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Tampakan ProjectSustainability Report 2009
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b TAMPAKAN PROJECT
Contents
Aot Xstrata plc
Xstrata is a global diversifed mining group, listed on the London and Swiss Stock Exchanges, with its headquarters in Zug, Switzerland.
Xstratas businesses maintain a meaningul position in seven major international commodity markets: copper, coking coal, thermal coal,
errochrome, nickel, vanadium and zinc, with a growing platinum group metals business, additional exposures to gold, cobalt, lead and
silver, recycling acilities and a suite o global technology products, many o which are industry leaders. The Groups operations and
projects span 19 countries.
Aot Xstrata CopperHeadquartered in Brisbane, Australia, Xstrata Copper is one o the commodity business units within Xstrata plc. Its operations and
projects span eight countries: Australia, Argentina, Chile, Peru, Canada, the USA, the Philippines and Papua New Guinea. Its operations
are administered by fve separate divisions, based close to the mining operations, namely the North Queensland, Minera Alumbrera, North
Chile, Southern Peru and Canada divisions. It also has a recycling business (Xstrata Recycling) with plants in the United States and ofces
in Canada and Asia.
Xstrata Coppers world-class portolio o copper development projects includes Tampakan in the Philippines, Frieda River in Papua
New Guinea, Las Bambas and Antapaccay in Peru and El Pachn in Argentina. Xstrata Copper is also developing the Energa Austral
hydropower plant project in southern Chile.
Xstrata Copper is the ourth largest global copper producer with attributable mined production in 2009 o 907,000 metric tons o copper
in cathodes and concentrates. The company is also one o the worlds largest producers o smelter and refned copper, including rom
third party materials. It employs approximately 19,500 people, including contractors.
1 Xstrata Copper TampakanProject
2 Executive General Managersmessage
4 General Managers message
6 2009 SD Scorecard and 2010Targets
12 Our approach to sustainabledevelopment
Xstrata Coppers Denition oPrpose
Or strategic ojectives
Or vales
Precationar approach
13 SMI Sstainale Development Polic
Ke sstainailit challenges
Awards or sstainale development
16 Governance and managementsystems
Governance strctre
Hman rights
Child and orced laor
b TAMPAKAN PROJECT
brier and corrption
Plic polic participation &political contritions
20 Our operations andeconomic contributions
Local sppliers
Local siness
Local inrastrctre
25 Case StudyProgress inBarangay Kimlawis
26 The workplace and our people
Saet perormance
Occpational health
Home saet and asic rst aid
behavioral based Saet (bbS)
Risk management
Treatment or serios diseases
Preparation or crisis andemergenc
Emploees
Emploing locall
Emploee training
Emploee perormance evalation
Diversit and eqal opportnit
Non-discrimination polic
29 Case Study5,000,000+ manhours with no LTI: The cltre
o saet in the work place andthe commnit
31 Case StudyCultural induction:Ke to cltrall sensitive commnitengagements
32 Sustainable communitiesCommnit grievances
Indigenos rights
36 Case StudyThe SMI public
consultation process
37 Case StudyHeritage Surveys:The cltrall sensitive engagementapproach
38 The environmentEnvironment Polic
Environmental incidents
Water management
biodiversit
Air emissions
Solid waste management
Environmental managementinitiatives
41 Case StudyForest Inventory:Ensring environmental estpractices eore andater operations
42 Case StudyLake Buluan Study:A critical milestone
43 Summary o key sustainabilitydata
44 Global Reporting Initiative
45 Glossary
Ke to cltrall sensitivecommnit engagements
o saet in the work place andthe commnit
The cltrall sensitiveengagement approach
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SuSTAINAbILITy REPORT 2009 1
Xstrata Copper Tampakan Project
Map o OperationsManila
Catanduanes
Masbate
Palawan
Samar
Mindoro
Negros
MINDANAO
Cebu
Zamboanga
Leyte
Tampakan
Gen.
Davao
Santos
Tampakan
The Tampakan Copper-Gold Project is located on the sothern Philippine island o Mindanao, approximatel
65 kilometers north o General Santos Cit. The Project is sitated on the ondaries o or provinces:
Soth Cotaato, Sarangani, Sltan Kdarat and Davao del Sr, and represents one o the largestndeveloped copper-gold deposits in the Sotheast Asia-Western Pacic region.
In 2009, the Tampakan Project entered into the nal easiilit phase and commenced plic consltations as
part o its Environmental and Social Impact Assessment (ESIA).
