Minmetals Resources Limited 2011 Sustainability Report (PDF)

Material sustainability issuesp68 Minmetals Resources Limited’sshare pricep68 Volatility in commodity pricesp68 Acquisition and project investmentp70 Realising the full value of assetsp70 Product shipping and logisticsp71 Customer economic sustainabilityp71 Australian Government’sclean energy legislationp71 Major disruptive event impactsp72 Management reporting anddecision-makingp22 Workforce localisationp24 Talent attractionand retentionp25 Gender diversityp26 Training anddevelopmentp27 Workplace andcorporate culturep31 Safety andwellbeing ofour peoplep33 Contractorselectionp35 Aviation riskmanagementp35 Public interactionwith operationsOUR PEOPLEPERFORMANCESUSTAINING OUR ECONOMICWHATREALLYMATTERSHEALTH & SAFETYRESPECTINGOUR ENVIRONMENTWORKING WITH OURSTAKEHOLDERSp53 Water use and supplyp53 Wastewater and tailingsp56 Energy use andcarbon emissionsp58 Biodiversityp65 Environmental managementp40 Post-closure communityexpectationsp41 Government relationsp42 Human rightsp44 Community and regionaldevelopmentp48 Stakeholder relationshipsp48 Cultural heritage3

ABOUT MMGThe Minerals and Metals Group (MMG) of companies and their operations are owned by Minmetals ResourcesLimited (MMR), a mid-tier global resources company that mines, explores and develops base metal projectsglobally. MMR acquired MMG on 31 December 2010. Our majority shareholder, with 72% of shares, is ChinaMinmetals Corporation through its subsidiary company China Minmetals Non-Ferrous Metals Company Limited.While MMR is listed on the Hong Kong Stock Exchange, MMG’s executive management team and head officeare located in Melbourne, Australia.BELGIUMEUROPEASIACHINASOUTH KOREAJAPANAFRICAVIENTIANETHAILANDLAOSSEPONVIETNAMHONGKONGSOUTH-EAST ASIAMUTOSHIKINSEVEREJAKARTALUSAKAGOLDEN GROVEPERTHCENTURYAUSTRALIAPORT PIRIEDUGALD RIVERTOWNSVILLEMELBOURNETASMANIAAVEBURYROSEBERYKinsevere2012 acquisition ofAnvil Mining LimitedGOLDEN GROVE2011 PRODUCTIONZinc concentrate (t) 70,687Copper concentrate (t) 21,661HPM concentrate (t) 7,482REVENUE US$388.5MEBITUS$53.3MROSEBERY2011 PRODUCTIONZinc concentrate (t) 80,670Lead concentrate (t) 25,353Gold doré (oz) 12,163REVENUE US$272.5MEBITUS$86.8M4

OPERATIONS DEVELOPMENT PROJECTS SUSPENDED OPERATION ACTIVE EXPLORATION REGIONCORPORATE OFFICES EXPLORATION OFFICES SALESMMG is one of the world’s largest producers of zinc and a substantial producer of copper, lead, gold andsilver. We operate in Australia and Laos, have development projects in Australia and Canada, and significantexploration projects and partnerships in Australia, Asia, Africa and North America. In February 2012 thecompany acquired Anvil Mining Limited with assets in the Democratic Republic of Congo in Africa.HIGH LAKEIZOK LAKEVANCOUVERCANADANORTHAMERICAIZOK CORRIDORLOCATIONNunavut, CanadaTARGET METALSCopper, zinc, lead, silverSEPON2011 PRODUCTIONCopper cathode (t) 78,859Gold poured (oz) 74,484REVENUE US$816.9MEBITUS$471.3MDENVERCENTURY2011 PRODUCTIONZinc concentrate (t) 497,251Lead concentrate (t) 26,536REVENUE US$750.4MEBITUS$116.2MSOUTHAMERICADUGALD RIVERLOCATIONQueensland, AustraliaTARGET METALSLead, zinc, silver5

THE MINING CYCLEMining is about more than operating mine sites where we extract ore,process and sell it. While that is a big part of what we do, it is just oneof a number of stages that we need to manage in the mining cycle.1 EXPLORATIONExploration is a core growth driver for MMGunder a three-tiered strategy that involves minedistrict exploration, new discovery programsand project generation. Our mine districtexploration program takes place around oursuite of operations and development sites tofind opportunities to extend mine life. Currentlythis program involves exploration activitiesaround Sepon, Century, Golden Grove,Rosebery, Avebury and our projects in Canada.There are a number of new discovery programsin Australia, Asia and the Americas that areactively pursuing a pipeline of new ventureopportunities.2 PROJECT DEVELOPMENTProject development involves the study of explorationresults, mine design, environmental impacts andeconomics to determine the feasibility of developinga mineral deposit into an operating mine. MMG hastwo key development projects. In Australia, theDugald River project is one of the world’s largest andhighest grade undeveloped lead-zinc-silver deposits.The project’s Environmental Impact Statement (EIS)assessment and social impact report advised that theproject was suitable to proceed to the next stage ofthe approval process. Approval of the full EnvironmentalManagement Plan is expected around the middle of2012. In Canada, the Izok Corridor Project in Nunavutcomprises the Izok Lake and High Lake zinc andcopper deposits currently under a feasibility study.6

Social licenCe to operate > Our social licence to operate is essential in gaining and maintaining stakeholderapproval and regulatory permission. It is dependent on the responsible management of the environmental and socialimpacts of mining activities, from exploration through to post-closure rehabilitation and monitoring. We conductcommunity consultation and invest in community and regional development initiatives, local business development,education and training initiatives and sponsorships and donations for all sites, be they at exploration, developmentproject or operational stage.3 OPERATIONSMMG has four operational mines,Century, Golden Grove, Roseberyand Sepon, and recently addedthe Kinsevere mine through itsacquisition of Anvil Mining Limited.Each of these mines extracts,crushes and processes mineraldeposits to create a saleable product.4 ACTIVE CLOSUREAs a mine’s mineral reserves aredepleted care must be taken toplan for its closure. The activephase of closure, where areasare prepared for final closure andpossible relinquishment, includesrehabilitation, revegetation,decommissioning, decontamination,demolition, stakeholder engagementinvestigations, plus other activity.This phase will commence a numberof years prior to shutdown andcontinue with its most intensiveactivities for a number of yearsimmediately after productionshutdown. With Century mine’sclosure expected in 2016, planningis currently underway, to preparefor closure execution.5 PASSIVE CLOSUREAfter closure execution in the activeclosure phase, the site will moveinto a passive closure phase,involving monitoring and ongoingmaintenance, as well as activitiessuch as long-term water treatmentand establishing agriculture. Followingthis a formal approval by the relevantregulating authority is soughtindicating that the completion criteriafor the mine have been met to thesatisfaction of the authority andother relevant stakeholders.7

Sustainability performance –three-year goalsWith our material sustainability issues in mind, we have identified three-year sustainability goals and targets to 2014as part of our overarching corporate business planning process. As this is the first time we have integrated long-termgoals, we have also commenced reporting baseline data for progress tracking in future years.3-year Goals 3-year Targets baseline data FROM 2011Our PeopleDevelop workforceplans building capabilityand diversity.Cultivate leadership-inspiredteamwork, innovationand discretionary effort.Embrace the ‘MMG Way’.Health and SafetyAchieve a step improvementin health and safetyperformance.90% close-out of actions from staffdevelopment plans.Development plans and training needs analysisconducted on each site.A capability matrix for all operational staff. Systems, Applications, and Products in Data Processingsoftware SAP-based training and events managementsystem implemented across all sites to capturecapability matrix data for future measurement(except Sepon – not currently using the SAP system).100% implementation of diversity actions(See “Our People”).5% increase on employee perceptionsurvey engagement index rating.90% close-out on previous yearemployee perception action plan.Innovation rewarded through MMGinnovation awards.Code of conduct breaches actionedto agreed plan.

Our refined policy will provide better standards for ourpeople on anti-corruption, bribery and facilitation payments.In 2011, we became a supporter of the Extractive IndustriesTransparency Initiative (EITI) (www.eiti.org). The EITIaims to set a global standard for transparency in oil,gas and mining (the extractives sector). MMG supportsthe principle that natural resource wealth should bean important driver of a nation’s economic growth,sustainable development and poverty reduction. We areworking toward comprehensive disclosure of publicpayments across our business and we are an activeparticipant in regional initiatives (e.g. the ICMM’s study ofmining industry contributions to Laos, see page 16).MMG will participate fully in EITI processes in the countriesin which we operate.Details of our taxation and royalty payments made to theGovernment of Laos are available in our Annual Reportand the Centre for International Economics Report onthe Economic Impact of the Sepon Mine 2010.We contribute financially to the EITI through membershipof the ICMM.No political donations were made in 2011.Public policy initiativesIn 2011, we engaged indirectly, through our membershipand participation in various industry groups, in several publicpolicy initiatives related to our business. These included:» ICMM’s Resource Endowment Initiative study, “Utilizingmining and mineral resources to foster the sustainabledevelopment of the Lao PDR”;» Minerals Council of Australia (MCA) SustainableDevelopment Committee, which is currently chairedby MMG Chief Executive Officer Andrew Michelmore;» MCA’s advocacy on the Australian Government’sproposed carbon legislation;» Business Council of Australia’s Global EngagementTaskforce advocating policies that promote free trade.Mr Michelmore is currently a Taskforce member;» Queensland Resources Council, Tasmanian MineralsCouncil and West Australian Chamber of Energy andResources; and» International Zinc Association, to which Mr Michelmorewas appointed Chairman in September 2011, and theirpartnership with UNICEF’s Zinc Saves Kids health initiative.CASE STUDY: Century mine PROSECUTED for CAUSING environmental harmIn our 2009 Sustainability Report, we detailed a breachthat occurred in the Century mine concentrate pipelinethat transports concentrate in slurry form from ourCentury mine to the dewatering and port facility atKarumba on the Gulf of Carpentaria. The breachresulted in the discharge of approximately 750 cubicmetres of zinc and water slurry at a pastoral stationalong the pipeline’s route.MMG spent almost A$10 million on the incident responseand remediation works following the pipeline breachand subsequent release. Remediation activities includedthe removal of soil affected by the zinc concentrate slurryand rehabilitation at the site. Following the incident,Century expanded its inspection and monitoringprogram to include the use of a new conditionmonitoring technique to provide further certainty.In late 2010 following an investigation, the formerQueensland Department of Environment and ResourceManagement (DERM) brought charges against MMGCentury Limited (Century) in the Mount Isa MagistratesCourt, as a result of the incident. In March 2012,Century pleaded guilty to one charge of unlawfullycausing material environmental harm. In April it wasfined A$40,000 and ordered to pay the DERM’sinvestigation costs of A$5,000. No conviction wasrecorded. In addition, MMG Century undertook todonate A$40,000 to Southern Gulf Catchments Limited,a community-based organisation tasked with strategicand sustainable natural resource management, planningand implementation in the southern Gulf of Carpentariaregion of North West Queensland. Century mine’sprompt response to the incident, the amount spent onremediation, the cooperative approach and the earlyplea of guilty were some of the factors the Magistrateconsidered relevant in determining the sentence.We continue to work with the pastoralists impacted bythe event to consider how the initial response couldhave been better managed and improve the waypastoralists and others are notified and engaged aboutworks along the pipeline. We are also undertakinggrading works on a right of way and other works toaddress soil erosion at points along the pipeline corridor.In addition to the inspection and monitoring program,Century conducts maintenance along the pipeline duringthe dry season. Work will be conducted at various pointsalong the pipeline during 2012 as part of Century’sbroader infrastructure maintenance program, and toensure the concentrate pipeline is operated safely andreliably until the end of production. This program willinclude comprehensive updates to existing operatingand contingency plans to incorporate newly-availablebest-practice standards.13

OUR APPROACH CONTINUEDGovernanceWe are committed to maintaining a high standardof corporate governance practices through a qualityBoard of directors, internal controls, transparency andaccountability to all shareholders. Our Board-levelAudit, Remuneration, SHEC and Disclosure Committeesoversee their respective areas.Our major shareholder, China Minmetals Corporation,is a major Chinese metals and minerals company.Therefore, to maintain fair and ethical market transactions,all sales and agreements between MMG and ChinaMinmetals entities are conducted on an “arm’s-length”basis, under the Hong Kong Stock Exchange’s (HKSE)Connected Party Transactions laws. Further informationcan be found in the Corporate Governance statementof our Minmetals Resources Limited Annual Report.Century mine was subject to one incidence of legalaction with regard to its environmental managementin 2011 as detailed in the case study below.Internal auditOur internal audit function provides an independent,objective assurance and consulting activity designedto add value and improve the organisation’s operations.It focuses on a broad range of evaluation andimprovement activities, namely risk management,control and governance processes.An annual Internal Audit Plan is developed in conjunctionwith MMG’s senior management and approved by theAudit Committee. Protiviti, our outsourced provider ofinternal audit services, undertakes our auditing underthe guidance of MMG’s General Manager EnterpriseRisk. On a six-monthly basis, the Audit Committeereviews the outcomes of audits completed in the precedingsix months.Product stewardshipMMG’s product stewardship approach focuses on themanagement of our metal concentrates. Zinc, copperand lead concentrate is stored at, handled by andtransported in bulk from MMG sites to internationalcustomers via concentrate storage facilities, front-endloaders, road trucking, rail transport, slurry pipelines,conveyors, filters and dryers, ship-loaders, barges andbulk ship-carriers. Plant, equipment and operations varyfrom site to site depending on the level of technology,age and condition. There are also varying levels of dustsuppression and/or control systems in operation.In 2011, MMG reviewed the concentrate managementstandard that applies to all operations with the goal ofprotecting human health, the environment and businesscontinuity. As a result of this review, a new standardwas drafted for release during 2012, which aims toalign systems for product stewardship and ensure thatappropriate resources are in place at managed facilitiesto monitor and respond effectively to existing andemerging international trends and changing expectations.Risk managementThe effective management of risk is central to thecontinued growth, efficient management and ultimatesuccess of MMG’s business.Our risk management process is based on the internationalstandard for risk management, ISO 3100:2009, andinvolves achieving an appropriate balance betweenrealising opportunities for gains while minimising adverseimpacts. It is an integral part of our management practiceand corporate governance. The process is iterative,consisting of steps that, when undertaken in sequence,enable continuous improvement in both decision-makingand performance. These steps include establishing thecontext, identifying, analysing and evaluating the risksand developing a risk response. Throughout the riskmanagement process there is continuous communicationand consultation with stakeholders and monitoring andreview for any changes in risks, controls and responseplans. In 2011, our risk register was updated andmanagement accountability and response plans assigned.Working with a state-owned enterpriseOur ultimate controlling shareholder is China MinmetalsCorporation (71.56%). Public shareholders (28.44%)include global resources and investment funds. ChinaMinmetals Corporation is a Chinese state-owned enterprise.In order to ensure clear governance processes and protectthe rights of minority and independent shareholders, MMRadheres to the listing rules of the HKSE. These include:» Ensuring an appropriate balance between the numberof majority shareholders appointed directors to Boardpositions and independent Non-executive Directors.In 2011, the company welcomed two new Non-executiveDirectors to the MMR Board, Dr Peter Cassidy andMr Anthony Larkin;» The rules relating to connected party transactions; and» The requirements for disclosure of material information.14

FEATURE CASE STUDY:Making an impact on developmentand progress in LaosA highlight of 2011 was the publication inFebruary of a detailed external and comparativeassessment of MMG’s contribution to developmentin the Lao People’s Democratic Republic (PDR) overthe last decade.Following on from previous case studies in countriessuch as Tanzania, Chile and Ghana, the ICMM appliedits “Mining: Partnerships for Development Toolkit” toassess the impact of mining in the Lao PDR. The resultwas Utilizing mining and mineral resources to foster thesustainable development of the Lao PDR, the first-evernational economic and social assessment of large-scalemining’s contributions and impact.The study was undertaken as part of the ICMM’s ResourceEndowment and Mining Partnerships for Developmentinitiative, which supports member companies (such asMMG) to actively foster multi-stakeholder partnershipsfor development in the countries in which they operate.The research drew on a comprehensive range of dataand studies from both national and independent externalsources, including considering retrospective informationon the variety of current mining activity.Primarily it focused on the contributions of the twolargest mines in the country: MMG’s Lane Xang MineralsLimited (LXML) Sepon mine, the first major commercialprivate-sector operation established in Laos in 2002,and PanAust Ltd’s PBM Phu Kham gold and copper mine,which commenced production in 2008. The depth andquality of social and economic data provided by bothMMG and PanAust Ltd were highlighted by the authorsas reflective of commitments to sustainability.The report quantified significant direct and "flow-down”benefits, at both national and local levels, from themining operations. These were facilitated by successfulparallel national and regional government programs andgovernance measures that have encouraged both foreigndirect investment and regional development progress,while also controlling the macroeconomic challengesassociated with a surge in gross domestic product overthe past decade.In particular, this has resulted in avoidance of the “resourcecurse”, where, in many resource-rich countries withoutsuch adequate processes to temper investment activityeffects, local communities experience negative or negligibleimpacts from resource exploitation, while any wealthbenefits are concentrated at and confined to a restrictednational level.Mining has proven a significant contributor to the country’seconomy. Together with PanAust Ltd’s operation, Seponaccounts for over 90% of total national mining production.Nearly 1% of the national population is employed bythe mines.The assessment determined that the mining industryrepresents 80% of foreign direct investment, 45% oftotal exports, 12% of government revenues and 10%of national income.This contribution, through a direct revenue share dividend(10%), taxation, export earnings, and secondary servicesand salary tax contributions, has allowed the governmentto reduce foreign debt and build surpluses, consequentlyfacilitating regional and local development investmentand support.THE CONTRIBUTION OF MINING TO THE LAO PDRFOREIGN DIRECT INVESTMENT (FDI)Since 2003, large-scale mining has accounted for 80% of FDIEXPORTSIn 2008, 45% of total exports were fromlarge-scale miningGOVERNMENT REVENUEIn 2009, mineral taxes contributed 12%of total government revenuesNATIONAL INCOMELarge-scale mining is expectedto contribute around 10% p.a.to GDP over next 15 yearsEMPLOYMENTJobs related tolarge-scale minesprovide 5% of nonagriculturalactivitiesFOREIGN DIRECT INVESTMENT (FDI)Since 2003, large-scale mining has accounted for 80% of FDIEXPORTSIn 2008, 45% of total exports were fromlarge-scale miningGOVERNMENT REVENUEIn 2009, mineral taxes contributed 12%of total government revenuesNATIONAL INCOMELarge-scale mining is expectedto contribute around 10% p.a.to GDP over next 15 yearsEMPLOYMENTJobs related tolarge-scale minesprovide 5% of nonagriculturalactivitiesOn average, local family incomes near Sepon mine haverisen significantly as a result of mining employment.16

