MINIMISING AND MITIGATING IMPACTS - Kumba Iron Ore

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A monthly meeting is held by mine energy champions, during which progress against targets and new projects regarding energy and the environment are discussed. By the end of 2013, a climate adaptation plan for Kumba, detailing the risks and associated mitigation plans, will have been put in place. This will be supported by the development of a regional climate model to identify key site adaptation requirements. The total energy consumption for the group rose by 10.7% to 7,046,889 gigajoules (GJ) in 2011 (2010: 6,365,277GJ), owing to rising waste stripping requirements and expansions. Energy intensity also rose by 20% to 0.177GJ per tonne of ore. Of the total energy consumed, electricity purchased accounted for 26% while 74% was generated from fossil fuels. Anglo American plc uses its Group Technical Standard as an energy and emissions management standard for the Group. Gap analyses for full compliance were conducted during the year by Anglo American Technical Services at all of Kumba’s operations. Sishen mine’s compliance was found to be 68% in March and 88% �� to 68% over the same period, and Kolomela mine’s compliance increased from 28% to 40%. Full compliance is targeted for December 2012. ENERGY CONSUMPTION (million GJ) AND ENERGY INTENSITY (GJ/tonne ore) 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2007 2008 2009 2010 2011 Consumption Intensity ENERGY SAVING INITIATIVES UNDERTAKEN OR COMPLETED DURING 2011 ENERGY CONSUMED FROM FOSSIL FUELS (DIRECT) (million GJ) 2011 2010 Sishen mine 4.16 3.78 �� 0.42 0.42 Kolomela mine 0.65 0.34 Group 5.23 4.54 ENERGY CONSUMED FROM ELECTRICITY PURCHASED (INDIRECT) (million GJ) 2011 2010 Sishen mine 1.64 1.70 �� 0.10 0.10 Kolomela mine 0.07 0.02 Group 1.82 1.82 TOTAL ENERGY CONSUMED (DIRECT AND INDIRECT) (million GJ) 2011 2010 Sishen mine 5.80 5.48 �� 0.53 0.52 Kolomela mine 0.72 0.36 Group 7.05 6.36 Energy savings potential Carbon emission savings potential Location Project (GJ per year) (CO2e tonnes per year) Sishen mine Installation of solar water heaters as part of Sishen mine’s hostel conversion process. 1,518 39 Replacement of a dust extraction system with a dust suppression system that uses smaller motors. 30,758 39 Installation of solar water heaters on mine houses in town. 2,490 39 Installation of solar water heaters at Sishen mine changehouses. 39 39 Diesel energy efficiency management system (DEEMS) used to track diesel performance and to log and track interventions. Diesel saving of 171,262 litres for 2011. 6,186 39 �� mine 0.20 0.16 0.12 0.08 0.04 0.00 Changes to the standard fine ore DMS flow line at the �� Savings to be quantified Savings to be quantified �� Savings to be quantified Savings to be quantified Kolomela mine Installation of 226 solar water heaters on houses completed by �� 1,485 424 Sustainable Development Report 2011 75 Sustainability performance
ENVIRONMENTAL PERFORMANCE TOTAL CO2e FROM FOSSIL FUELS (SCOPE 1 EMISSIONS 1 ) (Mt) 2011 2010 Sishen mine 0.31 0.27 �� 0.03 0.03 Kolomela mine 0.05 0.02 Group 0.39 0.32 TOTAL CO2e FROM ELECTRICITY PURCHASED (SCOPE 2 EMISSIONS 2 ) (Mt) 2011 2010 Sishen mine 0.47 0.49 �� 0.03 0.03 Kolomela mine 0.02 0.01 Group 0.52 0.52 TOTAL CO2e EMISSIONS (SCOPE 1 AND 2 EMISSIONS) (Mt) 2011 2010 Sishen mine 0.78 0.75 �� 0.06 0.06 Kolomela mine 0.07 0.03 Group 0.91 0.84 www www.angloamericankumba.com/pdf/reports/carbon_report_2011/2011_carbon_ report.pdf SCOPE 3 EMISSIONS 3 (Source: CDP Information Request, May 2011) Kumba’s product is transported and distributed via railway from Sishen mine (and now from Kolomela mine) to Saldanha Bay and then exported by ship to China, Japan, South Korea and Western Europe. Railway emissions were estimated at 7.25 million tonnes of CO2e (tCO2e) and shipping emissions at 1.77 million tCO2e. Kumba’s business air travel is by commercial airline and company jet. Emissions were estimated at 83.2 tCO2e for commercial flights and 26 tCO2e for the company jet. Claimed business kilometres by road produced an estimated 339 tCO2e. Employee commuting by road produced an estimated 80,075 tCO2e. FINANCIAL IMPLICATIONS OF CLIMATE CHANGE The most material and immediate financial implication of climate change would be the introduction of a carbon tax. As a member of the Anglo American plc Group, Kumba participated in a recent independent study conducted by McKinsey Consulting to evaluate this implication, and ensure that Kumba is prepared for this development, should it arise. The company considers itself to be adequately prepared. Although the uncertainty inherent in climate change itself makes quantification of financial implications difficult, damage to assets and/or disruptions to production could have severe financial effects. Disruptions to electricity supply and infrastructural damage caused by storms are some of the possible related risks. Total CO2e emissions for 2011 were 907,141 tonnes (2010: 841,245 tonnes). This is 18% higher than those in 2010 �� mines, and growth at Kolomela mine. The intensity of CO2e emissions was 0.023 tonnes CO2e per tonne of ore produced. The group has set a CO2e emission reduction target of 5% by 2015, against a business-as-usual curve with the base year of 2004. CO2e EMISSIONS (Mt) AND CO2e EMISSIONS INTENSITY (t/tonne ore) 1.2 1.0 0.8 0.6 0.4 0.2 2007 2008 2009 2010 2011 Emissions Intensity Failing stable electricity supplies, relatively costly diesel fuel would have to be used to generate power. The export-orientated nature of the product also exposes a logistical risk with respect to railway, road and harbour infrastructure, although in most cases this would have financial implications for customers rather than producers. By the end of 2013, a climate adaptation plan for Kumba, detailing risks and associated amelioration plans, will be in place, as will a regional climate model to identify key site adaptation requirements. The Anglo American Group Climate Change and �� there will be continuous cost requirements for the design, management and implementation of the adaptation plans – including the development of regional climate models – as well as capital costs associated with adaptation measures introduced into business plans. 1 Direct emissions from GHG sources owned or operated by Kumba. 2 Indirect emissions from GHG sources not owned or operated by Kumba, but that are necessary for Kumba’s operation. 3 All indirect emissions not included as part of Scope 2 emissions. Scope 3 emissions occur as a result of Kumba’s activities but are not central to its operation. These include business travel, supply chain emissions and product transport. (Source: Carbon Disclosure Project) 76 Kumba Iron Ore Limited 0.025 0.020 0.015 0.010 0.005 0.000
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Page 3 and 4: ENVIRONMENTAL PERFORMANCE Kumba aim
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MINIMISING AND MITIGATING IMPACTS - Kumba Iron Ore

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