Carried Out 3,357,351 7%
70 Total Investment US$ 50,144,225
41

PART 5
2011 Sustainability Report - Peru

2011 Sustainability Report:
South America Operations Division - Peru
• The Sustainability Report reflects our progress,
challenges and commitments: It compiles, assesses
and compares the policies, actions and results of our
economic, social and environmental management in
Tintaya Antapaccay and Las Bambas.
• It also gathers our stakeholders’ suggestions: We
present information about our relationships with all
our stakeholders.
• Our stakeholders contributed to improve our Report:
We organised a dialogue panel in Cusco and
another one in Lima to listen to our stakeholders‘
recommendations and improve our Report.
• The 2011 Sustainability Report includes 79
indicators, out of which 49 are core indicators, 30 are
additional indicators and 11 are indicators of the
Mining and Metals Sector Supplement.
43

2011 Sustainability Report:
South America Operations Division - Peru
• This sustainability report has been reviewed
by our company; by a third party, SASE; and by
the GRI, based on the criteria established by the
latter. As a result, we confirm that the South
America Operations Division - Peru 2011
Sustainability Report is Level:
A Self Declared
A Third Party Checked by SASE Institute
A GRI Checked
• The Sustainability Report includes information about
our management indicators. The A GRI-checked seal
confirms that our Sustainability Report complies with
including information on all core organisational profile
and overall performance indicators.
• It also reports specific information about the
mining/metal sector that the GRI includes in its
supplement for the industry
44

2011 Sustainability Report
Xstrata Copper
• To see other Xstrata Copper Sustainability Reports, please visit:
www.xstratacopper.com
45

Website
South America Operations Division - Peru
• Visit our website:
www.xstratacopperperu.pe
46

THANK YOU!!!