At a regional level, the report highlighted the followingSepon contributions for their long-lasting and positiveimpact on both Sepon employees and local stakeholders:» In just nine years of operation average incomes atSepon have increased seven-fold. The result of theseincreases in wealth is evidenced by changes in foodsecurity, improved housing and an increase in thenumber of motorbikes, mobile phones, refrigerators,water pumps and cars purchased. The number ofprivate bank accounts has also increased;» In 2010, Sepon employed 2,300 Lao people throughdirect employment, 1,600 indirectly and 9,750 peopleexternally by means of mine services demand. Personnelare predominantly local citizens;» In 2010, Sepon allocated a budgeted trainingexpenditure for employees of US$6,403,825;» In 2010, Sepon contributed US$412,044 to its SocialDevelopment Trust Fund; and» In 2007, Sepon was responsible for providing a totalincome of US$391,000 to Lao suppliers throughprocurement initiatives. This rose to US$2,217,394in 2011.The report credits both MMG and PanAust Ltd. withdedicated local community employment, investmentand development programs which have had, and arecontinuing to have, a measurable effect on increasesin living standards, through local enterprise evolutionand viability, water, sanitation and communicationsinfrastructure, education and health improvements,and fundamental self-sufficiency gains.There is, however, attention drawn in the report tosome important challenges. The land disturbance andenvironmental impact of mining is not insubstantialon local populations. Higher education attendance hasalso dropped in some areas as an opportunity cost ofpreferential local employment at the mines. The reportalso found that increased land use by the mines is notoffset by increases in jobs, and that the communityremains vulnerable to cut-backs in indirect mineProducing MMG safety uniforms.employment if economic conditions degrade, as wasthe case during 2008–09’s global financial crisis.The report authors highlight that further governmentreform, economic control measures and communityinvestment partnerships will support the mines’ ongoingsustainability contributions. These are fundamentallydriven through MMG’s operational planning and itsvision and commitment to being an industry leader incorporate, environmental and social responsibility.When launching the report MMG Chief Executive OfficerAndrew Michelmore said “The analysis is a very hearteningvalidation of a decade of significant efforts to delivertangible community and national benefits”.“We must leave an area better off than when we arrived– that is the challenge for all mining companies,” he said.The full draft of the ICMM’s report, Utilizing mining andmineral resources to foster the sustainable developmentof the Lao PDR, was presented in February 2011 at aworkshop in Vientiane attended by 150 representativesfrom national and provincial governments as well as theNational Assembly. The report can be read and downloadedat the ICMM and MMG websites.MINING'S contribution to the current account OF THE Lao PDR1,500Total exports (constant $m)Total dividends paid abroad ($m)Total imports of good and services ($m)Impact on current account balance ($m)Total debt servicing ($m)1,2009006003000-300-600200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202417

FEATURE CASE STUDY:Century mine and the Gulf CommunitiesMMG’s Century mine operates under the Gulf Communities Agreement, a unique tripartite commitmentbetween the mine, Queensland Government and four Traditional Owner groups – the Waanyi, Mingginda,Gkuthaarn and Kukatj which are all signatories.Known locally as the GCA, the agreement guides therelationship between the signatories and provides eachwith certain obligations and benefits. Highlights of theGCA are its focus on providing meaningful training,employment and business opportunities for localIndigenous people, compensation for eligible bodiesand cultural and environmental assurances.To assist Century to meet its obligations under the GCA,the mine has an on-site community relations team tomanage its Indigenous employment and communityengagement programs. To maintain close links with localcommunities the mine also has offices in Doomadgee,Mornington Island and Normanton.In 2011, a number of programs led to significant benefitsfor local and local Indigenous people and the Gulf region.These included:» More than 30 Indigenous employees gaining formalqualifications in heavy vehicle operations as part of amine-funded up-skilling program;» More than 30 young Indigenous people identifying asfrom local Traditional Owner groups graduating fromCentury’s renowned pre-employment program. Theserecruits took the total number of Indigenous apprenticesand trainees at Century to more than 75;» Century contributing more than A$2 million to bedistributed to local communities in accordance with theGCA. Of this, about A$1 million was provided to theAboriginal Development Benefits Trust (ADBT) to supportthe development of local Indigenous businesses. ABDThas 11 directors representing Traditional Owner groups,Gulf communities and Century;» The Riversleigh Open Day showcasing the successesof young Indigenous people undertaking pastoralstudies as part of Lawn Hill Riversleigh Pastoral HoldingCompany’s (LHRPHC) trainee program. Lawn Hill andRiversleigh Stations were acquired as part of the minedevelopment, with the Waanyi people now holding a51% share of LHRPHC and Century the remaining 49%;» Century continuing its partnership with the QueenslandReds. Queensland Reds players visited Doomadgee andMornington Island regularly during 2011 to encouragechildren to attend school, and promote healthy, activelifestyles;» Century providing additional funding to train some ofits experienced Indigenous employees to deliver thePutting Indigenous Youth in the Picture program toits trainees and apprentices. The program educatesyoung people about the legal consequences of socialissues such as texting and social networking, alcoholuse, violence and vehicle accidents;» Century providing financial and in-kind assistancethrough its sponsorship and community flights programto the value of more than A$450,000;» Dredging of the Karumba Port undertaken for theport’s shipping operations also benefited the localcattle export and other industries;» Local Indigenous employees Leontay Hookey, AaronJacob and Troy Kumsing being recognised for excellenceat the National Aborigines and Islanders Day ObservanceCommittee (NAIDOC) 2 Deadly Awards in Mount Isa;The Minister and Betty Kiernan MP at Century.18

» Century hosting the Queensland Minister for EmploymentSkills and Mining Stirling Hinchliffe and Member forMount Isa Betty Kiernan MP in September. The Ministerand Mrs Kiernan met with participants in the mine’sthird intake for the pre-employment program for 2011as well as some of Century’s longest-serving employees;» Former Community and Stakeholder RelationsManager Greg Scanlan was a keynote speaker atthe Queensland Government’s “Earn Learn Live!”Indigenous Employment Conference in October,the only resources industry representative asked toparticipate; and» Century continued its involvement in the North WestQueensland Indigenous Resource Industry Initiative(NWQIRII), a joint initiative between the Queenslandand Australian Governments and QueenslandResources Councils.While the potential to discover additional discrete-stylemineralisation near our Century mine is effectivelyexhausted, we continue to examine a number of near-mineinitiatives for identification of additional feed (ore) for theprocessing plant from smaller vein-style occurrences nearby.The viability of using Century infrastructure to exploit thephosphate deposits that occur on our tenements will befurther studied this year.However, the Century ore body is very discrete and wecurrently expect to cease mining and processing operationsof the current deposit in 2016. Century has been an importantcontributor to the economic and social fabric of the Gulf forover 15 years and we recognise the difficulties that closurerepresents for the local community. We have commenceddetailed mine closure assessment and planning as we aimto leave a positive and lasting legacy once operations cease.More information on the Century closure planning isavailable in the case study on page 41.Following is the speech delivered by Century CorporateSocial Responsibility Officer Corrie Richardson at adinner to celebrate the launch of China MinmetalsCorporation’s 2010 sustainability report:Corrie Richardson“I am Corrie Richardson,an Indigenous womanfrom the township ofNormanton in Queensland’sGulf of Carpentaria. I amdescendant from the Kukatjpeople, who are one of theTraditional Owner groupsparty to the GulfCommunities Agreement,the Native Title Agreementunder which MMG’sCentury mine operates.During my 13 years working at Century, I have seenmore than 300 local Indigenous people start or continuetheir careers at the mine.I have seen the opportunities that working at Centuryhave given these people. The skills they gained haveallowed them to improve their lifestyle, find work intheir own communities, or even gain employment atother operations.I’ve also seen some of our trainees and apprenticesrecognised for excellence within the industry. Theseare opportunities that they would not have hadwithout the mine.As we move towards the end of mine, we are movingour focus towards helping develop businesses that canprosper long after the mine closes. I am proud to workat Century and to be part of MMG.”Century trainees participate in the Putting Youth in the Picture program.19

Our approachWe strive for our people to be:» Employed under terms and conditions, that as aminimum, meet all relevant legal standards;» Provided with safe and healthy conditions of work;» Treated fairly in a workplace that values diversity,in terms of gender, age, race, religion, disability ornational origin;» Provided with a workplace that is free from harassment;» Provided with challenging and rewarding work;» Given access to information and knowledge neededto perform well;» Provided with training and development opportunitiesconsistent with the needs of the business;» Involved in open communication and regular feedbackon work performance and major changes;» Recognised when their actions support our vision andvalues; and» Confident to raise grievances that will be addressedin a timely and fair manner.We aim to deliver on each of these principles throughour core human resources activities and programs.PerformanceIn 2011, MMG employed a total of 8,513 people (employeesand contractors), an increase from the 7,253 employedin 2010. Of these, 3,197 were contractors, 1,628 werecasual employees, with the remaining full-time (3,660)and part-time (28) employees.In 2011, 5,763 of our employees and contractors wereemployed at Sepon, comprising 68% of MMG’s totalworkforce.At Century and Golden Grove, we employ local IndigenousAustralians (based on employees’ self-nomination asIndigenous). In 2011, they made up 24% of the Centuryworkforce and 3% of the Golden Grove workforce.Although we have Indigenous employees working atsuperintendent level, we recognise more work needs tobe done to raise the level of Indigenous representationat management levels. At Sepon, in 2011, 87% of theworkforce was Lao nationals, with the remaining 13%being expatriates from other parts of the world.People profile24211593322019319716283660TOTAL MMG 2010 TOTAL MMG 2011People profile BY SITE6000500040003000200010000CENTURYGOLDENGROVEAUSTRALIAN INDIGENOUS EMPLOYMENT RATIO(% OF TOTAL EMPLOYEES)24%21%CENTURYROSEBERY2.5% 3%28SEPONGOLDEN GROVEEXPLORATIONCorporate includes Dugald River project employeesContractorsCasualPart timeFull time20102011CORPORATE20102011SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE21

Talent attraction and retentionAttracting and retaining talented staff through offeringcompetitive conditions includes providing careerdevelopment opportunity, embracing diversity andencouraging the right company culture.In 2011, MMG’s total turnover rate reduced by 2.1percentage points, from 10.6% in 2010 to 8.5% in 2011,demonstrating an increase in employee tenure with us.TOTAL STAFF TURNOVER10.6%8.5%2010 2011This is a favourable comparison to the Australian miningindustry where turnover was 17.7% (according toresources industry turnover analysis work by MackieEmployer Solutions).In order to continue to attract, employ and retain peoplewith great skills and experience we are:» Aiming to develop a positive corporate culture;» Articulating our brand positioning;» Delivering competitive staff benefits and remuneration;» Offering flexible work arrangements where possible;» Offering training and development tailored to individualemployees’ needs;» Training our leaders in effective people management;» Responding to employee perception survey results; and» Supporting staff involvement in issues that concern them.CASE STUDY: Century employees ride for charityA team of enthusiastic cyclists from Century mine participated in a 780-kilometre charity bike ride to help raisemuch-needed funds for children in isolated communities throughout Far North Queensland.The Century team joined over 200 riders from across Australia who took part in the grueling ride throughout therainforests, tablelands and savannah lands of Queensland. The riders departed Cairns and arrived in Karumba oneweek later. All the Century team members successfully completed the ride and were within the front-runners oftheir riding pelotons.The team raised nearly A$10,000 leading up to the ride, a remarkable effort that will certainly benefit the “kids inthe bush”. The donations will go towards the Cairns School of the Air and other isolated schools within the Cairnsto Karumba region.The Century team: Glen LeLay, Tony Sullivan, Craig Jensen, Stacy Fifield and Greg Scanlan.24

Gender diversityAchieving a balance of male and female staff in the workforce at all levels, to enhance the cognitive diversity thatbalanced gender representation brings, is a broader mining sector challenge.Encouraging the balance of gender diversity across our business is a key focus. Although female representation asa proportion of the overall workforce has increased to 19%, up from 16% in 2010 (see the following chart), andin our corporate and exploration business units it is around 40%, the workforce at mining operation sites is onaverage well below 20% female. In addition, the majority of work roles held by females fall into the middle manager,specialist/supervisor and support staff categories (see the table below), with few working in the mill/mining/trade (6%).Remuneration balance is also an issue, with average female salaries being below those of our male employees acrossall work role categories.2011 gender diversity (% of female employees)20102011OUR PEOPLEHEALTH AND SAFETY44% 43%16% 19%34%34%13% 13% 13%11% 12% 11%Diversity, roles and remunerationWork Group% Male/Female2010% Male/Female20112011 Salary Average(A$ by Gender)We are undertaking the following initiatives to encourage gender diversity across our business:» Paid parental leave;» Leadership training for senior high-performing women;» Flexible working arrangements;» Health room in Melbourne that can be used as a parent room;» Unconscious bias workshops with senior leaders;» Gender pay analysis to ensure remuneration is comparative to skills and experience;» Contribution to the Australian Government Equal Opportunity for Women in the Workplace Authority report; and» Development of a diversity policy in 2012.2011AverageAgeFemale Male Female Male Female MaleSenior Executives/General Managers 5% 95% 11% 89% $336,000 $513,510 48Senior Managers 15% 85% 17% 83% $202,149 $232,100 45Middle Managers 18% 82% 25% 75% $142,478 $170,440 42Specialists/ Supervisors 23% 77% 22% 78% $116,919 $133,522 39Support Staff 53% 47% 56% 44% $80,078 $99,771 38Mill/Mining/ Trade 5% 95% 6% 94% $95,185 $113,139 40Total MMG 16% 84% 17% 83% $107,513 $132,178 40Includes all employees, but excludes casual staff, contractors, employees not based in Australia, and employees not paid in A$.14%CENTURY GOLDEN GROVE ROSEBERY SEPON EXPLORATION CORPORATE TOTAL MMGIncludes all employees, excluding contractors and Sepon casual staff.19%WORKING WITH OUR STAKEHOLDERSRESPECTING OUR ENVIRONMENTSUSTAINING OUR ECONOMIC PERFORMANCE25

CASE STUDY: Rosebery Young Trainee ProgramProviding an employment future for localschool leaversRecognising the limited local career paths availablefor school leavers, Rosebery initiated a trainee programfor young school leavers in the west-coast region ofTasmania. The program’s objective is to provide atwo-year traineeship for teenagers who have completedYear 10 or above, who are interested in entering themining industry, but do not have aspirations or thequalifications to proceed to a tertiary institution.The traineeships will result in a nationally recognisedqualification from Skills Institute, enabling graduatesto seek employment in mining and associated industriesacross Australia.Workplace and corporate cultureWe aim for our workplace and corporate culture tobe a reflection of our values of safety, integrity, actionand results.We are committed to building a business-wide workplaceand corporate culture based on high-performing teamsdelivering on our business plan.We utilise the Success Through Every Person (STEP)program to engage and develop our people so that theycan evolve personally and contribute to our Vision andMission. The STEP tools give us all a common MMGlanguage to ensure that everyone is clear on what anytask requires, able to identify critical issues and developsolutions and be aware of how diversity contributes tohigh-performing teams.MMG has also developed a linked approach called “Inflow”to support the development of its business culture. Theaim of the Inflow process is to ensure that all employeesare operating at a capability level that matches thecomplexity of their work and are not exposed to eitherstress or lack of role challenge.In order to encourage the desired MMG culture across allour sites, in 2011 we delivered a range of staff programsincluding training, communication and education. We alsoundertook a company-wide employee perception surveyand established “consultative forums” to help facilitateopen and transparent discussion with employees aroundkey issues that need to be addressed on site. A positiveincrease in the key engagement indicator of “Commitment”was recorded in 2011, and on average 86.8% ofThe program also provides the Rosebery mine withpotential enthusiastic young staff and the community withstable employment opportunities for its young people,some of whom will, ideally, stay to build local capacity.The program attracted some 47 applications, with a totalof 12 being selected: four trainees in the Mill, seventrainees in the Mine and one in Administration.Two of the trainees are fourth-generation local minerswith great grandfathers who had worked at the originalmine operations at Williamsford.The success of this initiative will be followed in 2012with a further six trainees being appointed to complementthe existing 12 success stories.Group-wide staff agreed that they are committedto MMG’s success. Additionally there was a steady risein positive perceptions about MMG’s impact on theenvironment and the reporting of safety incidenceswhen at work.MMG has commenced responding to the survey findings,and other feedback avenues, such as exit interviews,consultative committees, new employee feedback andmeetings with our business partners and suppliers.The consultative forums continue to act as strong conduitsbetween the workforce and the site management teams,ensuring that areas of improvement raised in the perceptionsurvey can be addressed.2012 challengesKey challenges for 2012 are to:» Continue to increase the localisation of the Seponworkforce, in particular in management roles;» Better identify the training requirements of our peopleand develop appropriate training and developmentopportunities to meet their needs;» Respond to and address the findings of the 2011employee perception survey;» Deploy a diversity survey to inform the development ofstrategy to improve diversity across the business; and» Launch the updated Code of Conduct policy andtraining program.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE27

HEALTH AND SAFETYWe adopt a continuous improvement approach to health and safety thatpromotes a zero-harm and fatality-free business.28Discussing safety procedures at Sepon.

Our approachIn 2011, we reviewed our core values and included safetyas a value. This was in response to feedback receivedacross the business that safety is a priority in everythingwe do, but we will not achieve our vision of zero harmand fatality-free unless we truly value the safety of ourpeople. Our four core values are now Safety, Integrity,Action and Results.We are improving our safety, health, environment andcommunity (SHEC) management system based onconsultation with our internal SHEC networks andleadership teams to drive a consistent approach acrossthe business. This system provides a framework consistingof a Group SHEC Strategy, SHEC Policy, SHEC standards,performance management support, building capabilityof our people, assurance and reporting.Injury Prevention PrinciplesOur Injury Prevention Principles help to guide thoughts,behaviours and decisions relating to health and safetyamong our employees. These principles are:» All incidents, injuries, fatalities and occupationalexposures are preventable;» No task is so important that it cannot be done safely;» Management is responsible for creating andmaintaining a safe work environment;» We are all responsible for preventing injuries toourselves and others;» Everyone is empowered to stop unsafe behaviour; and» We will promote off-the-job safety for our people.PerformanceA tragic fatality due to a vehicle accident that occurredat the Sepon site in early 2012 (outside the reportingperiod) has emphasised the importance of our safetyperformance. A contractor was killed at a constructionsite when a compactor (mobile equipment used for civilworks) experienced an uncontrolled movement. A fullinvestigation is being conducted into the incident and thefindings and lessons will be shared across the business.Our overall health and safety vision is a zero-harm andfatality-free workplace. As part of our priority to improvesafety and health performance, a major program waslaunched across the business in 2010 called “Stop andThink”. This program continued throughout 2011 andencourages the workforce to literally stop and thinkabout the consequences of their actions before theycommence a task.Safety incidentsThese statistics encompass our whole workforce,employees and contractors. Unfortunately, there was anincrease in the number of high fatality-potential incidents(any significant incident that has the potential to result ina single or multiple fatalities). This is a disappointing trend.As highlighted, a fatality occurred after the reportingperiod in early 2012. This has refocused our efforts onreducing the high fatality-potential risks in our business.As the graph on page 30 shows, our total recordableinjury frequency rate (TRIFR), per million hours worked,decreased during 2011 from 4.8 to 4.1 (15% reduction).Unfortunately, the year-end target of 3.5 was not achieved.The Group SHEC Strategy has been developed to improveoverall performance, including TRIFR. Improvements toTRIFR can only be achieved through a multi-disciplinedapproach, which includes rollout of improved, clearersafety and health standards from the corporate SHECteam, robust assurance processes to audit site performanceagainst the standards and on-going behavioural safetyprograms to understand what drives people to take risks.SAFETY INCIDENTS100806040200HIGH FATALITYPOTENTIAL INCIDENTSSIGNIFICANT INCIDENTSTOTAL RECORDABLEINJURIES2010LOST TIME INJURIES2011MEDICAL TREATMENT/RESTRICTED WORK INJURIESSUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE29