The Tampakan Project is a 2.4 illion metric ton deposit, containing 13.5 million metric tons o copper and
15.8 million onces o gold at a 0.3% ct-o grade. It is operated Philippine-ased aliate Sagittaris
Mines, Incorporated (SMI), whose 40% controlling eqit is a joint ventre among Xstrata Copper (62.5%)
and Indophil Resorces NL (37.5%). The 60% non-controlling eqit shareholders o SMI are the Tampakan
Mining Corporation and Sothcot Mining Corporation (known as the Tampakan Grop o Companies). In
Decemer 2009, the Project emploed approximatel 252 emploees and 1,065 contractors, inclding a
weekl average o 202 local commnit residents, to spport the Projects explorator drilling and other
operational needs.
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2 TAMPAKAN PROJECT
Exective General Managers message
The dramatic all in commodit prices andthe gloal economic slow down in late2008 contined to aect the mining sectorin 2009. Xstrata Copper responded qickl
and decisivel to the deteriorating economicenvironment to ensre the sstainailit oor operations and projects. As a reslt,we emerged rom the downtrn in astrong position when rising copper demandand prices egan to ease the challengingeconomic conditions in the second hal othe ear.
Despite the diclt siness environment,Xstrata Copper made signicant progress inadvancing its portolio o greeneld projectsinclding the Tampakan Project in thePhilippines, Frieda River in Papa New Ginea(PNG), El Pachn in Argentina and the Energa
Astral hdropower project in sothern Chile.
We had a positive start to 2009 with theFrieda River project progressing into thepre-easiilit stage in Janar, refecting theencoraging reslts o or extensive drillingprogram in 2008. Evalation continedthroghot the ear and in Janar 2010,we annonced a revised Mineral Resorceestimate or the Horse-Ivaal-Trkai depositwhich represented a sstantial tonnageincrease over the previosl plishedestimate. The pre-easiilit std is schedledor completion in the third qarter o 2010.
The Tampakan Copper-Gold Projectlocated on the sothern Philippine islando Mindanao emarked on a uS$74million easiilit std in Jne 2009 andcommenced a comprehensive Environmentaland Social Impact Assessment (ESIA) andstakeholder engagement process. In Octoer2009, the Projects Mineral Resorce estimatewas also pdated. The easiilit std isschedled or completion in the secondqarter o 2010.
We contined to ndertake engineeringstdies and environmental impactassessments or the Energa Astralhdropower project in sothern Chiles AsnRegion which comprises three power plantacilities and a dedicated transmission line.The ESIA std or the Rio Cervo power
plant acilit was smitted to the Chileangovernment in Agst 2009, marking asignicant milestone or the Project.
The El Pachn project contined to pdateits previos easiilit std and ndertookexpanded environmental aseline stdies.Following an analsis o the reslts rom theprevios ears drilling program, a sstantialincrease in the Projects Mineral Resorceestimate was annonced in late 2009.
I elieve or ailit to deliver these extensivework programs sccessll while operatingin sch remote and demanding locations istestament to or commitment to workingsael, sstainal and in genine partnershipwith or stakeholders. These SstainaleDevelopment principles are ndamental
to or siness model and gide or daildecision-making.
Or projects also set SstainaleDevelopment improvement targets andcontinall assess their perormance againstthose ojectives throghot the ear. Orpriorit is zero harm and we aim to achievethis throgh a sstematic approach toidentiing, analzing and managing thecatastrophic hazards present in or workenvironment and the high hazard activitieswe ndertake across or siness on a dailasis.
In 2009 or projects achieved some
improvements in saet perormance as areslt o strong management ocs in thisarea and the implementation o initiativessch as the positive attitde saet sstem(PASS). For the ll ear, or total recordaleinjr reqenc rate (TRIFR) was 2.3 recordedinjries per million hors o work, down rom4.2 in 2008. Or projects also recorded alost time injr reqenc rate (LTIFR) o 1.5in 2009 down rom 1.7 in the previos ear.The Tampakan Project remained LTI ree orthe entire ear, achieving over 5 million horsLTI ree in earl Janar 2010.
Tragicall, despite these saet improvements,
a atal incident occrred at Energa Astralwhen an infatale oat carring personnelrom a contractor compan capsized on the
Cervo River in soth Chile casing the losso three workers, Moiss Aros, Mario Mndez
and Edgardo Rogel. Having reviewed orsstems and processes in relation to thisincident, or most pressing challenge or2010 is to achieve or strategic ojectiveo an injr-ree, sae work environment toensre that all or people go home sael atthe end o each da.
Dring the ear or projects contined toocs on environmental aseline monitoringin ke areas sch as grond and sracewater, soil and land se, iodiversit,meteorolog and geotechnical stdies. TheFrieda River project maintained its aqaticiodiversit monitoring program or the Sepik
River catchment area and commenced aterrestrial iodiversit srve, the rst std oits kind to e condcted in the area in almosta centr.