JANJANFEBFEBMARMARAPRAPRMAYMAYJUNJUNJULJULAUGAUGSEPSEPOCTOCTNOVNOVDECDECLTIFRTRIFRJUNMMG 2011 INJURY FREQUENCY RATE(12-MONTH MOVING AVERAGE PER MILLION HOURS)54321s/illnesses for required 0 indicator x 1,000,000)/total exposure hours.543210JULLTIFRAUG SEP OCT NOV DECTRIFR* Frequency rates are calculated by: Number of injuries/illnessesfor required indicator x 1,000,000/total exposure hours. Includesall employees and contractors.2011 SIGNIFICANT/HIGH FATALITY-POTENTIAL INCIDENTS BY SITEMELBOURNEHEAD OFFICE1%DUGALD RIVER4%SEPON41%GOLDEN GROVE22%ROSEBERY10%EXPLORATION1%CENTURY21%The lost time injury frequency rate (LTIFR) was 0.6, adisappointing increase compared with the 2010 LTIFR of0.4. There was no LTIFR target for 2011. Numbers for2010 LTIFR differ in the 2010 Sustainability Report due tothe reclassification of an injury after the reporting period.There were no fatalities in the reporting period. However,as discussed, our significant/high fatality-potentialincident frequency rate increased over the 12-monthperiod from 4.6 to 5.1 (10% increase), with 104 incidentsin 2011, compared to 98 in 2010. As shown by the chartabove, more than 41% of these incidents occurred atSepon, with vehicle incidents the leading high fatalitypotentialincident type. Unfortunately, as mentioned,after the reporting period there was a fatality at Sepon,involving mobile equipment, which has increased ourfocus on reducing vehicle risks.Vehicle safetyWe are working to reduce vehicle incidents through thedevelopment of a Fatal Risk Control Standard in 2012,which will include a set of expectations for systematicallyand consistently managing risks associated with managingvehicles and mobile equipment across all operations.This single standard will replace 10 separate standardsthat currently exist, significantly reducing the volumeof information to allow focus on critical controls.Release of the Fatal Risk Control Standard will include aninternal assessment exercise to allow each operation toevaluate their current level of alignment. It will also resultin the preparation of targeted site-based action plans toaddress gaps associated with any of the defined fatal riskareas, including vehicles and mobile equipment. One ofthe critical control areas for the effective management ofvehicles and mobile equipment is a traffic managementplan that is clearly understood by site.Occupational health and hygieneHealth and fitness for work is a key component of safetymanagement and injury prevention. We encourage allemployees and contractors to be fit for work both physicallyand mentally. This includes our standards on drug andalcohol use in the workplace, fatigue management andour general health and wellbeing. We offer healthy lifestylepromotions, gym memberships or facilities and a 24-houremployee assistance program providing confidentialcounselling services to employees and their families.Drug and alcohol testing is conducted at all sites andoffices and applied to all employees, contractors andvisitors. Employees must have a blood alcohol contentof 0.00 and be free of illicit drugs at all times. Positivereadings are assessed and may result in disciplinaryconsequences.Health surveillance is undertaken across all sites with theaim of protecting the health of our employees andcontractors. Substances including lead, cadmium andsilica are present in the ore bodies that we mine. Inaddition to this the use of reagents, chemicals and dieselfuel can create hazardous environments.We provide and regularly review personal protectiveequipment (PPE) and hygiene awareness programsappropriate to the area of work in the aim of minimisingand managing occupational exposure. We test the bloodlead levels of employees and in 2011 conducted 2,213blood lead tests. This includes programs at Century,30

Golden Grove and Rosebery for the full year, and Seponfor the second half of the year when blood leadmonitoring programs were implemented.Of these results 15 employees recorded blood lead levelsabove the action level (above 15 micrograms of lead perdecilitre of blood (µg/dL) for males and females not ofreproductive capacity, and above 5 µg/dL for females ofreproductive capacity). Further testing is undertaken onany employees recording levels above the action level,hygiene awareness sessions are provided and personalprotective equipment upgraded in an effort to maintainblood lead levels under the action level. These strategieswere applied to the 15 employees who were above theaction level.There were also nine blood lead levels recorded abovethe transfer level (above 30 µg/dL for males and femalesnot of reproductive capacity and above 10 µg/dL forwomen of reproductive capacity). Employees in thiscategory are transferred to alternative duties until bloodlead levels decrease.In 2011, we also undertook heavy metal urine testing;air monitoring for inhalable lead, cadmium, respirablecrystalline silica, diesel particulate matter and respirabledust; noise monitoring and hydration testing. Test workand management programs are tailored to eachoperational site’s operating environment.Safety and wellbeing of our peopleWe strive to provide a safe workplace and workingconditions, alongside programs for health and wellbeing.A proactive approach to safety is embraced as acorporate value.During 2011, Group Safety and Health focused on thefollowing actions to increase the health and safety ofour people, contractors and visitors:» Refined a list of health and safety standards andguidelines required in the SHEC management system;» Commissioned an independent review of the qualityof incident investigations for significant and highfatality-potential incidents;» Developed a training package and gap analysis toolto be rolled out in 2012 to address changes in theAustralian workplace health and safety legislation andthe supporting work health and safety regulations;» Developed a better understanding of the currentposition of occupational health and hygiene at sitesthrough formal assessments and continued to work ona number of occupational health and hygiene projects;» Commenced an independent fatigue managementreview; and» External aviation advisor completed 33 aviation audits.During 2012 our Group Safety, Health and Security keypriorities are:» Establishing the steering committee for the developmentof an upgraded incident management solution basedon a SAP IT platform undertaking incident managementdesign workshops with representatives from sites andbusiness units;» Renewing Incident Cause Analysis Method (ICAM)investigation training at all sites to improve incidentinvestigation skills across our business and enhance thequality of reporting;» Working with supply and contract management torefine SHEC requirements in our contractormanagement system;» Introducing the next phase of a behavioural safetyprogram across the business to drive a safety culturechange improvement;» Updating a number of safety standards, including:– Incident management standard and associatedguidelines;– Fatal risk control standard and supporting LifeSaving Rules;– Security standard;– Occupational hygiene standard and health-riskassessment guidelines;– SHEC management system standard and associatedguidelines; and an updated aviation standard;» Reviewing pre-employment medical processes tostandardise them across the business and ensureemployees are fit for work; and» Continuing to improve monitoring of occupationhealth exposures.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE31

CASE STUDY: Rosebery stops the jobFollowing a period of poor safety performance Rosebery mine employees demonstrated a renewedcommitment to ensuring that safety comes first by conducting a “Stop the Job” safety meeting.At 11am the entire mine workforce was withdrawn from the mine in an orderly manner. Gathered together, theystood in silence as they listened to the sounds of the mine and the concentrator being brought to a controlled stop.This memorable moment was intended to focus employees’ and contractors’ health and safety thinking in responseto a first quarter of higher-than-target injury incidents. The following messages were articulated by former RoseberyGeneral Manager John Lamb:» Stop and Think – every time, every task, every day;» It’s your choice – make the right one; and» Be just a little afraid – it could happen to you or your mate.Operations were safely resumed when employees returned to their workplaces at the conclusion of the Stop the Job.Rosebery's entire mine workforce gathered to “Stop the Job”.CASE STUDY: Security update at SeponRoving security patrols at Sepon help to reducefuel and malachite theft.Last year, Sepon reported on the security issues faced atthe site. By replacing the static security force at the sitewith six roving security patrols, each able to react to arange of security incursions, incidents of fuel andmalachite theft have been substantially reduced.Other security improvements have been made, inpart through implementing the recommendationsof a security audit of the site:» Introduction of two Senior Security Advisors;» Integration of the Provincial Police Taskforce intoSepon security management;» No longer using the military or District SecurityCommittee; and» Continued alignment with the ICMM Principleon Human Rights.A security check at Sepon mine.32

CASE STUDY: Unexploded Ordnance (UXO) clearance at SeponDuring the Vietnam War of the 1960s and 70s, muchof the US Air Force bombing of Laos was concentratedat the intersection of the Ho Chi Minh Trail inSavannakhet Province. This is where MMG’s Seponmine now operates. Consequently, Sepon runs acomprehensive unexploded ordnance (UXO)search and clearance process which precedesmining area expansion.The program employs 389 permanent staff, all but 11being local Lao nationals, including local village chiefsand deputy chiefs. The work is staged and involvesvegetation cutting and preparatory clearance, electronicsearch and detection, digging and removal, supervisionand office data processing and administration.The UXO clearance team currently searches approximately1,000 hectares per year, and clears approximately500 hectares per year. More than 80,000 unexplodedmunitions have been removed in the last 15 years.The UXO clearance process is in place primarily to allowmining operations to proceed, but there are somesecondary community benefits. Aside from direct localemployment, on-the-job-training transfers knowledgeabout UXO safety into the community. Also, surroundingland and access roads through the district cleared formine exploration or transport become safe for lateruse by the community. The UXO search and clearanceprocess also finds archaeological and cultural heritageitems, which are then logged as part of Sepon’s culturalheritage management program.Contractor selectionContractors make up a significant part of the workforceand are regarded as MMG’s responsibility on-site, henceselection of partners with a good safety culture, preparedto implement best-practice safety management, is animportant consideration in the selection process. Workingwith contractors to implement safety management is animportant element of our safety strategy.We monitor health and safety incidents relating tocontractors on our sites and contractor safety incidentsare recorded in our safety statistics. Contractor safetyat some sites, in particular Sepon, has arisen as an issue.We seek to include contractors in our safety cultureand influence them to implement safe procedures by:» Uniform implementation of health and safetyrequirements for all persons on our sites;» Enforcing safety inductions and personal protectiveequipment requirements for our people, contractorsand visitors to our sites;UXO clearance at Sepon.» Embedding health and safety requirements in ourcontract documents; and» Working with our contractors to develop their healthand safety understanding, processes and procedures.Sourcing skilled labour is a challenge for the miningindustry and contractors are just as challenged as miningcompanies to find the right people with the right skillset for the right job. This skills shortage has resulted ina reduction in the years of experience of trades people,which demands rigorous contractor management systems.MMG respects this challenge and will be reviewing itscontractor management system during 2012 to improvepre-selection criteria. Particular focus will be on theincreased management of supervision and training needsthat this less-experienced contractor workforce requires.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE33

CASE STUDY: Century and Tropical North Queensland Technical and Further Education (TAFE)working together to improve safetyWith the graduation of the first three participantsfrom a hydraulic hose safety course, Century andTropical North Queensland TAFE are on the way toovercoming one of the mining industry’s biggestsafety hazards.Century and Tropical North Queensland TAFE partneredto develop a course that equips tradespeople with theskills and knowledge to safely use, repair and manufacturehydraulic hoses, considered among the most dangerouspieces of equipment in any workshop. Fluid injectioninjuries can cause serious harm or even death.While all tradespeople receive informal training in hydraulichose management and use during their apprenticeships,a specific, comprehensive course has not been available.Furthermore, the new course is based on the MechanicalDesign Guidelines 41 (MDG 41), considered to be thebest-practice industry standard for hydraulic hose safety.Former Century General Manager Karl Spaleck said thatthe first graduates were just three of 72 from the mine’smaintenance workshop participating in the course.“We are incredibly proud of our first graduates, TrevorHartwell, Dean Smith and Josh Body. They have workedhard to complete this course and are leading the wayfor many other tradespeople at Century.“I am also particularly pleased that Josh is one ofour first graduates. Josh joined Century early this yearthrough our Indigenous pre-employment programand is our first hose technician trainee.”Josh said that the qualification, along with his experienceat Century, provided a strong foundation for the future.“I’ve learnt a lot through my training and mentoringfrom one of our experienced technicians. I’m keen tokeep learning and see where else this takes me.”In addition to working with Century to developthis pioneering course, Tropical North QueenslandTAFE built an excavation simulator to allow courseparticipants to understand, energise and demobilisehydraulic circuits safely.“After consultation between MMG and Tropical NorthQueensland TAFE, the program was designed andwill be delivered in such a way as to cover all aspectsrelating to MDG 41 for fluid power safety at mines.“This is an excellent example of how tailored trainingcan be designed on-site to meet the emerging needsof companies operating in the resources sector,”Tropical North Queensland TAFE Institute DirectorJoann Pyne said.Mr Spaleck said that the hydraulic hose safety coursewas something that the resources industry should takenotice of. “Our focus should always be on looking atways to reduce the potential for injuries and incidents.“By teaching participants how to work in adherencewith MDG 41, we are giving our people the tools tokeep themselves and their workmates safe whileworking with hydraulic hoses.”Century tradespeople undergo anew hydraulic hose training course.34

WORKING WITH OURSTAKEHOLDERSWe aim to secure MMG’s social licence to operate through strongand responsive relationships.36The Sepon Community Water Project installed tap stands in 12 villages.

Our approachWe are refining our understanding of stakeholder relationsand community development and our approach to socialinvestment, to maintain our social licence to operatefor the long term. This will include drawing togetherstakeholder relationships into a Reputation ManagementPlan and the development of a community relationsstrategy and management system in 2012, which is acomponent of the Group SHEC Strategy.We aim to secure MMG’s social licence to operate throughstrong and responsive relationships, and sustainablepartnerships and social performance, and also to fosterself-sustaining and healthy communities beyond the lifeof our mines.To this end, we have already started work on redevelopingour stakeholder engagement standard. We are alsobuilding trusting relationships by engaging clearly, openlyand honestly with our host communities and other keystakeholders.Our social licence to operateMaintaining our social licence to operate will depend onhow we engage with our stakeholders. It will also dependon the investments that we make which benefit ourcommunities, and therefore, indirectly, our company.Our social investment activity must consist of measurableand sustainable contributions to local communities andbroader society. This is often through partnerships withgovernment and non-governmental organisations (NGOs)to support local business development and educational,employment and health programs.In determining our social investment activity, we rely onthree things:1. Baseline studies and social impact assessment andmanagement, that is, health and safety impacts, traffic,noise, dust, environmental disturbance, quality of lifeand economic impacts;2. Understanding societal issues directly or indirectlyrelated to our operations, that is, health and educationstandards, infrastructure, corruption, security, conflict,revenue transparency, human rights and poverty; and3. Direct social benefits and opportunities for localcommunities and broader society to benefit fromoperations, that is, jobs and local suppliers, infrastructuredevelopments, spend in local economy, taxesand royalties.Community relationsOur community relations strategy and managementsystem will include a vision, mission, policies, standards,guidelines, tools and resources, self-assessment andgap closure, building capacity within our teams andundertaking external reviews and audits. Our aim isfor this comprehensive system to progress us towardssustainable communities and business and enhanceour social licence to operate.Key stakeholdersWe manage our relationships with stakeholders on anindividual basis. Responsibility for this lies with eachoperational site and functional manager. In 2012, weaim to bring these strategies under the umbrella of aReputation Management Plan, identified as a key workprogram in our business planning process. The plan willincorporate government, investor and external stakeholderrelations strategies, as well as brand management andcorporate positioning.RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLEGeneral Manager Queensland Operations Mark Adams and Doug Bruce, Chairman of Kalkadoon Community,celebrate Traditional Ownership at Dugald River during a ‘Welcome to Country’ ceremony.37SUSTAINING OUR ECONOMIC PERFORMANCE

Below is a matrix of our current broad stakeholder groups, their areas of interest and our engagement strategies,including those pursued in 2011:Stakeholder Stakeholder Groups Areas of Interest Engagement StrategiesEmployeesCommunitiesSuppliersGovernmentMMG employeesand contractors at:» Mine sites;» Development projects;» Exploration projects;and» All offices includinghead group officein Melbourne.» Host and regionalcommunities; and» Local villages andtowns near ouroperations.» Businesses from whichto purchase productsand services.» Regulators andgovernment authoritieswith responsibilities forthe areas where weoperate; and» Local, state andfederal governmentin countries includingAustralia, Lao PDRand Canada.Staff safety and wellbeing – safetymanagement and performance.Sustaining our economic performance –business strategy.Talent attraction and retention – valuesand behaviours, working conditions, workplans, remuneration and benefits, careeropportunities.Diversity – equal opportunity.Post-closure community expectationsand community and regional development– impacts on local communities, communityinvestment and development, localamenity and housing.Stakeholder relationships – local businesssupport.Environmental management andcompliance – environmental impactsand management.Public interaction with operations –health and safety impacts.Economic sustainability – future financialviability.Community and regional development –sutainable employment post mine life.Sustaining our economic performance –economic security of the business, supplyopportunities, payment processes.Contractor selection – health and safety,contractor management procedures,supplier contractual conditions.Government relations – compliance withpermits and licences, social policy andfiscal regimes applicable to the resourcessector.Community and regional development –engagement with host and localcommunities, community investmentand development, market access.Environmental management andcompliance – environmental impactmanagement, product stewardship.» Safety meetings;» Shift change meetings;» Management and CEOpresentations;» Emailed and writtenupdates;» Corporate and individualsite intranets;» Quarterly employeemagazine;» Cultural and peopledevelopment programsand training; and» Annual employeeperception survey.» Community investmentprojects;» Quarterly and monthlynewsletters;» Meetings;» Written communications;and» Local media.» Tender and contractdocuments;» Direct communications;and» Induction and training.» Statutory and licencereporting, regularmeetings; and» Written communication.38

Stakeholder Stakeholder Groups Areas of Interest Engagement StrategiesInvestorsNongovernmentorganisationsMediaIndustry» Retail investors inHong Kong;» Global institutionalinvestors;» Research analysts;» Brokers;» Stock commentators;and» China MinmetalsCorporation (majorityshareholder).» Non-governmentorganisations; and» Special interest groups.» Local and regionalmedia in the areas ofour operations; and» Finance and resourcesmedia internationally.» Other miningbusinesses;» Industry associations;and» University andtechnical trainingproviders.MMG share price – earnings andproduction results, share priceperformance, funding arrangements,access to business information.Acquisition investment – projectannouncements, merger andacquisition programs.Realising full value of leases – resourcesand reserve, mine life, business strategy.Management decision-making –governance, risk management,Board composition and operation.Resource nationalisation.Community and regional development –impacts on local communities, communityinvestment and development, communityhealth, local infrastructure developmentand investment.Public interaction with operations –interactions with local communities.Human rights.Bribery and facilitation payments.Workforce localisation.Environmental management andcompliance – environmental impactsand management.Post-closure community expectations.Management decision-making –governance, risk management, Boardcomposition and operation.Potential for interest in all areas ofmaterial issues, particularly those ofcurrent interest to other stakeholders.MMG share price – earnings andproduction results, share priceperformance against industry peers.Acquisition investment – projectannouncements, merger and acquisitionprograms.Management decision-making –governance, risk management, Boardcomposition and operation.Stakeholder relationships and governmentrelations – support for industry initiatives,involvement in industry forums, supportfor industry-specific training anddevelopment.» Announcements to theHong Kong StockExchange in compliancewith Listing Rules;» Quarterly productionand exploration results;» Annual resources andreserves statement;» Annual and Interim Reports;» Annual investor roadshow;» Telephone/emailcorrespondence; and» Monthly managementreports to majorityshareholder andBoard reports.» Sustainability report;» Meetings;» Media releases;» Website content; and» Site visits.» Media releases, website;and» Media tours, interviews.» Membership ofinternational, national andregional industry groups;» Representation onexecutive and workinggroup committees;» Sustainability reportingagainst GRI and ICMMbenchmarks; and» Sponsorship andsupport of technicaltraining institutionsand organisations.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE39

PerformanceThe graph below provides a breakdown of our socialinvestment across our local host communities in anumber of different investment areas. In 2011, a totalof A$11,326,767 (approximately 2% of net profitafter tax) was invested in our local host communities,with nearly half of this sum going into local (non-staff)training and education initiatives. This was a significantincrease on 2010 investment and demonstrates ourcontinued commitment to invest in the developmentof our communities.Post-closure community expectationsWe engage local communities to help build their futurebeyond mine closure, including developing sustainablelocal economies, land rehabilitation and maintenanceof the former mine site.Responsibility for our mining sites reaches beyond extractionoperations, to include closure, care and maintenance, andrehabilitation. Consideration of ongoing host communityimpacts post-closure, and the local financial impacts ofclosure itself, are important for our long-term strategy andplanning. We work with our host communities to developsustainable economies aside from our mine operationsand to engage with them in closure planning.Consultation on a draft multidisciplinary and risk-basedclosure standard commenced in 2011, and is expectedto be finalised in 2012. A business-wide Closure SteeringCommittee was also established with endorsement fromthe Executive Committee. The committee has thefollowing objectives:» Promote a multidisciplinary approach to ensure thatclosure is consistently managed across the entireMMG project lifecycle;SOCIAL INVESTMENT IN 2011$14,280$2,450,194$1,351,428$272,106$1,064,481$2,241,246$5,150,457$35,573$386,658$2,939,740 $1,701,644Capacity buildingCompensationDonationsSponsorshipsEducation and trainingLocal business developmentinitiativesCommunity developmentinitiatives2010 TOTAL 2011 TOTALNote: In 2010, compensationdata were not included in socialinvestment, and donations andsponsorships were combined.Compensation comprises paymentfor land acquisition.» Improve the governance and communication of closureactivities across our operations to ensure that lessonsare shared and closure risks are actively minimisedduring mine life;» Provide an integrated body that takes “carriage” for theclosure standard beyond safety, health and environment;» Actively manage provisions and research anddevelopment; and» Focus on closure planning at Century as a priority, witha mine life to approximately 2016.Mine closure planning includes landform design andrehabilitation. During 2012, we plan to review and updateour rehabilitation management standard to align withthe ICMM Principles and provide specific direction onrehabilitation expectations.During 2011, a Legacy Risk Management Frameworkwas endorsed by the Board SHEC Committee and willbe driven by a Corporate Legacy Risk Committee to:» Establish objectives for the management of legacyrisks (e.g. minimise liabilities, enhance reputationand reduce demands on operating sites' resources);» Provide triggers for the identification of new legacyrisks as the business grows;» Provide continuity for the ongoing management oflegacy risks;» Develop an exit strategy for those legacy risks thatare not generating value and/or revenue;» Implement management plans for legacy sites that havea strategic business objective (i.e. exploration); and» Adequately quantify the legacy risk and their associatedprovisions.MMG recognises that if legacy risks are not appropriatelymanaged there may be:» Negative impacts on environment and public health;» Exposure to legal liability or financial loss in the form ofa statutory liability to remediate or otherwise clean uplegacy sites, or claims by third parties alleging propertydamage or personal injury;» Impact on the reputation of MMG in local communitiesand/or more broadly;» Continued impacts to the bottom line, where financialprovision for known legacy risk must continue;» Continued reaction rather than pro-active initiative andawareness of potential risks; and» Delays in future development approvals until regulatorsare satisfied that surrounding legacy sites are beingmanaged effectively.Note: In 2010, compensation data was not included in social investment,and donations and sponsorships were combined. Compensation comprises40 payment for land acquisition.

CASE STUDY: Century mine closure planningWith a mine life to approximately 2016, mine closureplanning at Century is now a key focus. A goal forthe Century business plan in 2012 is to develop a mineclosure strategy, including reduction of the waste rockimpact issues associated with the site.To support the business plan, the Century ClosureManagement Program will focus on developing aworkforce retention plan and communicating thehuman resource closure strategy to the workforce.It will also cover rehabilitation planning, defining finallandforms, and investigating contaminated sites atKarumba and Lawn Hill.Our primary closure objective is full relinquishmentof mining leases with closure visions as follows:» In 100 years’ time people in the Lower Gulf willvalue Century’s contributions and legacies;» We will leave behind a safe, sustainable environmentwith enduring benefits and minimal environmentalharm; and» We will manage closure risk in a proactive mannerusing real data to make decisions.To support closure planning, the following managementprocesses are in place:» A multidisciplinary Century Mine Closure WorkingGroup;» Closure liability estimate model based on the preferredclosure option; and» Establishment of a Closure Balanced Scorecard tomonitor progress against closure-planning activities.MMG is planning for the Century's active closure phase,where areas are prepared for final closure and possiblerelinquishment including capping of tailings managementfacilities within seven years. The passive phases of closureimmediately follow the closure execution phase and willinvolve monitoring and ongoing maintenance, as wellas activities such as long-term water treatment. MMGintends that strategic assets such as the port facilitieswill be divested or sub-leased for beneficial reuses.We have committed to undertaking extensive consultationwith traditional owners, local communities and otherstakeholders to ensure that Century leaves a legacy ofbenefits across the Gulf region. We also recognise theimmediate impact that the mine’s closure will have on thelocal community with the sudden loss of employment,local business opportunities, and charter flights in theGulf area. To this end, a communications and consultationplan is being developed which will include awarenesssessions and consultation and planning workshopswith key local stakeholders.Government relationsWe develop our relationships with the governments of thecountries and states in which we operate to address localissues, contribute to what is important to them and buildpartnership opportunities. Understanding the priorities ofgovernments, in particular when moving into a new countryfor the first time, is central to creating a successful operation.MMG works to ensure that government representativesare informed of our activities and operations. We maintainrelationships with local, state or regional and nationalgovernments in the areas where we have operating mines,development and exploration projects. In Queensland wehave a tripartite agreement with the government and localNative Title holders called the Gulf Communities Agreementunder which the Century mine is operated. In Laos we arejoint owners of the Sepon mine with the Government ofLaos, which holds a 10% equity investment in the operation.Each of our mines is developing a stakeholder engagementand government relations plan that will aim to buildawareness of operations and recognition of the sites’economic and social contributions at a local, state andnational level.CASE STUDY: Flood response update“I was shocked by the impact of the flooding,” saidMMG Chief Executive Officer Andrew Michelmore.Sepon presented a cheque for US$30 million to the LaoGovernment on 28 November 2011, following a requestfor early payment of taxes to help the government manageits financial response to heavy flooding which affectedparts of Laos in 2011. The government estimated the costof the flood damage to be approximately US$140million. The advance tax payment was an instalment ofthe mine’s expected profit tax payment for 2011,scheduled to be paid in March 2012.MMG Chief Executive Officer Andrew Michelmore visitedLaos and extended our support to those impacted by thefloods. Mr Michelmore met with Minister of the Ministryof Energy and Mines Mr Soulivong Daravong on his visit.“The floods affected communities close to Sepon mine.In addition to the advance payment, we have provided atotal of over US$100,000 in donations and other assistancefor the floods through the authorities in Vientiane,Savannakhet and Vilabouly,” said Mr Michelmore.MMG Chief Executive Officer AndrewMichelmore presenting the early taxpayment to Minister of Energy andMines Mr Soulivong Daravong.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE41

Human rightsWe respect fundamental human rights and cultures,customs and values in our dealings with employees andothers who are affected by our activities.Principle 3 of the ICMM 10 Sustainable DevelopmentPrinciples relates to human rights. We strive to addresshuman rights issues through our people commitments,stakeholder engagement and relations, community andregional development programs and investment.As part of our ICMM alignment program, we haverecognised a need to further align our policies, principlesand standards with Principle 3, and this is being pursuedin 2012.Particularly, following the acquisition of Anvil MiningLimited, we have the opportunity to incorporateappropriate standards, experiences and approaches tohuman rights management into any integrated companywideapproach during 2012.Land rights and resettlementManaging the impacts of our activities on our hostcommunities, their homes and land through effectiveland management, and where appropriate resettlement,is an important element of managing human rights. Noresettlements occurred in relation to our sites within thereporting period.In 2011, a compensation rate review was conducted atSepon. The review was led by a representative from theLaos National Land Management Office and incorporateda review of updated laws surrounding compensation andland management. The review resulted in new rates andconditions for compensation.Community complaints managementWe are developing formal grievance systems at all sites,including for our exploration activities, to register,investigate and resolve community complaints. In 2011,37 grievances were recorded, the majority in relation torequests for compensation for unauthorised damage tovillage land and crops.CASE STUDY: Community development initiatives in LaosSepon aims to engage and empower the community to lead their own development.Sepon facilitates the community’s participation in mining projects and planning for their independent future throughproviding local employment and, where possible, using community business to provide mine-related services. This, andinitiatives such as the Village Development Funds, aim to ensure that local people have enduring livelihoods.Village Development FundsThe Village Development Funds (VDFs), which aresmall annual grants of up to $15,000 from Seponto selected host community villages, aim to addressthe following challenges:» Localised ownership: host communities chooseand maintain their own projects;» Capacity building: elected local village leaders learn toidentify and administer development projects themselves,independent of outside expertise;» Providing alternatives: developing other livelihoodoptions for host communities whose traditional onesare affected by our activities; and» Partnership/participation: the mine chooses to limititself to a facilitation role, spending significant timeinteracting and listening to villagers’ needs and wants.This helps to build the relationship and trust, withoutcreating villagers’ dependency on the mine.Villages are guided to set up a VDF committeerepresenting a diversity of village interests, and how touse this committee to make decisions and implementdevelopment projects in a transparent and accountableway. Projects must benefit the entire village, and haveincluded latrines, fish ponds, village meeting houses,improved electricity supply and a motor vehicle-free roadthat provides children with a safe route to school. Theyhave an economic value to the individual village – eitherimmediately, in the case of the fish ponds – or over time,in the case of an improved electricity supply that willenable income-generating activities to be conductedafter nightfall.At a broader level, the skills learnt by communitymembers, such as inclusive decision-making, financialmanagement and project monitoring, will assist eachcommunity to maximise economic opportunities in thefuture. Over time, as the VDF scheme is designed torepeat annually, it should have lasting economic benefitas the communities learn to prioritise needs, plan howto use limited resources and manage their finances. Theeconomic benefit is likely to increase in the future ascommunities begin to choose non-infrastructure projects,such as business training, education and agriculturalimprovements.VDFs were provided to 13 villages in 2011, with increasesin funds and recipients expected in 2012. The success ofthe funds has been evident from recent village appreciation.One village suggested progressing beyond infrastructureprovision towards investment in activities that “stay withus forever”.Continues42

Community development initiatives in Laos continued“We felt that we are the owners of this project,” addedMr Bounnoi Soubouly, a fellow resident of the village.“The VDFs have established a mechanism that worksdirectly with those most affected by the mine, in aparticipatory way, using the development principleof people being able to decide on their own destiny,”said Sepon’s Superintendent for CommunityDevelopment Luke Stephens.“The variety of projects chosen by the villages illustrateshow their priorities can differ.”Mrs Pi Mixay of Namalu village, where the communitychose to build a meeting house that would allow them tomeet in all weather, said “I am very proud that I tookpart in the decision-making. In the past I didn’t havea chance like this.”Sepon Trust Fund updateThe 2011 Trust Fund projects, part of the much largercommunity development spend, included bridgeand road construction, training for governmenthealth staff and improvements for local schools.All 53 projects planned for 2011 were completed.Standards were also developed for different types ofinfrastructure projects in relation to size, quality and cost.These standards were approved by the districtgovernment, and in 2012, Sepon will move to jointevaluation of projects with the government. Plans forrepresentation of all 13 villages directly affected bymining activities, rather than the six villages currentlyrepresented, will better facilitate the joint decisionmakingand take village needs into account.Sepon Village microfinance updateIf people are able to save and borrow money, andaccess support for small business development,they can consider more livelihood options andimprove their quality of life.Our microfinance initiative, extended to 2015, providesaccess to credit and leads to greater economic activitylocally. Explaining the concept of paying interest onsavings is one task facing German development agency,GIZ, who, partnering with MMG, is expanding access tofinance in 38 rural villages in the district. Some communitymembers have proved reluctant to save money in anysort of fund. Some did not trust such a savings system,while the concept of paying interest was completelynew to others.“This is a good example of how private and publicpartners can benefit from working together,” said KlausProchaska of GIZ. “MMG wants to draw on our expertiseto help lay the groundwork for viable livelihoods thatassist villages now and into the future without beingdependent on the mine. GIZ wants to expand access tofinance for poor communities in Laos. We firmly believethat successful development cooperation needs privatesectorinvolvement,” he said.RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLEA community planning meeting in progress.A resident of Ban Latdeng Noiduring a planning meeting.SUSTAINING OUR ECONOMIC PERFORMANCE43

Community and regional developmentWe aim to increase the strength and effectiveness ofcommunities, improve people’s quality of life, and enablepeople to participate in decision-making to achievegreater long-term control over their lives. Our sociallicence to operate depends on us getting this right.We aim to support the development of our operations’host communities. We have adopted the ICMM definitionof community development:Community development is the process of increasing thestrength and effectiveness of communities, improvingpeople’s quality of life, and enabling people to participatein decision making to achieve greater long-term controlover their lives. Sustainable community developmentprograms are those that contribute to the long-termstrengthening of community viability … communitysustainability can be supported by mining practices thathelp convert one local asset, non-renewable naturalresource capital, into another local asset, sustainablehuman and social capital.We strive to achieve community development througheffective social investment, tailored to the needs of thecommunities around each of our sites.We recognise the need to move from philanthropicdonations towards using our financial investments tosupport sustainable growth initiatives. Our communityinvestment programs aim to build stronger relationshipswith our stakeholders and enable greater participation oflocal communities in their own development. However,against this we must ensure that we have a clear socialinvestment strategy supported by management systemsto prevent reactionary responses to stakeholder issues orcreate a dependency culture in our host communities.CASE STUDY: MMG Golden Grove launches an Education Engagement ProgramIn 2011, we launched an Education Engagement Program at Golden Grove designed to support and encouragemid-west Western Australian students in their educational pursuits. The program includes various scholarshipsand vocational training, site visits and community awards programs for Geraldton Secondary School students.MMG worked closely with the local high schools and tertiary institutions to develop the program criteria andidentify appropriate students to receive awards and participate in site visits.Testimony and feedback to date have been exceptionally positive, with many respondents believing the awards willgo a long way to encouraging students in their educational pursuits while also providing a better understandingof Golden Grove’s operations and future employment opportunities.CASE STUDY: Bringing electricity to 900 local families at SeponSepon has given US$300,000 towards the cost ofbringing electricity to more than 800 families ineight villages in the Vilabouly district.The power line construction project, a governmentinitiative, will cost US$1 million in total and is expectedto take 18 months to complete. At the official openingceremony for the project on 5 March 2011 in Namkhipvillage, the Minister of Planning and Investment H.E.Dr Sinlavong Khoutphaythoun thanked Sepon for itsfinancial contribution to the project. Speaking afterthe event, Sepon Director Mr Saman Aneka said thatin this case MMG was supporting infrastructuredevelopment in communities that are not directlyaffected by mining activities. “This is an expressionof the company’s commitment to supporting thedevelopment of Vilabouly, one of the 47 poorest districtsin the country,” he said. The eight villages to benefitfrom the new project all lie along the road betweenKateb and Phadang, some 20 to 30 kilometres fromcurrent mining operations.Opening the project.44

CASE STUDY: Land access impacts Sepon’s communitiesTo continue mining activities at Sepon, access to newland is needed. This land belongs to the communityand the right compensation for them is important.As mining activities expand, Sepon needs more land.As a result, land is acquired from the community,for which community landowners receive compensation.In 2011, Sepon undertook an important review ofcompensation rates, which were increased as a result(see ”Grievance mechanism review”).ICMM guidelines reviewMMG was one of nine mining companies whowere asked to help pilot-test ICMM guidelineson complaints and grievance mechanisms.Grievance procedures are a transparent mechanism forcommunity members to seek information, raise concerns,or register complaints if they feel that any aspect ofmining operations has affected them negatively. Suchmechanisms are common amongst socially responsiblebusinesses. In 2011, MMG was asked to help pilot-testsome new guidelines, across its mine operations, set outin Human Rights in the Mining and Metals Industry:Guidance on Handling and Resolving Local Level Concernsand Grievances, developed by ICMM. Sepon identifiedthe following issues of importance to local communities:access to grievance mechanisms, level of knowledge aboutthem, and availability of information in Lao and English.Grievance mechanism reviewBy gathering input from community members,Sepon aims to make the grievance mechanismmore effective and easier to use.Sepon also reviewed its own grievance mechanism in2011. Twenty-seven communities around the mine, orapproximately 13,000 people, are directly or indirectlyaffected by either mining or exploration activities.Thirteenof these communities, approximately 7,000 people, areconsidered to be directly affected. Most grievancesreceived are related to disputes over accurate landboundaries and subsequent compensation payments,requests for employment or environmental concerns.“While we have a very low number of grievancesalready, we want to further improve access to ourgrievance procedures. There are likely to be some issuesor questions that community members wish to discuss,but don’t know how best to raise them. We want to helplocal communities by listening, capturing and addressingany issues they might have, as soon as they arise, andbefore they become grievances,” said Sepon DirectorSaman Aneka.Community members access the mechanism bycontacting one of the mine’s community relations officersor writing a letter to the district authorities to raise aconcern or complaint. Through the review, Seponidentified and engaged the Village Grievance CommitteeFramework approach that already exists at a nationallevel. The committee, which comprises village authoritiesand respected elders, will receive any initial complaintsand decide, in cooperation with Sepon, which qualifyas a grievance. The committee will aim to deal withcomplaints (the initial lodgement of disagreementsor dissatisfaction), before they escalate into grievances(escalated complaints where it was established thateither a service or benefit was not received as agreed,or land or other rights where not respected).RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLESepon’s community consultation process is fundamental to managing grievances that arise in the twenty-sevencommunities around the mine.SUSTAINING OUR ECONOMIC PERFORMANCE45

CASE STUDY: Sepon Mother and Child Health ProjectPartnering with the Burnet Institute and theVilabouly District Health Office, Sepon hasrecognised the importance of the health ofwomen and children in the district with theMaternal and Child Health Project.The goals of the Mother and Child Health Project,which covered 12 focus villages (16 outreach sites)surrounding Vilabouly town, were to:» Extend the capacity of Vilabouly District healthpersonnel to plan, manage and review primaryhealth care interventions for women and children;» Improve the health-related practices of women inthe target area during pregnancy and in the earlymonths of their baby’s life; and» Improve the nutritional status of children underfive years in the target area.Country Program Manager for the Burnet Institute inLaos Dr Niramonh Chanlivong shares her thoughts:“The Burnet Institute is a public health NGO that hasbeen working in Laos for over a decade now. We focuson the development and delivery of responses tocommunity health needs. In practice, this usually meansworking with government partners and communities.In 2007, we added private industry to the mix whenwe started to engage with Sepon mine. This, we found,was a whole new ball game!“Initially we were hired to ‘enhance the ability of themine’s employees and young people living in Vilaboulydistrict to protect themselves from HIV and othersexually transmitted infections’. As a result of thissuccessful cooperation, in 2008 the mine asked Burnetto start a new intervention, this time promoting thehealth and nutrition of women and children livingaround the mine. This project has been much easierto navigate, and we have appreciated the fact that thecompany has given us the freedom to implement as wesee fit, applying our technical experience in this area.“As we approach the end of the third year of thisinitiative, we have started to see some very tangibleresults: greater capacity of district health staff; morevillagers attending outreach activities; more childrengetting vaccinated; and more women breastfeeding.There are still times when the differing perspectivesof a private company and a development organisationcreate challenges – for example public health programsdon’t measure ‘outputs’ in quite the same way asindustry, and behaviour change doesn’t happenovernight – but the company’s recruitment ofprofessional community development staff in recentyears has helped to ease this.“Overall, we are proud of what we have been able toachieve at the community level in Vilabouly, in bothour HIV and mother and child health projects, and wedon’t forget that these achievements are all thanks toSepon mine – for its financial support, of course, butmore importantly for the company’s commitment tosharing the benefits of the mine with the communitiesthat surround it.”Recording the weight and height of infants so thattheir development can be recorded and compared.46