Xstrata Copper contined to advance its portolio o world-class copper projects in 2009 and
completed the ear with solid improvements across all areas o sstainale development.
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SuSTAINAbILITy REPORT 2009 3
Peter Forrestal
Executive General Manager
Project Evaluation
At the El Pachn project, environmentalaseline stdies were spported the
installation o ctting-edge meteorologicaland water monitoring stations. With thisadvanced technolog now in place, we lookorward to gaining rther insight into theclimate, landscape and water resorces o thisremote part o Argentina.
For or more advanced projects, thepreparation o ESIA stdies was also a prioritthroghot the ear. In the second halo 2009, the Tampakan Project team metwith 94 stakeholder grops as part o itsESIA process and held or plic meetingsattended over 2,863 people. Throghthese orms we have received valaleeedack that will e incorporated into the
Tampakan Projects design and planningalong with the reslts o or specialiststdies.
The ESIA std or the Rio Cervohdroelectric power plant was also smittedin 2009 the Energa Astral projectollowing a two ear commnit consltation
process. This is the rst o or sch stdiesto e ndertaken the Project which hasthe potential to serve as a new sorce oclean energ or Chile.
While Xstrata Coppers projects are crrentllow energ consmers, we recognize theneed to address climate change and weactivel work to redce greenhose emissionsand energ consmption, as well as reshwater se, wherever possile. We alsorecognize that at a project level, the keto eective greenhose gas managementis throgh the appropriate design o orproposed operations and, as sch, the
optimization o or projects greenhose gasootprint is an important consideration in ordevelopment process.
In 2009, or projects intensied theircommnit and stakeholder engagementactivities to ensre that local commnitiesconcerns and interests are eing addressedin or project planning and design. XstrataCopper is committed to advancing orprojects in line with international estpractices. Throghot the ear we continedto work with or stakeholders to address keisses inclding land ownership, resettlement,ree prior and inormed consent, hman
rights, the provision o government servicesin remote areas and social and economicdevelopment.
We also invested over uSD2.65 millionon commnit initiatives in the areas ohealth, edcation, enterprise development,arts and cltre and social development.Together with local stakeholders and partnerorganizations, we spported a wide rangeo activities specicall tailored to localcommnit needs sch as pgrading the onloarding school in the Calingasta mnicipalitnear the El Pachn project, delivering HIV/AIDS awareness programs to commnities
in the PNG highlands, installing potalewater inrastrctre in villages within theTampakan Project area and spporting skillstraining programs to increase emploment
opportnities or commnities near EnergaAstral.
As we move into 2010, we anticipate
that contined improvement in Westerneconomies will drive a recover in copperconsmption, providing a more positiveeconomic environment or or siness. Wewill contine to progress or portolio ogreeneld projects and we look orward tocompleting the Tampakan Project easiilitstd in the rst hal o 2010 ollowed theFrieda River project pre-easiilit std the end o the ear. In 2010 we also expectto nalize the ESIA or the Tampakan Projectand Energa Astrals Rio blanco and LagoCondor hdroelectric plants.
Ater a comprehensive review, we will also
e implementing in the second qarter othe ear a new Sstainale DevelopmentPolic and Management Framework that willreplace and incorporate or crrent Saet &Health, Environment and Commnit policies.Training and revised indction procedres atall o or sites will orm a crcial part o theimplementation plan.
Each ear or projects plish individalSstainailit Reports that seek to addressthe material isses that have een raised local stakeholders as well as thosewhich Xstrata Copper considers essential toachieve or high standards in SstainaleDevelopment. These reports also detail orperormance against or targets and otlinenew ojectives or the coming ear.
I hope that o nd this report a valalesorce o inormation not onl aot theTampakan Project, t also aot theSstainale Development principles andojectives that gide all o Xstrata Copperssiness activities.
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4 TAMPAKAN PROJECT
General Managers messageXstrata Copper is committed to developing a nanciall sccessl project that improves the social andeconomic prosperit o the region or tre generations.
I am pleased to present the Tampakan
Projects third Sstainailit Report. Thisreport smits in detail SMIs Sstainale
Development (SD) perormance as well as the
challenges aced and milestones achieved the Tampakan Project or the ear 2009.
2009 shered in new challenges or theTampakan Project. Ater having completed
a 21-month extended pre-easiilit stdin Decemer 2008, we egan preparator
work or the Projects easiilit std dring
the rst hal o 2009. In Jne, we ormallemarked on the uSD74 million easiilit
std, de or completion the second
qarter o 2010.
Together with sstained improvements in
or governance and management sstems
and contined adherence to or SstainaleDevelopment Polic, we progressedthe Environmental and Social Impact
Assessment (ESIA) in collaoration with the
Projects stakeholders rom the commnit,government and private sectors.