Stakeholder relationshipsStakeholders are those groups and individuals with aninterest in our activities, including employees, communities,contractors, suppliers, governments, investors, nongovernmentalorganisations (NGOs), media and industry.Building relationships with stakeholders is essential to thesustainability of our business. Stakeholder relationshipsdetermine our environmental and social licence to operate.We have commenced work on our stakeholderengagement standard, which incorporates stakeholderidentification and mapping, stakeholder engagement andinvolvement in decision-making, grievance managementand resolution, performance measures andimplementation of the standard.We have also been working through our approachto community development, social investment andmaintaining our social licence to operate for the longterm. In September 2011, we held a network meeting ofour community relations team across the business to kickoff the development of our community relations strategyand management system. Internal stakeholders areparamount in making this work, and some culturechange is needed. Site-by-site collaboration is centralto our approach, building on the initiatives beingimplemented at each site, some of which are evident inthe case studies presented in this report. We are planningto visit every site in early 2012 to progress our communityrelations strategy and management system.A community perception survey was conducted in 2011for our Australian operational sites. The objectives of theresearch were to better gauge community attitudes,awareness and understanding of MMG, better informcommunity engagement activities, establish a baselinemeasurement of the communities’ attitudes andsatisfaction toward MMG and construct an MMG-wide“Community Trust Index”. This will provide a reliablemonitor of local community perceptions toward MMG.Qualitative focus groups were conducted in each ofthe communities serving Century, Golden Grove andRosebery.The Community Trust Index results from the qualitativework undertaken in 2011 demonstrate a satisfactionrating of 65.9% at Rosebery, 50.8% at Golden Groveand 38.9% at Century. Although the results appear to below, they are related to the small number of communitymembers who were available to participate in the survey.In 2012, the survey methods will be reviewed to allow agreater percentage of the local community to be involvedacross the sites. A survey for Sepon will be undertaken in2012. Rosebery’s score reflects MMG’s close associationwith the local community, including having a shop frontin the township.Golden Grove and Century’s results reflect the relativedistance, both geographically and in engagement terms,between MMG and those local communities.Our goal for 2012 is to progress this work with newqualitative and quantitative survey assessments, andbeyond that to deliver a 5% increase year on year forthe Community Trust Index.2011 COMMUNITY TRUST INDEX65.9%ROSEBERY50.8%GOLDENGROVE38.9%CENTURY2011 CommunityTrust IndexCultural heritageWe are working with host communities to preservecultural heritage, both tangible (e.g. historical artefactsfound during mining) and intangible (customs, beliefs,songs and stories). As new members of the communitiesin which we operate, we bring an opportunity to supportand foster cultural heritage where there weren’tresources to do so before.We seek to understand community concerns, customs,beliefs and traditions, alongside transparent and opendialogue and preservation of cultural heritage in theregions in which we operate.In 2011 at Sepon, site-specific cultural heritagemanagement plans were developed and implemented.These plans outline monitoring and managementguidelines for all identified cultural heritage sites. Inaddition, the baseline research on intangible culturalheritage undertaken in developing the plans has led tothe development of a district Cultural Heritage Centre,which will focus on the protection of tangible andintangible cultural heritage from the area.Cultural heritage initiatives were also active at Roseberyand Golden Grove in 2011, with the Rosebery minecelebrating 75 years in operation, and the cross-culturalawareness program at Golden Grove continuing to connectMMG employees with the local Indigenous culture.At Dugald River, we engaged with representatives fromlocal Indigenous groups to ensure that site operationsand powerline access would not impact on culturallyimportant areas. Cultural awareness and training materialswere also developed for the project's induction programs.48

CASE STUDY: Rosebery Mine celebrates 75 years in operationThe Rosebery zinc ore body was originally discovered in November 1893 by Tom McDonald. Various attempts weremade to bring the mine into a commercial operation. However, it was not until February 1936 that full productioncommenced with the installation of the metals concentrator and transport of metal concentrates to the Port ofBurnie via the Emu Bay Railway.The mine and mill have since been in continuous operation, and on 18 February 2011 the Rosebery community sharedin the 75th anniversary celebrations hosted by MMG in conjunction with the annual Rosebery Festival.Celebration activities included an official reception, a mine Open Day and a variety of MMG-sponsored festivalactivities, as well as the unveiling of a TasRail locomotive branded “MMG 75 years”.General Manager John Lamb noted in his address, “I cannot promise 75 more years, but I can be confident there area lot more years to come of the continuing theme”.OUR PEOPLEWORKING WITH OUR STAKEHOLDERSHEALTH AND SAFETYCASE STUDY: Rosebery Community Liaison OfficeBringing the Rosebery mine and the communityeven closer together.During 2011, MMG has operated a Community LiaisonOffice in the main street of Rosebery, only 200 metresfrom the mine site entry road.This initiative was General Manager John Lamb’s idea. Hesaw the need for a closer, more personal link between themine and the community than the Site EntryAdministration Centre within the mine environment.Designed by Stakeholder Relations Officer ChristineWinskill and providing past and present information onthe mine, the “shop front” is available for both thecommunity and tourists, and facilitates comfortable andpersonable provision of information and discussion ofissues. The office is also used for community meetings,and briefings for mine visitors.Rosebery community members gathered to celebrate75 years of the MMG mine’s operation.The Liaison Office is open Monday to Friday from 10amto 4pm, and is manned on a roster basis by Administrationstaff from the mine.The Rosebery community liaisonoffice in Main Street, Rosebery.RESPECTING OUR ENVIRONMENTSUSTAINING OUR ECONOMIC PERFORMANCE49

CASE STUDY: Unearthing “Cultural Gold” at SeponIn 2011, Sepon increased its initiatives to understand community customs, beliefs and traditions andpreserve local cultural heritage.As part of Sepon’s cultural heritage program, in 2011, an intangible cultural heritage survey was undertaken, capturingthe rich oral history, songs, music and religious expression of the local villages. Meanwhile, Sepon’s management oftangible cultural heritage finds and preservation resulted in the discovery of a second significant ceremonial copper drumfound by local villagers. Plans for a Cultural Heritage Centre were also confirmed, where the drum will be displayed.Intangible cultural heritage surveyVillagers’ traditional music and song performances have been captured in a unique video record.Led by eminent anthropologist, James R. Chamberlain, the intangible heritage survey videoed 232 local villagers’music and song performances from across ten Brou (Mon-Khmer-speaking ethnic Makong and Tri groups) and11 Phou Thay (localised Lao-speaking ethnic group) villages. It provides a unique record of Lao culture and laysthe groundwork for the Cultural Heritage Centre, being built in Vilabouly by the end of 2012. Oral genres werecategorised as stories and tales; ethno-history; legends of place; and singing and music. For example:Brou singing and music: tamprɔɔy is a form used mainly in courting or entertaining encounters between menand women.Phou Thay singing and music: sung forms, known only as Lam Phou Thay Nyay and Lam Phou Thay Noy, aregenerally performed purely for entertainment during festivals (boun). The former type is slower and more drawnout, while the latter is faster. Both involve back-and-forth witty dialogue between men and women.Brou religious expression: yau refers to spiritual healing and involves inviting spirits to descend and healafflicted persons. The ceremony is conducted in combined sa’ɛɛŋ and san ɤɤsung styles accompanied by the fluteplayed in a sombre mode. san ɤɤkuun is rare and highly restricted in its usage to invite specific spirits by name forspecific ailments to partake of food being offered.A new cultural heritage centreBy the end of 2012, local communities and visitors will benefit from a new place of learning that willdisplay the region’s mining and cultural history.Sepon is operating on an ancient mine site, with evidence that mining occurred as long as 3,000 years ago. Thisinspired the idea to build a Cultural Heritage Centre in partnership with the Government of Laos and James CookUniversity of Australia. The centre will be a place of community learning, visitor reception and display of objects ofoutstanding cultural value for communities local to the mine. The conceptual design was completed in 2011 and thedesign and build contract will be awarded locally in March 2012, with a view to opening the centre by the end of2012. Two initial district meetings were held in 2011 and a District Steering Committee set up, involving MMG, thedistrict and provincial governments and the Ministry of Information and Culture.The ceremonial copper drum found by villagers.An archaeological dig.50

CASE STUDY update: MMG Golden Grove Cross-Cultural Awareness ProgramIn 2011, the Golden Grove Cross-Cultural Awareness (CCA) Program was delivered to a total of 140 site employees.A total of almost 300 employees have now participated since the inception of the program.The program continues to be delivered by traditional land owners and provides an introductory cultural orientationand awareness message.Also in 2011, scoping commenced for a Cross-Cultural Competency course. This course will target employees at amanagement and supervisor level, with the intention of supporting the site’s Indigenous Employment ImplementationPlan. Managers and supervisors will be trained to manage incidents and workplaces in a manner that is bothculturally sensitive and tolerant.OUR PEOPLEHEALTH AND SAFETYWORKING WITH OUR STAKEHOLDERS2012 challengesIn 2012, we will review the company’s community andstakeholder engagement standards to ensure alignmentwith the ICMM 10 Sustainable Development Principles.We will develop the Century Mine Closure Strategy andprioritise the implementation of related actions.In addition to this, we will aim to improve our stakeholderengagement approach and performance with thefollowing initiatives:» Align site-based social investment initiatives to agroup-wide standard and develop the group-widestrategy and system to manage it;Golden Grove employees learn about Indigenous heritage.» Improve the strategic collection and interpretationof social investment data;» Improve responsiveness to community complaintsand grievances;» Improve consistency of stakeholder management plansfor each operating site and region where we operate;and» Further develop our corporate reputation managementplan including branding, sponsorships, industrypartnerships, communications, investor relationsand stakeholder and government relations.RESPECTING OUR ENVIRONMENTSUSTAINING OUR ECONOMIC PERFORMANCE51

RESPECTING OURENVIRONMENTWe recognise that building excellence in managing environmentalresponsibilities is essential to long-term success.Seedlings growing for site rehabilitation work.52

Our approachWe aim to minimise our environmental footprint andequip our people with environmental standards toeffectively manage the environmental aspects ofour operations.Our key environmental priorities are water management,including security, wastewater and tailings; closure/rehabilitation; biodiversity; energy and greenhouseemissions; air quality; product stewardship; waste rock;and managing hazardous substances to avoid adverseenvironmental impacts. These priorities are managed Donationsthrough an environmental management system thatincludes performance standards, consultation, assuranceand reporting.Capacity buildingCompensationPerformanceSecurity of water supply is critical to maintainingoperations, in particular in dry climates. Further, communitiesaround mine sites may also be affected by mine use anddischarge of water. Balancing the challenges of extremelydry Capacity environments, building compared with wet climates, requiresdifferentCompensationapproaches to water management dependentDonationsonSponsorshipssite location.Water Education use and and training supplyLocal business development initiativesDifferent Community water development challenges initiatives are experienced by each ofour operations and projects. While a number of sitesneed to manage excess water from tropical rainfalls,our Golden Grove operation is situated in an arid regionof Australia where water is drawn from bore sources.We acknowledge the general importance of water accessmanagement across the mining sector and as we growand acquire or develop operations in different countries,we expect this to become more of a challenge for us.Wastewater and tailings managementMining creates wastewater and mineral waste residues,typically stored in tailings storage facilities. Heavy metalsWASTEand other 343 contaminant levels are carefully WATER monitored474and proactively managed through wastewater treatment5475controls and retention strategies to avoid wastewaterPRECIPITATIONAQUIFERdischarge issues.AND RUNOFF328046636The efficient use of water and the management ofwastewater discharges are evolving issues for which2516we are developing a water management strategy anddetailed 3198 water management plans for each operation.In 2011, we commenced work on a functional waterbalance model for all operations to understand storage,usage and treatment requirements. In addition, watermeters that enable accurate data collection on waterusage, reuse and discharges are being installed at ouroperations. To enable benchmarking with our miningindustry peers, we are pursuing water reporting in linewith the Minerals Council of Australia (MCA) WaterAccounting Framework (WAF).ENTRAINMENTBORE FIELDSINTERCEPTIONEXTERNAL SURFACEWATER STORAGESRIVERS AND CREEKSOur existing water management standard was reviewedand updated in 2011 and will be finalised andimplemented at all sites in 2012.The water data presented here are aligned with the newMCA WAF. As such, they cannot be directly comparedwith 2010 data.Water inputs shown include all water managed by thesite, including water extracted for use and managedwater from other sources entering the site, such as rain,run-off, groundwater and river or creek water.2011 MMG water inputsIn 2011, a total of 53,446 megalitres of water was managedby MMG mine operations, of which 34,477 megalitrescame from rain and run-off. Due to high rainfall, Centurymanaged 30,639 megalitres of water in 2011. Of the totalwater managed, approximately 65% was derived fromprecipitation and run-off from rainwater. Both Centuryand Sepon are located in tropical climates and Roseberyis located in one of the highest rainfall areas in Australia.SponsorshipsEducation and trainingLocal business development initiativesCommunity development initiativesTOTAL water INPUTS managed BY SOURCE 2011 (ML)ENTRAINMENT343BORE FIELDS5,514AQUIFERINTERCEPTION6,923EXTERNAL SURFACEWATER STORAGES2,516TOTAL water INPUTS managed BY SITE 2011 (ML)ROSEBERY9,507SEPON10,088GOLDEN GROVE2,523WASTEWATER474PRECIPITATIONAND RUNOFF34,477RIVERSANDCREEKS3,198SOUTHHERCULES690CENTURY30,639DUGALD RIVER4%SEPON41%SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLEMELBOURNEHEAD OFFICE4%53

ENVIRONMENTAL FLOWSSEEPAGE036REINJECTION 0DISCHARGE TO ESTUARY 973DISCHARGE TO SEA/OCEAN 0SUPPLY TO THIRD PARTY 988EVAPORATION 11146ENTRAINMENT 4709OTHER (DEFINE) 1262011 MMG water outputsWater management, treatment processes andinfrastructure are in place at all of our operational sites.We are working to effectively manage our output waterquality in line with local licence conditions. As the outputdata in the following chart shows, the majority of ourwater outputs, 16,806 megalitres, are to surface waterdischarge, with a significant water loss via evaporation atmost sites (11,146 ML in 2011).2011 MMG water output qualityWater output quality is monitored at all sites to meet ourlicence and reporting conditions. We present it here inline with the MCA WAF categories. As charted, around70% of our water outputs are classified as Category 2,with the remaining classified as Category 1 and the lowerquality Category 3.Century experienced a one-in-150-year rain event in2011, which resulted in a challenging year for watermanagement at the site. This included several incidentsSOUTHof sediment dam discharges, which HERCULES were reported to theenvironmental regulator in line with 690 our licence conditions.A Queensland Department of Environment and ResourceManagement 9,507 (DERM) investigationCENTURYfollowed. On 9 March28,6392012, MMG Century Limited received a summons toanswer the complaint that Century contravened aSEPON condition of its environmental authority (Section 430(3)10,088of the Environmental Protection Act 1994 (Queensland)).During the remainder of 2011, Century focused on2,523improving wastewater containment capacity, including theconstruction of a diversion channel around the operation’sevaporation dam to reduce the volume of surface waterentering the system on site during times of high rainfall.Golden Grove's water comes from the dewatering ofour two underground mines. This water is used for oreprocessing, and treated for dust suppression and dischargeto Lake Wownaminya. Potable water at Golden Grove issourced from bore fields and is treated through a reverseosmosis plant. A new reverse osmosis plant was installedduring 2011, greatly improving potable water quality.On average, 2011 was a slightly drier year for Rosebery,allowing the Rosebery environment team to focus onwater monitoring. Water treatment and monitoring werethe focus at the satellite South Hercules trial developmentsite, with a new modular and potentially relocatablewater treatment plant in operation.A total of 2,507 millimetres of rainfall was recorded atSepon, making 2011 the fourth wettest year on record.Rainfall has been measured and recorded at Sepon since1994, with only 2005 (2,679mm), 2002 (2,627mm) and1996 (2,621mm) having more rainfall than 2011. The newsediment dams in the western areas of the site performedwell during this initial year of operation. The project toprovide clean drinking water to villages surrounding Seponalso continued in 2011, with 12 villages and 3,400people now having access to clean water supplies.ROSEBERYGOLDEN GROVETOTAL OUTPUTS BY DESTINATION (ML)ENTRAINMENT4,709EVAPORATION11,146SUPPLY TOTHIRD PARTY988DISCHARGETO ESTUARY973WATER OUTPUTS BY SITE (ML)SOUTHHERCULES8ROSEBERY9,484SEPON8,106GOLDENGROVE2,415TOTAL OUTPUTS BY WATER QUALITY (ML)3,76023,7427,282OTHER126SURFACEWATERDISCHARGE16,806SEEPAGE36AVEBURY132CENTURY14,639Water QualityCategory 1Water QualityCategory 2Water QualityCategory 3Water quality key(Minerals Council of Australia Water Accounting Framework):Category 1 – Close to the drinking water standards, as it onlyrequires minimum treatment (disinfection) to be safe for humanconsumption. It can be used for all purposes.Category 2 – Suitable for some purposes. Treatment will berequired to remove total dissolved solids and/or to adjust otherparameters to be safe for human consumption and more sensitiveagricultural and recreational purposes.Category 3 – Water unsuitable for most purposes due to the highsalinity (>5000mg/L of total dissolved solids) or highly unsuitablepH (10). Category 3 water will require significanttreatment to be suitable for Category 1 and Category 2.54

CASE STUDY: Managing water issues at CenturyEvaporation Dam clean water diversion channelBetween 1 November 2010 and 1 April 2011 a total of1,115 millimetres of rainfall was recorded at the LawnHill Mine at Century, twice the annual average of 518millimetres. This extraordinarily wet season has beenestimated as a one-in-150-year event, which came onthe back of a one-in-125-year season in 2008–09 anda one-in-20-year season in 2009–10.These exceptional events meant the mine’s water storagefacilities held some 45,000 megalitres of water thatcould not be released to the environment. This resultedin a number of reportable incidents. The water level inthe evaporation dam on 1 April 2011 was 1.8 metres(8,000ML) higher than the design storage allowance(DSA) level. The DSA relates to a requirement wheresufficient storage must be maintained to reduce thelikelihood of any water entering the receivingenvironment. This is necessary to capture the run-offand inputs that result in potentially environmentallyhazardous contaminated water from a two-monthcritical wet season.Sources of contaminated water include waste rockdumps, process areas and the pit. Water from thesesources mixes with the clean rainwater falling in thecatchment area, before it then flows to the evaporationdam. Sufficient storage to meet the DSA and holdthe run-off water must be available on 1 Novemberof each year.Our water balance modelling showed that without someform of intervention, the water level in the evaporationdam on 1 November 2011 would be greater than theDSA level. The consequence would have been a noncompliancewith Century’s environmental permit.Furthermore, the modelling suggested that, even underaverage annual rainfall conditions, the stored waterwould not drop below the DSA until 2015.An opportunity existed to decrease the DSA volumeby reducing the amount of clean run-off from thecatchment area entering the evaporation dam. On13 April 2011, an application to construct a series ofdiversion embankments and channels to the south-westof the dam was submitted to the regulator, with finalapproval granted on 15 August 2011.The works were conducted to technical specificationsdeveloped with a specialist contractor, ATC Williams.Equipment reliability and wet weather have been identifiedas key schedule risks, but despite some significantrainfall in both October and November 2011, practicalcompletion was achieved only four months later inDecember 2011, and ahead of schedule.The final result, after the excavation of six drainagechannels and five embankments, was a diversion systemthat is able to redirect clean water from approximately14 square kilometres of catchment away from theevaporation dam and to Coglan Creek. The revisedwater balance assessment indicated that the diversionwill reduce the maximum volume by as much as10,000 megalitres.A cultural survey of the project area was completedas part of the evaporation dam development in 1998;no sites of significance were identified. Also, Century’sProject Impact Assessment Study (Dames & Moore,1994) described and recorded a number of significantspecies (endangered, vulnerable and rare) in the Centurystudy areas. No species classified as endangered orvulnerable were identified within the diversionsproject area.Water testing.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE55

unityEnergy use and carbon emissionsThrough energy efficiency projects and considerationof carbon offset activities, our carbon footprint isbeing reduced.In 2011, MMG used a total of 6,452,901 718,366gigajoules (GJ)of energy, of which 3,423,836 GJ 481,752 was indirect energysourced from the electricity grid, and 3,029,066 GJ wasdirect consumption of diesel and other fuels. A total of765,418 tonnes of CO 2 e greenhouse27,020gas emissions wereproduced in 2011, with 555,9388,925tonnes coming fromindirect electricity use and 209,479 1,962 tonnes from directconsumption of diesel and other fuels. Energy efficiencyand emissions intensity trends have remained, onaverage, fairly steady throughout 2011.Throughout our operations, offices and transportactivities, the efficient use of energy is important inminimising greenhouse gas emissions. Current energyand emissions reduction programs under way includethe preparation6000of energy management plans for 2010our Australian 50002011mining operations, and meeting ourEnergy Efficiency 4000 Opportunities (EEO) commitments.We undertook Location 3000 a Climate Change Study in 2011 (seepage 58). We also have systems in place to meet our2000obligations under the National Greenhouse and Energy1000Reporting Scheme (NGERS).tal Energy Consumption (GJ) 2011 Total Energy Consumption (GJ)1 2,953,6914 2,261,1852011 energy efficiencyThe term “energy efficiency” describes the amount ofenergy that we consume per unit of production. Energyefficiency indicators, such as gigajoules per tonne*Corporate includes Dugald River project employeesof concentrate, are used to measure the effectivenessof our energy-use reduction projects and strategies.Key performance indicators (KPIs) can showimprovements in efficiency even when our totalenergy consumption increases.Between 2010 and 2011, MMG’s operations experiencedvariations in energy efficiency performance. The energyefficiency KPI is based on the energy required to producea tonne of concentrate (or copper cathode in the caseof Sepon). Consequently, this KPI is greatly influencedby factors such as ore grade, recovery rates and stripratios (the quantity of waste rock mined to enable oneunit of ore).Sepon experienced an 11% improvement in energyefficiency, resulting from a significant (25%) increase incopper cathode production following commissioning ofthe expanded copper processing plant, but only a 15%increase in energy consumption. This improvement isoffset somewhat by a 25% reduction in gold production.Energy efficiency at Century also improved by 10%,associated with a 12% reduction in energy consumptionbut only a 3% reduction in concentrate production.At Golden Grove, energy efficiency worsened by 24%.This was associated with the combination of a 14%increase in material mined due to the reopening of theScuddles underground mine that was on care andmaintenance in 2010, but a 2% reduction in oreprocessed and a 17% reduction in concentrateproduction. Similarly, Rosebery experienced an 8%reduction in energy efficiency due to an increase inmaterial mined and processed, but with concentrateproduction remaining essentially the same as last year.2010 Total GHG Emissions (T CO2e) 2011 Total GHG Emissions (T CO2e)Century 338,917 316,267Golden Grove 115,784 118,852Rosebery 0 (inc Avebury) 30,748 38,388Sepon 218,110 288,858Dugald River 361 1,744Exploration 748 644Melbourne Group Office 652 665CENTURYGOLDENGROVEROSEBERYSEPONEXPLORATIONCORPORATEENERGY CONsUMPTION (GJ)GREENHOUSE GAS EMISSIONS (T CO 2 e)7,000,0008000006,000,0007000005,000,000 6000004,000,000 5000003,000,000 4000002,000,000 3000002000001,000,000100000001,925 1,9621,958,234 2,261,185472,845481,752698,080718,3663,220,691 2,953,6912010 2011OtherSeponRoseberyGolden GroveCentury800,000700,000600,000500,000400,000300,000200,000100,0000652218,11030,748115,784338,9172010665288,85838,388118,852316,2672011OtherSeponRoseberyGolden GroveCentury*Other: Melbourne Group Office; Exploration; and Dugald River*Other: Melbourne Group Office; Exploration; and Dugald River56

11 Communityst Index60002011 emissions 65.9% intensityThe term5000“emissions intensity” describes the tonnes ofgreenhouse 400050.8%gas emissions produced per unit of production.Emissions 3000 intensity key performance 38.9% indicators (KPIs)often trend 2000 similarly to the energy efficiency KPIs dueto the direct link between energy use and greenhouse1000gas emissions.02011 CommunityDifferences between energy efficiency and emissionsTrust IndexROSEBERY CENTURY GOLDEN GROVEintensity exist due to some energy sources havinggreater emissions intensity than others. For example, theconsumption *Corporate of 1 includes GJ of natural Dugald River gas project would employees result in feweremissions than 1 GJ of diesel, which would result in feweremissions than using 1 GJ of coal-fired grid electricity.Therefore, reductions in the use of high-emission energysources such as coal-fired grid electricity will have a greaterimpact on the emissions intensity KPIs than the energyefficiency KPIs.SEPONROSEBERYGOLDENGROVECENTURYCENTURY3.053.292.162.683.623.25GOLDENGROVEROSEBERYSEPONEnergy efficiency per tonne of product(GJ/Tonne of product)EXPLORATION28.6732.1620102011CORPORATE201020110.0 0.5 0 1.0 5 1.5 102.0 152.5 20 3.0 3.5 25 4.0 30 356000During 2011, the emissions intensity at all operationswas generally50002011consistent with their energy efficiencyperformance. 4000 The exception was at Sepon, where energyefficiency 3000 improved by 11%, but emissions intensityincreased 2000 by 2%. This was largely due to an amendmentin July 2011 to the emissions factor for grid electricity,1000where estimated emissions per kWh of electricity increased0by 17%. Another contributing factor was an increase indiesel consumption and a reduction in the consumptionof LPG.An Energy *Corporate Efficiency includes Opportunity Dugald River (EEO) project assessment employees wasundertaken at Rosebery in 2011, and the following threeprojects were identified for implementation: new corecrusher (approximately 50GJ saving); mine control system(approximately 5,355GJ saving); underground ventilationupgrade (approximately 11,913GJ saving).SEPONROSEBERYGOLDENGROVECENTURYCENTURY0.230.260.360.440.370.35Sampling water quality in a storage dam.GOLDENGROVEROSEBERYSEPONEmissions intensity per tonne of product(Tonnes of CO 2-e/Tonne of product)EXPLORATION3.583.662010CORPORATE201020110.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE57

CASE STUDY: MMG Climate Change StudyWe participate in the National Greenhouse and EnergyReporting Scheme (NGERS) and the Energy EfficiencyOpportunities (EEO) Program for our Australianoperations, and collect equivalent data for our Seponmine in Laos. We commissioned a climate change riskassessment through our internal audit partner in 2010.As an outcome of this process, the highest-rated riskwas lack of a clear Climate Change Policy (CCP) for thecompany. In November 2011, MMG adopted a CCPmandating a study be undertaken to look at energyefficiency opportunities, prepare MMG for a carbon priceand examine the implications of setting a voluntaryemissions reduction target. These three objectives formthe basis of the MMG Climate Change Study.The main objectives of this study have been endorsedby the SHEC Committee and the Energy and ClimateChange Steering Committee in June 2011 and include:Outcome 1: Site EEO assessments (includesSepon) – Identify and screen Greenhouse Gas(GHG) reduction projects and meet AustralianFederal Government EEO obligations;Outcome 2: Carbon legislation planning – Evaluateand prioritise GHG reduction projects and prepareMarginal Abatement Cost Curves; andOutcome 3: Voluntary emissions reduction targets –Describe potential and favoured target scenariosavailable to MMG.The Climate Change Study demonstrates MMG'scommitment to the ICMM Principles, and to establish acomprehensive and rigorous climate change managementprogram of policy principles and leading practice.BiodiversityMining activity can impact the habitats of native flora andfauna. Offset projects to balance impacts on biodiversityfrom operations represent best practice.The land area held by MMG fluctuates regularly. Atthe end of 2011, total land area managed globally was2,121,241 hectares. Some of this land is adjacent to areasof high biodiversity value and high-use value for localcommunities. Effective and sensitive management of thisland and our impacts on surrounding ecosystems istherefore a high priority for us.Biodiversity management plans are in place at Sepon,Golden Grove, and Rosebery. A plan is currently beingdeveloped for Century. In addition, we have a number ofbiodiversity offset projects operating to rehabilitate andsupport biodiversity in other disturbed areas in exchangefor areas that are disturbed by our operations. We arecurrently investigating options for managing biodiversityoffsets where we can strive to achieve no net biodiversityloss and are also developing biodiversity managementplans for all mining operations during the next three years.During 2012, we plan to review and update our existingbiodiversity management standard to align with theICMM Principle 7, to contribute to biodiversityconservation, and the International Finance Corporation(IFC) Performance Standard 6: biodiversity conservationand sustainable management of living natural resources.Land disturbance and rehabilitationAt the beginning of 2011, a total of 5,183 hectares ofland was in use and classified as “disturbed” (as detailedbelow). During 2011, a further 127 hectares weredisturbed and 11 hectares rehabilitated, resulting ina 2011 closing balance of 5,298 hectares of disturbedland. This compares with 2010 where the openingbalance was 4,878 hectares.SiteTotal Land Disturbednot yet Rehabilitated(2011 opening balance)(Hectares (Ha))Total 2011Disturbed Land(Ha)Total 2011Rehabilitated Land(Ha)Total Land Disturbednot yet Rehabilitated(2011 closing balance)(Ha)Century 2,873 0 0 2,873Sepon 1,282 26.99 0 1,308Rosebery 2.52 0 0 2.4Golden Grove 992.8 91.9 0.88 1,083.9Exploration 32.7 7.9 9.7 30.9Total MMG 5,183 127 11 5,29858

CASE STUDY: Declared rare flora monitoring and protection at Golden GroveStylidium sp. Yalgoo is a small perennial trigger plantthat typically flowers between August and September.Approximately 100 millimetres high, it has two greenbasal leaves on the ground and a single or sometimesbranched red stem with one or more pearl-whiteflowers. The flowers are approximately 20 millimetresacross with vibrant pink markings on the upper surfaceat the base of the petals.Stylidium sp. Yalgoo was first identified at GoldenGrove during a flora survey in 2008 at which time theplant held a ‘Priority One’ conservation status. In August2010, Stylidium sp. Yalgoo was gazetted as Threatened/Declared Rare Flora (Minister for Environment, 2010),and ranked as vulnerable, meaning that it is consideredto be facing a high risk of extinction in the wild. Thisstatus means Stylidium sp. Yalgoo is subject to legalprotection under the Australian Wildlife Protection Act1950 to ensure no loss of known individuals. Only withMinisterial approval can Threatened/Declared Rare Florabe removed.Stylidium sp. Yalgoo in flower.During field surveys conducted in August and September2011, more than 158,357 individual plants in a totalof 11 Stylidium sp. Yalgoo populations were locatedthroughout our tenements. Prior to this, the WesternAustralian FloraBase had records of 30,000 individualspreviously surveyed up to September 2009.While the populations located throughout our surveysare comparatively large, they remain confined to arelatively small area of the local region. Populationshave been mostly located on mining tenements close toactive exploration sites, and as such, these populationsare potentially under threat.As we are responsible for the monitoring and protectionof the Stylidium sp. Yalgoo populations within theGolden Grove tenements, Threatened and Priority Florareport forms were completed for the populations foundduring the 2011 searches and submitted to theDepartment of Environment and Conservation (DEC).This information assists DEC in their regional monitoringand management of the species.Golden Grove’s Threatened Flora management programis evolving as part of our ongoing commitment to theprotection of conservation-significant flora. This willprovide a means to monitor, assess and implementconservation practices to ensure the protection ofStylidium sp. Yalgoo at Golden Grove.Counting Stylidum sp. Yalgooindividuals during targeted searches.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE59

CASE STUDY: Business and Biodiversity Offset Project (BBOP)A BBOP will protect and enrich plant and animalspecies beyond where the mine operates.Miners are usually interested in rock samples. However,over the last year, Sepon has also been collecting samplesof something rather different: animal dung. Elephants,gibbons and other important species can be found ineastern Savannakhet province, where the mine is located.Collecting dung samples is just one of the methods used toestimate animal populations and assess habitats aroundthe mine.In partnership with the Wildlife Conservation Society(WCS), a BBOP is being developed. BBOP compensatesfor the likely impacts on biodiversity from mining withinitiatives to protect and manage species and habitatsbeyond the places where the mine operates.Developing the project involved identifying species ofanimals in the area, mapping their habitats, evaluatingthreats to them and deciding an appropriate offsetmeasure (usually investment into the enhancementof biodiversity in another vulnerable location).Around 30 species of animals were identified aspotential candidates for conservation, including anumber of International Union for Conservation ofNature (IUCN) Red List endangered species. Theirpresence was confirmed through a review of previousassessments, recorded sightings by camera trap andconversations with local hunters.Siamese crocodile enhancement projectSepon’s Siamese crocodile conservation work withthe Wildlife Conservation Society (WCS) is highlysignificant as only 100 of the species are believedto be left in the wild in Laos.Since 2008, Sepon has been working with the WCSto promote the conservation and enhancement of theSiamese crocodile (Crocodylus siamensis), which is anIUCN Red List species. While not found inside the minearea, crocodiles are found in the western portion of theSavannakhet Province, and elsewhere in Laos. Year 2011was the third year of the project, which has includedhabitat mapping, location of animals and nests, habitatenhancement and community education. In May 2011,a Siamese crocodile nest was discovered containing 20eggs, which was highly significant as only 100 suchcrocodiles are believed to be left in the wild in Laos.In late August 2011, the eggs were taken to VientianeZoo to raise the juveniles in captivity for 18 to 24months. They will be released into the wild when theyare large enough to fend off predators.Sepon elephant population updateThe size and genetic diversity of the Seponelephant population is of national significance.Sepon has also been researching Asian elephant (Elephasmaximus) populations in the immediate region aroundthe mine to develop a better understanding of thepopulation and habitat requirements. This is oneof a handful of such scientifically rigorous populationassessments conducted in Laos. Two areas of the minesite are considered to be “hot spots”, with elephantsfrequently sighted by Sepon employees and localfarmers. The research uses DNA techniques to analysedung samples and identify individual animals. Onehundred and forty-two dung samples were analysed,and a statistical test was carried out to estimate thepopulation size of 51 animals.A juvenille Siamese crocodile.© Liz Leyden/iStockphotoThe Asian elephant.60

CASE STUDY: Sustainable development in action in a unique locationIn 2011, MMG embarked on a project to trial“best-practice” stakeholder engagement, safety andenvironmental responsibility in the development of atrial pit at a satellite ore body.The South Hercules deposit is located in a unique andsensitive alpine environment, 7 kilometres from, and 700metres higher than, the Rosebery mine and township onMount Hamilton.The ore body was originally discovered 40 years ago andsits along a strike of the historic adjacent Hercules mine,which operated from 1894 to 1986. The two sites arelinked both environmentally and through futuredevelopment potential.The challenges facing the project include environmental,safety, access, stakeholder relations and operational issues,just some of which are:» Climate – well above the winter snow line withtemperatures frequently below zero;» Water management – up to 4 metres of rain per annum;» Winds in excess of 120 kilometres per hour;» Threatened species including the Grooved Cheeseberryand the Toothed Orites;» Unique stands of hybrid King Billy and Pencil Pines,which only occur where King Billy Pines and PencilPines are located in very close proximity;» Access by a steep single-carriage track, which requireda significant upgrade to allow truck movement;» Acid mine drainage issues from the Hercules minelegacy site and the potential for similar issues fromthe proposed South Hercules development;» Visual scarring and land degradation; and» A variety of interested groups including environmentaland government stakeholders.The Grooved cheeseberry (Planocarpa sulcata).Development of the site included engagement ofstakeholders, communication of issues, engagementwith the workforce, and senior management support.Results include:» Minimal disturbance to the environment in all aspects,from the road upgrade through to water treatmentplant design and test pit excavations;» Successful translocation and protection of somethreatened species such as the Grooved Cheeseberry;» Installation of an innovative modular and relocatablewater treatment plant;» Development of a communications trail with signsdetailing both mining and natural heritageinformation;» Development of an upgraded access track along thesame route as existing 4WD-only access track, withminimal disturbance to sensitive vegetation, andincluding passing and emergency run-off bays; and» Good health and safety results, including zero injuriesto date and a total non-smoking site.We aim to rehabilitate the Hercules site, facilitated by theimproved access to and profitable development of SouthHercules.Checking acid mine drainage at Hercules.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE61

Mineral waste managementDuring our mining and processing we generatemineral and non-mineral wastes requiring management.Understanding the characteristics of the waste streams,planning and managing them assist in reducing thepotential long-term environmental impacts that can result.Managing mineral wastes is a risk for MMG both from anoperational perspective, and beyond the life of the asset.We are striving to integrate mineral waste managementwithin life-of-asset planning to manage waste facilitiesconsistent with established final landform designs.We understand the need to design and plan for suchlandforms prior to commissioning such facilities topromote beneficial post-mining land uses, and minimisepost-mining rehabilitation and closure liability.The existing tailings management and waste rockmanagement standards will be combined into onestandard in 2012, namely the Mineral Waste ManagementStandard. This standard will cover tailings, waste rock andlow-grade stockpiles until such time as they are processed.2011 mineral waste managementSite Site Mineral Waste Management Practices OreProcessed(KT)CenturySeponRoseberyGolden GroveTotal MMGWaste rock is managed through the encapsulation of potentiallyacid-forming material with non-acid-forming material.Tailing is pumped to a tailings storage facility.Waste rock is managed (encapsulated) within a specific acidmaterialwaste disposal site. Non-acid-forming material is used inconstruction of facilities such as tailings dam walls, outer battersof waste rock dumps and roads.Tailings are deposited into 2 constructed tailings storage facilities.Waste rock generated is used to backfill underground areas anddisused development areas in accordance with mine planningand development procedures and processes.Tailing is pumped via a flume to the Bobadil Tailings StorageFacility (TSF).Waste rock is stored on the run-of-mine (ROM) pad and usedwith Cemented Hydraulic Fill (CHF) to backfill stopes underground.CHF is comprised of tailings and cement generated at the CHFplant. Tailings not used for CHF are deposited into a TSF.In preparation for the Gossan Hill Copper Open Pit, a waste rockdump commenced construction for the disposal of its waste rock.WasteRock Mined(KT)TailingsGenerated(KT)5,297 34,580 4,3903,422 14,899 3,651788 376 5951,568 456 1,30011,075 50,311 9,936The pumping station at Golden Grove's tailings facility.62

CASE STUDY: Approval of the Dugald River Environmental Impact StatementIn January 2011, MMG released its Environmental ImpactStatement (EIS) on the proposed Dugald River project. InNovember 2011, the EIS assessment report advised thatthe project was suitable to proceed to the next stage ofthe approval process. Approval of the full EnvironmentalManagement Plan is expected around the middle of2012. The release of the EIS was an important step forthe project and followed the completion of a feasibilitystudy in 2008, which was updated in 2010.Dugald River is an important part of our strategy to builda leading global diversified base metals company. As aresult of the impending closure of several major zincmines over the next few years, including our Centurymine, which is expected to close around 2016, thetiming of the development of Dugald River is important.It is expected that Dugald River will produce concentratescontaining approximately 200,000 tonnes of zinc,25,000 tonnes of lead and 900,000 ounces of silverannually over a 23-year mine life.An important element of the current phase of thisproject is consultation between MMG, the localcommunity and other key stakeholders. In 2012, we willestablish a local office in Cloncurry to assist with thisconsultation process.In December 2011, Dugald River was included in MMR’sMineral Resources and Ore Reserves for the first time.Coinciding with this, the MMR Board was pleased toapprove expenditure of A$157 million to develop thenext stage of the project. In addition, the EnvironmentalImpact Statement for the mine received approval fromthe former Queensland Department of Environment andResource Management (DERM).The next stage will progress project activities up toreceipt of the full Environmental Management Plan.Major work will include detailed engineering,metallurgical testwork, long lead-time major equipmentprocurement, continuation of early site works andunderground decline development. Key localinfrastructure development including load-out, powerand accommodation will also be advanced. Followingcompletion of this phase the MMR Board will considerfinal approval of project development and construction.The Dugald River was included in the scopeof the environmental impact assessment.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE63

ReportableIncidentsNon-Compliancewith LicenceConditionsNo. ofFinesCommentsCentury 32 5 0 Implementation of new licence conditions at Karumba resulted inincreased number of reportable events to the Regulator. The minesite also experienced a one-in-150-year rain event that resulted innumerous sediment dams discharging, for which each requiredthe Regulator to be notified.Sepon 0 0 0 For the second year in a row there have been no reportableor significant environmental incidents. This is attributable to acomprehensive monitoring plan and integration of environmentalperformance criteria in all aspects of the operation, fromexploration, through mining and processing.GoldenGrove1 1 0 This exceedance was associated with elevated levels in agroundwater bore. An investigation included the drilling of newmonitoring bores. Further aquifer investigation and a revision ofthe licence conditions are planned for 2012.Rosebery 6 2 0 One exceedence occurred during a heavy rainfall event when afilter plant retention pond was found to be discharging offsite.The other was an exceedence of zinc licence limit from a polishingpond resulting in a minor exceedence.Rosebery(SouthHercules)0 0 0 For the entire development and trial production of the SouthHercules site in 2011, there were no environmental complianceincidents.Avebury 0 12 0 The Avebury mine, currently on care and maintenance,experienced 12 technical licence breaches in which nickel, arsenicor iron, which occur naturally in the Avebury ore body, wererecorded in water discharges. The Tasmanian EnvironmentProtection Authority has acknowledged that current data, whiletechnically over the licence limit demonstrates no measurableharm to the receiving waters from site activities. MMG hascompleted investigations which have identified a number ofsources of Acid Mine Drainage and a program of works thatwould support compliance with future discharge limits. Oncethe new discharge conditions are in place, we are expecting theexceedances to cease.Exploration 0 0 0 There have been no reportable or significant environmentalincidents for the 2011 period. This successful year can be mainlyattributed to the high standards of pre-engagement auditing forall drill contractors, excellent supervision and regular inspections.64

Environmental management and complianceMining is subject to a large number of environmentalregulatory and statutory requirements. Environmentalmanagement systems are required to ensure compliance.Certification to the international standard for environmentalmanagement systems (EMS), ISO 14001, representswidely accepted good practice.We aim to minimise our impact on the environment,comply with legal requirements and reduce our legacyissues through continuous improvement. Toward theseaims, we are developing an integrated SHEC managementsystem that incorporates ISO 14001 environmentalmanagement system requirements. It will include formal,risk-based development and implementation of SHECpolicy, standards and a supporting assurance program tomeasure operational performance against environmentalperformance standards. We are working to ensure thatoperations maintain or receive ISO 14001 certification andachieve zero non-compliance with our operational licenceand other legal requirements.All sites operated an ISO 14001 environmentalmanagement system in 2011, with certified systemsat Sepon, Rosebery and Golden Grove, and a newlyestablished ISO 14001-compliant environmentalmanagement system at Century.2011 environmental incidents and complianceIn 2011, MMG had a total of 39 reportable incidents,of which eight represented a non-compliance with sitelicence conditions (see the table, left). In comparison, therewere 32 recordable incidents in 2010, of which14 were non-compliances with licence conditions.While there was a reduction in non-compliances in 2011,this increase in reportable incidents was due to the watermanagement challenges associated with the one-in-150year rain event in Queensland. The event affectedCentury particularly severely, resulting in 32 incidentson site, of which five were non-compliances.2012 challengesIn 2012, our key environmental managementchallenges are to:» Deliver continual improvement in water management,including enhancement of operational water balancemodels for proactive risk management in both dry andwet climates. The aim of this being to ensure watersupply security in current operations and futuredevelopment projects in dry climates;» Reduce the incidence of environmental non-complianceswith operating licences in line with the targets outlinedin our three-year goals;» Review group environment standards to update withdeveloping industry standards;» Embed the concentrate handling strategy and productstewardship standard, as detailed under “ProductStewardship” on page 14, developed this year;» Address the Australian Government’s Clean Energylegislation to meet obligations and minimise impact; and» Gain full approval of the Environmental ManagementPlan for Dugald River, our first major development project.A transport vessel at Geraldton waits to load highprecious metal concentrate from Golden Grove.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE65

SUSTAININGOUR ECONOMICPERFORMANCEOur aim is to expand our position as a leading internationally diversified basemetals group, and our objective is to be one of the world’s top three mid-tiermining companies within five years. We aim to achieve this through a consideredapproach to growth and development.66Work has commenced on the development of two exploration declines at Dugald River.

Our approachWe aim to grow and develop our upstream, diversifiedbase metals operations through exploration and discovery,organic growth and acquisition. Our growth strategy aimsto meet the following objectives:» Commit to leading practices in corporate governance,production standards, safety, operational excellence andenvironmental protection;» Continue strong commitment to local economies andcommunities to support our social licence to operateensuring that local economies continue to receivetangible benefits from our operations;» Continue to leverage on the expertise and experienceof China Minmetals Corporation;» Pursue available organic growth opportunities throughour project pipeline and exploration strategy; and» Target value-focused acquisitions.Minmetals Resources Limited, the entity listed on the HongKong Stock Exchange (HKSE) that operates the MMG assets,reported its financial performance for the full year 2011with total net profit after tax attributable to equity holdersof US$540.9 million, up 32% from the full year 2010, asshown in the table below.Performance2011 financial results for Minmetals Resources LimitedFinancial Highlights (US$ million) 2011 2010 %Continuing operations:Revenue 2,228.3 1,919.9 16%EBITDA 1,063.8 820.9 30%Operating profit (EBIT) 755.3 521.3 45%Net profit after tax attributable to:Equity holders of the Company Capacity buildingCapacity building540.9 409.4 32%CompensationNon-controlling Compensation interests 33.6 21.0 60%Profit Donations attributable to equity holders of the Company:SponsorshipsEducation and trainingLocal business development initiativesCommunity development initiativesThis result was driven by significant one-off benefits,including the gain realised on the investment inEquinox Minerals Limited (“Equinox”) and the saleof non-core assets.Earnings Before Interest and Tax (EBIT) from continuingoperations was US$755.3 million, up 45% from the fullyear 2010. Underlying Earnings Before Interest, Taxes,Depreciation and Amortisation (EBITDA) for the company’scontinuing operations, excluding one-off items, wereUS$887.8 million, a 2.2% decrease on 2010.Operating costs remain a focus across our business withindustry-wide cost pressures remaining evident. Costmanagement will remain a challenge and focus for theBoard and management in 2012.The majority of the company’s revenue was receivedfrom sales of copper and zinc, accounting for 82%of sales revenue.Our largest customer, by revenue, continues to beAustralia, followed by Asia (namely Thailand and Vietnam,with sales of copper cathode from Sepon), as shown inthe chart below. Sales to China continue to account forapproximately 24% of our revenue. Of this, approximately6% of sales were to MMR’s ultimate majority shareholderChina Minmetals Corporation, on arms-length agreementswith commercial terms.Continuing operations 454.1 335.8 35%Discontinued operationsLocal business development86.8initiatives73.6 18%Earnings per share – fully dilutedContinuing operations 8.99 cents 7.41 cents 21%Discontinued operations 1.72 cents 1.63 cents 6%Total earnings per share 10.71 cents 9.04 cents 18%2011 REVENUE BY METALSILVER5%GOLD8%LEAD5%COPPER40%ZINC42%DonationsSponsorshipsEducation and trainingCommunity development initiatives2011 REVENUE BY destinationOTHER ASIA29%CHINA24%JAPAN AND KOREA2%AUSTRALIA34%EUROPE11%SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE67

150Minmetals Resources Limited’s (MMR) share priceperformanceWith a current free float of 28%, and the rest of ourstock held, ultimately, by majority shareholder ChinaMinmetals Corporation, it is challenging to realise a fullvaluation from the market of our company in our shareprice and market capitalisation. This has the potential to50limit our ability to attract high-potential candidates to thebusiness and to meet our growth targets.Over the course of 2011, MMR’s share price (HKSE 1208)performance0largely mirrored the performance of theHSBC Global Base Metals Index. MMR’s share price alsofollows the movements of global commodity prices,namely copper and zinc, our major products. The indexended the year down 28%, but MMR’s share price endedthe year down 44%, so MMR underperformed againstthe index.Three research analysts initiated coverage on thecompany this year. MMR intends to continuecommunications with the investment market, includingthe development of an Investor Relations Strategy in2012, to ensure balanced valuation of our stock.Volatility in commodity pricesThe price of metals, such as copper, gold, lead and zinc,fluctuates on the market as a result of changes in demandand currency exchange rates. This directly affects theprofit attainable from our products, our intent to invest inorganic growth and our ability to retain key employees.The price of our products in the market is directly relatedto the economic sustainability of our business, determiningthe level of 140 profit attainable from our operations and thefinancial viability 120 of operating our mines. Prices for ourkey commodities of copper and zinc declined in the latter100part of 2011 with concerns around European debt issuesreducing general 80 commodity demand.Rapid urbanisation 60 in China continues to drive backgrounddemand for 40natural resources. While China’s gross domesticproduct (GDP) growth is expected to slow to around 7–8%20in 2012, this is still impressive growth off such a large base.1000HSBC GLOBAL BASE METALS TR INDEXDemand is now being driven more by domesticconsumption within China, with a focus on publichousing development. We believe base metal demandwill continue to be strong but may face some short-termfluctuations, with recent economic difficulties in someparts of Europe and the United States.In order to manage this risk, we closely monitor and analysecommodity price movements and update our internalfinancial models and forecasts. Our growth strategyincludes the long-term analysis and demand for a varietyof base metal commodities.In addition to this, we work with industry partners topromote our products, increase demand through newuses and markets, and maintain the quality140of ourproducts to market to attain the best possible prices.120In 2011, Chief Executive Officer Andrew Michelmore wasmade the Chairman of the International 100 Zinc Association(IZA), the peak industry body for the zinc 80 industry. TheIZA aims to sustain the long-term global demand for zinc60and promote its importance to human health andagriculture.40Acquisition and project investment 20We are investing in new assets through mergers 0 andacquisitions to create shareholder value. We are workingto ensure the smooth integration of acquisitions intobusiness activities to achieve synergies and maximiseopportunities.When MMG was formed in 2009, we established a clearvision for the business – to build the next generation’sMMR SHARE PRICE (HK$)leading global diversified minerals and metals group.While we currently have a market capitalisation of aroundUS$2 billion, our objective is to be recognised as one ofthe top three mid-tier base metal mining companies inthe world. This would require growth of around three tofive times our current size through discovering, acquiring,developing and sustainably operating base metalsprojects around the world. New and difficult jurisdictionsand environments of available economic deposits willchallenge growth of this scale.JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC2011 Minmetals Resources Limited’s share prices performance against the HSBC Mining Index150HSBC GLOBAL BASE METALS TR INDEXMMR SHARE PRICE (HK$)100500JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC68

In 2011, MMR announced an intention to make an offerfor Equinox Minerals Limited (ASX, TSX: EQN) (“Equinox”),a mining company with copper assets in Zambia. Thiswas our first step into the global merger and acquisitionsmarket and signalled our interest in expanding into thehighly prospective southern African copper belt. Whilewe chose not to pursue this acquisition, the high priceultimately paid for Equinox enabled us to realise anattractive gain on our investment of US$152.1 million(pre-tax) from the sale of our 4.2% stake in that company.In September 2011, we announced an offer to acquireAnvil Mining Limited (ASX, TSX: AVM) (“Anvil”). We werepleased to complete the C$1,330 million acquisition,which brings the Kinsevere copper cathode operation inCASE STUDY: Zinc Saves KidsMMG supports UNICEF micronutrient powder gifts.Zinc is an essential micronutrient for healthy humandevelopment as it helps generate cells and is importantfor growth and brain development. Zinc Saves Kids is anIZA program that improves the survival, growth anddevelopment of undernourished children by fundingUNICEF-supported zinc micronutrient programs aroundthe world.UNICEF’s charity gifts program gives people theopportunity to purchase a gift that will make adifference to children in need. We are supportingpurchases of micronutrient powder valued at $16 for480 sachets, which we are matching dollar for dollarup to $25,000. The powder contains micronutrientsthat are lacking in many infants’ diets in developingcountries. The little sachets also help to give children’semergency food rations a powerful boost.MMG is now a key supporter of the IZA’s Zinc SavesKids program. The IZA, meanwhile, has a crucial roleto play in sustaining long-term global demand for zincand promoting its criticality to human health, cropnutrition and sustainable development.Anyone can support Zinc Saves Kids by purchasingmicronutrient powder gifts through the UNICEFInspired Gifts website: http://www.unicef.org.au/Charity-Gifts/Products/micronutrient-powder.aspxthe Democratic Republic of Congo into MMR’s portfolio.Our first priority is to smoothly integrate the Anviloperations into our business in 2012.Supporting our growth aspirations will be the deliveryof two important projects, Dugald River and Izok Corridor,which are targeted to replace Century mine productionpost closure, in zinc equivalent. The Dugald Riverdevelopment project in Queensland, Australia, advancedwith the Board approving further expenditure ofA$157 million toward the next stage of the project.A pre-feasibility study of the Izok Corridor Project inNunavut, Canada, was completed in 2011 and workhas now commenced on a feasibility study.Micronutrient sachets are sprinkled on meals.ZincSavesKidsTMAn International Zinc Association initiative in support of UNICEFSUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE69

Realising the full value of assetsExtracting the maximum value from our current assetswill be a key driver in delivering sustainable economicperformance.In 2011, our mining assets performed within costguidance for both production and operating costs.Stand-out results were seen at our Sepon copper andgold operation following the completion of the coppercathode expansion project, which has expanded nameplatecapacity from 65,000 to 80,000 tonnes per annum.At Golden Grove, we commenced development of anopen copper pit, above existing underground operations,that will deliver an additional 20,000 tonnes of copper inconcentrate a year from 2012 to 2014.At Rosebery, our exploration programs continued toidentify additional mineral resources and source feed forthe processing plant which this year celebrated 75 yearsof continuous operation. Combined with theestablishment of an innovative sustainable extractionoperation at the nearby South Hercules deposit,Rosebery’s mine life now extends to 2024.While the potential to discover additional discrete-stylemineralisation near our Century mine is effectively testedand current operations are expected to cease in 2016, wecontinue to examine a number of near-mine initiatives foridentification of additional feed for the processing plantfrom smaller vein-style occurrences nearby. The viabilityof using Century infrastructure to exploit the phosphatedeposits that occur on our tenements will be furtherstudied this year. Our aim is to continue to identifyopportunities to unlock the full production potential,and ultimately shareholder value, of our current assets.Product shipping and logisticsAccess to markets for our products is essential tothe sustainability of the business. We work withinfrastructure service providers and regulators toresponsibly maintain access.We use a combination of logistics channels to transportproduct from our mines to customers. This is different ateach site depending on its location and that of its customers.For example, at Century, concentrates are transported inslurry form in a 304-kilometre underground pipeline toour port facility in Karumba, where they are dewatered,loaded onto a barge and transported and transferred todeep-water export vessels at sea. At Sepon, located inLaos, a land-locked country, copper cathode is transportedby truck to customers in Thailand, Vietnam and China.Unique product stewardship and material-handlingchallenges are present along all logistics chains as outlinedin the “Product stewardship” section of this report.CASE STUDY: Acquisition of Anvil MiningOn 19 March 2012 we completed the acquisitionof Anvil Mining Limited (“Anvil”). Anvil’s copperoperations are an excellent fit with our strategy tobuild an upstream base metals company. The key assetacquired is 95% of the Kinsevere copper operation and a70% interest in the Mutoshi development project, bothlocated in the southern Katanga province of theDemocratic Republic of Congo (DRC).Now the acquisition is complete, our immediate focusand challenge is to integrate the Anvil operations intoour business. Integration is a demanding phase for boththe acquirer and the target company. A project team hasbeen deployed to identify, transition and integrate Anvil’sbusiness processes, systems and standards into MMG.Our focus will be to extend MMG’s safety, health,environment and community management systems tothe Anvil operations.Copper cathode production at Kinsevere operationsin the DRC have been impacted by power supply issuescaused by unexpected network outages within theKatanga region. A combination of low water levelsin hydro-electricity systems, infrastructure failure andinability to access power from neighbouring Zambiahas led to an extended period of no, or limited, powerallocation to the Kinsevere site. We continue to workclosely with site management and electricity providers inthe DRC and Zambia to improve the reliability of supply.In addition, plans are under way to provide a level oftemporary on-site generation to ensure that Kinseverecontinues to ramp up effectively.In addition, we recognise that the geopolitical riskspresent in the DRC will be a challenge in the future.Anvil made significant investments in the localcommunity supporting the establishment of schools,local businesses, health programs and other socialinvestment projects. We intend to continue this supportfor the local community to ensure the benefits of themine’s operations flow back to the local community.70

CASE STUDY: Primary gold potential at SeponSepon mine currently mines and processes oxide goldore – gold ore that is at, or very close to, the surface.A study of primary gold ore, which lies beneath theoxide gold ore, is expected to report later this year. Iffavourable, a substantial investment would be neededto modify the processing plant in order to process thisdifferent type of ore.Since its commencement, the Sepon gold operation hasproduced over one million ounces of gold through openpit mining and conventional treatment of oxide gold ore.Current reserves of oxide gold are not expected to lastmuch beyond 2012.Customer economic sustainabilityOur customers are smelting businesses who on-sell ourproduct after refining it further, for consumption in arange of end uses, such as construction materials orautomotive vehicles. When global demand for these enduses falls, our customers may respond by reducing theirdemand for our product.While we have life-of-mine contracts in place for a largeportion of our current production, we negotiate annualtreatment and refining charges. In addition to this, we sellproduct to customers on short-term, spot-market contracts.To maintain our economic sustainability, we must be ableto sell our products to market, and therefore the demandfor our products from customers is pivotal to our economicsustainability. Through the IZA, the ICMM and the MCA,we are working on various initiatives to promote ourproducts to the global market for established and new uses.We believe that access to growing economies, such asChina, provides our products with strong customer markets.As with commodity prices, we monitor customer demandfor our products and adjust our internal forecasts andoperational plans accordingly.Financial implications of the Australian Government’sClean Energy legislationThe Australian Government’s Clean Energy Bill willintroduce carbon pricing to Australian industries from1 July 2012.In 2011, the Australian Government announced aproposed carbon tax on selected businesses of A$23.00per tonne of carbon dioxide equivalent (CO 2 -e). The taxwill apply from 1 July 2012 and will increase at 2.5% plusinflation annually until 1 July 2015, when an emissionstrading scheme will be introduced.Loading ore at Sepon.Our operations contribute greenhouse gas emissions bothdirectly, mainly via on-site consumption of diesel fuel, andindirectly mainly through grid-sourced electricity. Basedon the legislation currently proposed, the company will beexempt from the direct carbon tax as its emissions producedfrom Australian sites are under the threshold. However,it will see increased costs on fuel due to a reduction ingovernment fuel tax credits. In addition, it is likely that afurther indirect cost from the carbon tax will arise throughincreased costs passed on by suppliers, most notably forgrid-sourced electricity. The cost impact for the businessassociated with the current carbon tax proposal is estimatedto be approximately A$18 million per annum, during theinitial two years under a fixed-price regime.Major disruptive event impactsA key risk for the business is that of a major disruptiveevent, such as a fatality, mine closure, reputational damageand loss of community support or legal action, that leadsto a disruption to production.In order to manage these risks, we implement a varietyof preventative measures, including site emergencymanagement and corporate crisis management plans.In addition, our approach to sustainability management,as detailed earlier in this report, incorporates site andcorporate risk registers, governance structures, includingreporting of performance and issues to a Board committee,and operating standards, such as certification to ISO14001 at all of our operating sites.SUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE71

Management reporting and decision-makingGood management reporting is necessary to facilitateeffective decision-making and improve our ability tointegrate future acquisitions smoothly.In 2011, a program commenced to review and upgradeour information technology (IT) systems required toeliminate reliance on legacy systems and supportmanagement reporting and decision-making. There wasa significant step-up in investment in IT in 2011, relatingto the transformation of key management systems toprovide a foundation for the company’s simplificationand growth including essential infrastructure. Work hascommenced on a standardised and simplified businessmanagement system, underpinned by common globalprocesses and standard SAP mining platform. Thistransformational program aims to improve managementresponsiveness and overall operational efficiency.The economic and social contribution of mining isimportant to our stakeholders and we anticipate willcontinue to be a challenge in the future. Mining andexploration businesses pay royalties and other fees togovernments in order to explore for and extract mineralsresources. The investment and long term focus requiredto bring these projects to production is significant.Companies must ensure that the benefits of theiroperations are reinvested to all stakeholders, be theyshareholders, employees or local communities. However,companies need to be assured of a long-term economicreturn on their investment. This is an issue that MMGwill continue to monitor as governments around theworld continue to assess their expectations of theminerals industry.CASE STUDY: Mine rescue teams at MMGIn 2011, MMG’s high-performing mine rescue teamsreceived a number of commendations for their effortsafter competing at various Australian state-run minerescue competitions.Century’s Emergency Response Team excelled at theNorth West Mine Rescue Challenge at the end ofOctober. The team won first place in the Road AccidentRescue, second place in the Vertical Height Rescue(Ropes) and third place in the First Rescue categoriesof the challenge.Also in October 2011, the Golden Grove Mine RescueTeam achieved an outstanding result at the Chamberof Minerals and Energy’s annual Underground MinesRescue Competition held at Mount Charlotte inKalgoorlie, Western Australia, finishing second overall.The team produced consistent results, placing in the topthree in nine out of the 11 available awards. Adding tothe success, first-time team Captain Frank Vink wasrewarded with the competition’s Captain’s Award foroutstanding leadership.In November 2011, in the Tasmanian EmergencyRescue Competition held at Vedanta Copper Mines,the Rosebery Mine Rescue Team secured the overallchampionship for the third time in four years. Led byElmar Van Breda, who secured the Captain’s Award, theteam produced excellent results, placing first in six ofnine categories: safety, first aid, team skills, confinedspace, vehicle extraction, and underground rescue.2012 challengesThe business will continue to confront challenges in2012 as it develops a number of the opportunities inits project pipeline, focusing on:» Progressing the Dugald River Project, moving fromthe feasibility phase into project development;» The transition and integration of Anvil’s businessprocesses, systems and standards into MMG.» Progressing the Izok Corridor Project, moving frompre-feasibility to feasibility phase; and» Continuing to target acquisition opportunities withthe aim to complete at least one material acquisitionper year.Golden Grove’s Mine Rescue Team providedlocal fire fighters with personnel, resources andmachinery during the recent local bush fires72

GLOBAL REPORTING INDEX FINDER CONTINUEDGRI CategoryIndirectEconomicImpactsMaterialsEnergyWaterBiodiversityEmissions,effluentsand wasteProductsand servicesGRIIndicatorNumberEC8EN1,EN2EN3,EN4EN8,EN10EN11EN12MM1MM2Indicator Description Sustainability Report Reference PageInfrastructure and servicesprovided primarily for publicbenefit.Materials.Direct and indirect energyconsumption.Water withdrawal, water sourceand reuse.Location and size of land inor adjacent to protected areasand description of impacts.Amount of land (owned orleased, and managed forproduction activities orextractive use) disturbedor rehabilitated.Sites identified as requiringbiodiversity management plansand the number (%) of thosesites with plans in place.Working with our stakeholders – 2011 Communityinvestment expenditure; Case studies.About MMG – Map; Respecting our environment – Mineralwaste management. Materials used (such as site supplies,food, vehicle maintenance supplies etc) is not considered animportant impact area in the context of the material mined,product produced and mineral waste produced and managed.Respecting our environment – Energy use and carbonemissions; 2011 energy efficiency.Respecting our environment – 2011 water outputs; 2011water output quality; Water and wastewater dischargemanagement; Case study – Managing water issues at Century.Respecting our environment - Biodiversity; Land disturbanceand rehabilitation; Case studies. Sepon mine is adjacent toprotected area in Laos, and Rosebery operations are adjacentto 138 hectares of protected area in Australia.Respecting our environment – Biodiversity – Land disturbanceand rehabilitation; Sustainability highlights and challenges.Respecting our environment – Biodiversity, Case studies;Sustainability highlights and challenges.EN16–18 Greenhouse gas emissions. Respecting our environment – MMG Climate Change Study,2011 greenhouse gas emissions. For project detail visit:http://www.mmg.com/en/Sustainability-and-Community/Climate-change.aspxEN21 Total water discharge. Respecting our environment – 2011 MMG water outputs;2011 water output quality.EN22 Total weight of waste. Respecting our environment – Mineral waste management. 62EN23MM3EN26EN27Number and volume ofsignificant spills.Total amounts of overburden,rock, tailings, and sludgesand their associated risks.Initiatives to mitigateenvironmental impacts.Percentage of products soldand their packaging materialsthat are reclaimed by category.Respecting our environment – 2011 environmental incidentsand compliance.Respecting our environment – Mineral waste management;2011 MMG water outputs; 2011 water output quality.Respecting our environment – Environmental managementand compliance.This is not applicable to MMG as concentrates are sold inbulk and not packaged for the end consumer.Compliance EN28 Monetary value of fines. Respecting our environment – Environmental managementand compliance – 2011 environmental incidents andcompliance. There were no fines to be paid in the 2011reporting period.40;41–574; 625653–5458;58–6358; 858; 858; 565464–6562; 5464–6564–65Community SO1 Programs that assessand manage the impacts ofoperations on communities.MM6MM7Significant disputes relatingto land use, customary rightsof local communities andIndigenous Peoples.Use of grievance mechanisms toresolve disputes relating to landuse, customary rights of localcommunities and IndigenousPeoplesWorking with our stakeholders – Community and regionaldevelopment; Case studies – Community developmentinitiatives in Laos, Sepon Trust Fund update, Sepon villagemicrofinance update, Sepon mother and child health project;MMG Golden Grove launches an education engagementprogram; Bringing electricity to 900 local families at Sepon;Sustainability highlights and challenges.Working with our stakeholders – Human rights –Community complaints management.Working with our stakeholders – Human rights –Community complaints management.44; 42424274

GRI CategoryGRIIndicatorNumberCommunity MM8 Company operating sites whereartisanal and small scale miningtakes place on, or adjacent to,the site, associated risks andactions taken.MM9Indicator Description Sustainability Report Reference PageSites where resettlementtakes place, the number ofhouseholds resettled and howlivelihoods were affected.There was no informal or artisanal mining at MMG’s Australiansites in 2011. Some dredging activity was investigated withinSepon’s tenement area during the reporting period. Theseinvestigations involved Environment Officers of the Governmentof Laos, and resulted in an official MMG memorandum to theLao government ministries explaining the activities and theirassociated risks.No resettlements occurred during the reporting period.MM10 Operations with closure plans. Working with our stakeholders – Closure planning; Case study– Century Mine closure planning. New closure planningstandards are being developed in 2012, to be implementedby all sites.Corruption SO2 Analysis for risks. Our approach – Risk management. 14SO3 Employee training. An improved Code of Conduct, including corruption, will berolled out with accompanying training in 2012.SO4Analysis for risks, and actionstaken in response to corruption.Public Policy SO5 Public policy positions andparticipation in public policydevelopment and lobbying.Compliance SO8 Fines for non-compliance withlaws and regulations.MaterialsstewardshipCustomerhealth andsafetyProductand servicelabellingMM11PR1Programs and progress relatingto materials stewardship.Health and safety impacts ofproducts and services.Our approach – Management approach –Anti-corruption.Our approach – Management approach – Public policyinitiatives.No political donations were made in the period.Our approach – Business ethics and governance;Anti-corruption.Our approach – Product stewardship. MMG works withthe International Zinc Association (IZA), the ICMM andthe MCA on material stewardship programs.MMG works with its trade and smelter customers to ensureour products are handled correctly, provide Material DataSafety Sheets, ensure the handling and movement are donewith appropriate care and improve this where required.PR3 Product and service information. MMG's products are sold as either concentrates in bulk,copper cathode or refined precious metals. MMG complieswith the product handling, safety and labelling requirementsapplying to the sale and transport of our products to customers.Marketing PR6 Adherence to laws, standardsand voluntary codes related tomarketing communications.Compliance PR9 Fines concerning the provisionand use of products and servicesEmployment LA1 Workforce by employment type,LA2region and employee turnoverLabour/managementrelationsLA3LA4LA5MM4Benefits provided to full-timeemployees that are not providedto temporary or part-timeemployees, by major operations.Employees covered bycollective agreements.Minimum notice periodsregarding operational changesNumber of strikes and lock-outsexceeding one week’s duration,by country.MMG does not undertake marketing communications for ourproduct as they are sold to buyers with whom the companyhas well-established relationships.No fines occurred in the reporting period.Our people – Performance; People profile; People profile bysite; Diversity, roles and remuneration. See table, page 76.Our people – Performance – People profile. Part timeemployees have the same entitlements as full time. Temporaryemployees do not have access to St Luke’s healthcare, novatedleasing, paternity leave, or site short-term incentives unlessspecifically outlined in their contract or if they are with MMGfor at least 12 months.Sepon – All employees are on individual employmentarrangements.Century – 414 or 60.7% of Century employees are covered bythe MMG Century Mine Employee Certified Agreement 2010.Rosebery – 45% of Rosebery employees are covered byEnterprise Bargain Agreement for the underground workforce.There is no specific minimum notice period, however, onceMMG has made a definite decision to pursue a specific courseof action then MMG would notify all relevant parties.There were no strikes or lock-outs during the reporting period.40; 411213121421; 252175

GLOBAL REPORTING INDEX FINDER CONTINUEDGRI CategoryOccupationalhealth andsafetyTraining andEducationDiversityand equalopportunityGRIIndicatorNumberLA7–LA8Indicator Description Sustainability Report Reference PageHealth and safety committeesand rates of injury andwork-related fatalities.Health and safety – Performance; Staff safety and wellbeing. 29; 31LA10 Staff training. Our people – Training and development. 26LA11LA13LA14Programs for skills managementand lifelong learning thatsupport the continuedemployability of employeesand assist them in managingcareer endings.Composition of governancebodies and employee categories.Salary ratio of men to womenby employee category.Our people – Training and development; Case studies –Rosebery young trainee program; Australia's largest zinc minelaunches 'Women in Resources Network'; An opportunity tostudy; Apprenticeship program update; Apprenticeships canchange lives; Data clerks traineeship program update.For details of the MMG board and governance structure,please refer to the MMR 2011 Annual Report at(www.mmg.com).Our people – Gender diversity; Diversity, roles andremuneration.26; 27;2325Investment andprocurementpracticesNondiscriminationFreedom ofassociationand collectivebargainingSecuritypracticesIndigenousrightsHR1–HR2HR3HR4HR5–7HR8MM5Significant investmentagreements that includehuman rights and suppliersand contractors that haveundergone screening.Employee training on policiesand procedures concerninghuman rightsIncidents of discriminationand actions taken.The right to exercise freedomof association and collectivebargaining. Child labour,compulsory labour.Security personnel trained inrelevant human rights policiesor proceduresOperations taking place in oradjacent to Indigenous Peoples'territories, and operations wherethere are formal agreementswith Indigenous Peoples'communities.Currently 0%. Human rights screening is not currently partof the investment and procurement processes at MMG.All security personnel at Sepon are trained in how to managesecurity issues and the rights of people involved.There were no reported incidents of discriminationin the period.MMG employees have and exercise rights of associationand collective bargaining.MMG's Human Resources department manages employeeindividual agreements, collective agreements, and allemployee grievances in regard to these agreements.No incidents of restriction of these rights, or child or forcedlabour, have been identified in the reporting periodAll security personnel at Sepon are trained in how to managesecurity issues and the rights of people involved.MMG's Century, Sepon and Golden Grove mines are alladjacent to indigenous people's territories. At all thesesites MMG has agreements and community developmentprograms in place with these indigenous communities.Total workforce make-upCenturyGoldenGroveRosebery Sepon Exploration Corporate Total MMG 2011Total workforce 1,030 748 504 5,763 70 398 8,513Full time 756 468 258 1,832 56 290 3,660Part time 0 0 2 0 3 23 28Casual 10 10 12 1,566 8 22 1,628Contractors 264 270 232 2,365 3 63 3,197Female Ratio (%) 13% 12% 13% 18% 39% 43% 17%Indigenous Ratio (%) 24% 3% 1% 0% 0% 0% 10%87% 0% 0% 87% 25% 0%Local employee(vs Ex-pat) Ratio (%)Turnover (%)(Jan-Dec 2011)12.0% 9.6% 6.3% 8.4% 4.3% 7.7% 8.5%76

ICMM 10 sustainabledevelopment Principles indexICMM PRINCIPLES REPORT SECTION PAGE01 Implement and maintain ethical businesspractices and sound systems of corporategovernance.02 Integrate sustainable developmentconsiderations within the corporate decisionmakingprocess03 Uphold fundamental human rights and respectcultures, customs and values in dealings withemployees and others who are affected byour activities04 Implement risk management strategies basedon valid data and sound science05 Seek continual improvement of our healthand safety performance06 Seek continual improvement of ourenvironmental performance07 Contribute to conservation of biodiversity andintegrated approaches to land use planning08 Facilitate and encourage responsible productdesign, use, re-use, recycling and disposal ofour products09 Contribute to the social, economic andinstitutional development of the communitiesin which we operate10 Implement effective and transparentengagement, communication andindependently verified reporting arrangementswith our stakeholdersOur approach – Management approach;Business ethics and governance; Feature –Sepon ICMM Report.Our approach – Alignment with the ICMM 10Sustainable Development Principles; Managementapproach; Business ethics and governance;Materiality determination.Our approach; Feature – Century indigenouscommunity development.12; 1611; 1210; 18Our people – Our approach; Performance. 21Working with our stakeholders – Our approach; 37; 42Performance – Human Rights.Message from the CEO. 2Our approach – Risk management. 14Health and safety – Our approach; Performance –Aviation risk management.Working with our stakeholders – Post-closurecommunity expectations.Respecting our environment – Mineral wastemanagement; Environmental management andcompliance; 2012 challenges.Sustaining our economic performance –Volatility in commodity prices; Majordisruptive event impacts.Overview – Sustainability performance –3-year goals.Our approach. 10Health and safety – Our approach;Performance; 2012 challenges.Overview – Sustainability performance –3-year goals.Our approach. 10Respecting our environment – Our approach;Performance; 2012 challenges.Respecting our environment – Our approach;Performance – Biodiversity.Our approach – Product stewardship. 14Respecting our environment – Performance –Mineral waste management; Wastewater andtailings management, 2012 challenges.Our approach. 10Working with our stakeholders. 3629; 354062; 6568; 71929; 35953; 6553; 5862; 53;65Working with our stakeholders – closure planning. 40; 41Sustaining our economic performance. 67Our approach. 10Working with our stakeholders – Our approach,Performance, 2012 challenges.10; 40;5177

2Assurance Provider’s ResponsibilityOur responsibility is to express a limited assurance conclusion on whether the subject matter is presented in accordance withthe criteria. Our limited assurance engagement has been planned and performed in accordance with the InternationalFederation of Accountants’ International Standard on Assurance Engagements 3000: Assurance Engagements Other ThanAudits or Reviews of Historical Financial Information (‘ISAE 3000’), with regard to ICMM’s SD Framework: AssuranceProcedure. Our limited assurance engagement does not include any testing of controls or performing procedures relating tochecking aggregation or calculation of data within IT systems, which would have been performed under a reasonableassurance engagement. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis forour limited assurance conclusions.Level of AssuranceA limited assurance engagement consists of making enquiries and applying analytical and other limited assuranceprocedures. Our procedures were designed to provide a limited level of assurance and as such do not provide all theevidence that would be required to provide a reasonable level of assurance. While we considered the effectiveness ofmanagement’s internal controls when determining the nature and extent of our procedures, our review was not designed toprovide assurance on internal controls. We believe that the evidence we have obtained is sufficient and appropriate toprovide a basis for our limited assurance conclusions.Our ApproachOur procedures performed included, but were not limited to Interviewing a selection of MMG staff and management at both a site and corporate level responsible for subject matterand the preparation of the Report Reviewing the report to determine if material topics and performance issues identified during our procedures had notbeen adequately disclosed Sample testing of reported data, performance statements, claims and case studies included in the subject matter againstsupporting source information, MMG’s reported boundary and GRI’s principles of balance and completeness Sample testing as to whether the methods used for calculating data were not aligned with the stated criteria Reviewing selected management information and documentation supporting assertions made in the subject matter Reviewing MMG policies and standards and assessing alignment with ICMM’s 10 Sustainable Development Principles andother mandatory requirements as set out in ICMM’s Position StatementsInherent LimitationsThere are inherent limitations of any assurance engagement arising from the evidence on which the auditor drawsconclusions upon being persuasive, as it relies on selected data to be representative, rather than conclusive. There areadditional inherent risks associated with assurance over non-financial information including reporting against standardswhich require information to be assured against source data compiled using definitions that are developed by the reportingentity. Finally, principles of materiality and responsiveness are subjective and will be interpreted differently by differentstakeholder groups.Use of Our ReportOur limited assurance report has been prepared for distribution to the management and directors of MMG. We disclaim anyassumption of responsibility for any reliance on this assurance statement or on the subject matter to which it relates, to anyperson other than management and directors of MMG, or for any purpose other than that for which it was prepared.Our Independence and Assurance TeamIn conducting our assurance engagement we have met the independence requirements of the APES 110 Code of Ethics forProfessional Accountants. We have the required competencies and experience to conduct this assurance engagement.Matters relating to electronic presentation of the Sustainability ReportOur review included web-based information that was available via web links as of the date of this statement. We provide noassurance over changes to the content of this web-based information after the date of this assurance statement.Assurance conclusionOn the basis of our procedures for this limited assurance engagement, nothing has come to our attention that causes us tobelieve that subject matter has not been presented in accordance with the criteria.Ernst & YoungMelbourne, 4 May 201280

GLOSSARYRegularly occurring acronymsCEOChief executive officerCSRCorporate social responsibilityDERMDepartment of Environment and Resource Management (Queensland)DSADesigned storage allowanceEBITEarnings before interest and taxEBITDAEarnings before interest, tax, depreciation and amortisationEEOEnergy Efficiency OpportunitiesEISEnvironmental Impact StatementFIFO“Fly-in fly-out”GCAGulf Communities AgreementGRIGlobal Reporting InitiativeHKSEHong Kong Stock ExchangeICMMInternational Council on Mining and MetalsISO (including 14001) International Organisation for Standardisation of management standardsIZAInternational Zinc AssociationLao PDRLao People’s Democratic RepublicMCAMinerals Council of AustraliaMMGMinerals and Metals GroupMMRMinmetals Resources LimitedSHECSafety, health, environment and communityVDFVillage Development FundsWAFWater Accounting Framework (of the Minerals Council of Australia)Regularly occurring units of measureA$ Australian dollar(s)US$United States of America dollar(s)C$ Canadian dollar(s)GJGigajoules (of energy)MLMegalitres (of water or other liquid)µg/dLMicrograms per decilitre (of substance)KEY CONTACTSWe are interested in your comments on this report.Please contact James Porteous, Communications Advisor atjames.porteous@mmg.com with your feedback or suggestions.Head OfficeLevel 2328 Freshwater PlaceSouthbank Victoria 3006AustraliaT +61 3 9288 0888Websitewww.mmg.comStakeholder RelationsTroy HeyGeneral Manager – Stakeholder & Investor Relationstroy.hey@mmg.comInvestor RelationsColette CampbellGroup Manager – Investor Relationscolette.campbell@mmg.comMedia RelationsSally CoxGroup Manager – Communicationssally.cox@mmg.comShare ListingHong Kong Stock Exchange1208 – Minmetals Resources Limited81