As mandated law, specicall the 1995Philippine Mining Act and the Indigenos
Peoples Rights Act (IPRA), we commenced
the process o secring Free and PriorInormed Consent (FPIC) rom or host
commnities. Pre-scoping and plic scopingmeetings, consltations, and assemlies were
condcted or oth the ESIA and the FPIC.
A total o 94 stakeholder grops,
approximatel 1,500 individals, were
engaged in a series o 43 small, privateconsltation meetings rom Septemer
to Decemer 2009. For plic scoping
meetings were held rom 17 to 20 Novemer2009. This was a ke milestone or the
Tampakan Project ESIA approvals process,reaching a cross-section o sectors composed
o 415 leaders in Tampakan, Soth Cotaato;
375 in Kilawan, Davao del Sr; 367 inMalngon, Sarangani; and 430 in Colmio,
Sltan Kdarat.
We are honored that or commitmentto ilding sstainale commnities wasrecognized or partners and stakeholders
in 2009. The Regional Minerals Development
Concil (RMDC) and Regional Development
Concil (RDC) o Region XII named theTampakan Project as Flagship Project and,
together with RMDC XI, recommended to the
Mindanao Economic and Development Concilits adoption as Mindanaos Flagship Project
in Minerals Development. The title not onlgives distinction to the Projects crrent and
potential contritions to the region, it also
gives credence to the compans vision o theTampakan Project as a model or responsile
and sstainale minerals development in the
Philippines.
Conseqentl, the Tampakan Project was
proposed or inclsion in the Regional MedimTerm Development Plan (RTMDP) since the
promotion o minerals development as a majorindstr and economic catalst was soght
the concerned RMDCs and RDC.
Or commitment to the principles o
sstainale development was again recognized
in 2009. SMI received the Presidential Mineral
Indstr Environment Award (PMIEA) inNovemer 2009 rom the Philippine Mine
Saet and Environment Association. ThePMIEA is the highest award given to a mining
compan in the Philippines or otstandingenvironmental practices.
In 2009, the ollowing technical stdies were
completed as part o the ESIA:
Soils mapping and land se assessment
within the Project area
Flora and ana srves
Noise assessment and modeling
Visal amenit srves, and
Coastal marine srves
A detailed srace water model is also eing
developed as part o the easiilit std.This work contined in 2009 as part o the
easiilit and ESIA program.
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SuSTAINAbILITy REPORT 2009 5
Mark Williams
General Manager
Tampakan Project
SMIs saet perormance has continosl
improved registering no Lost Time Injr (LTI)
throghot 2009. An LTI was last recorded inMa 2008.
We attrite this perormance to or strongcommitment to the goal o zero harm
and to or Saet and Health Polic andProcedres, the ltimate ojective o which
is to create and sstain injr-ree, health
work environments or all in or workplaces.We contine to invest in health and saet
capacit-ilding training programs within
the compan and in the commnit.
While we contine the exploration o a vital
natral resorce expected to enet oththe nation and its people, we contine to
invest in skills, edcation, health, social andenterprise development that lead to economic
enets and sstainale commnities eondthe lie o or proposed operations.
In 2009, SMI paid local sppliers a total o
PhP328 million (uSD7 million) or goods and
services: PhP136 million (uSD3 million) orgoods and PhP192 million (uSD4 million) or
services.
We emploed 252 people (more than 98%
o whom are rom the Philippines, with more
than 80% coming rom the Project area andenvirons) and 1,065 contractors in 2009.
SMI spent PhP79 million (uSD1.67 million) on
a range o Corporate Social Involvement (CSI)
programs that covered edcation, livelihoodand capacit-ilding ventres, providing real
and long-term enets or local commnities.
Over PhP18.56 million (uSD391,808) was
spent on environmental projects inclding
eld trial research to enhance localiodiversit; prodction o seedlings or oth
reorestation programs and the propagationo endemic species; vermicltre, ee cltre,
stick insect cltre, and technical assistance;
and training or partners and volnteers.Rehailitation is also a ke activit across the
Project to ensre that areas distred thedrilling program are retrned to a stale land
orm.
While all these were accomplished in 2009
at the height o the gloal nancial crisis
rom which no contr or indstr wasthoroghl inslated, there remains or 2010
the challenge o completing the Tampakan
Project easiilit std and secring FPICrom or host commnities.
We will once again rel heavil on the
trst and condence o or partners and
stakeholders that have een the mostimportant driving orce ehind or sccesses
in 2009. We will contine to e motivated the vision o ilding sstainalecommnities, and or strongest commitment
to health and saet, environmental
management, respect or cltre, socialresponsiilit, and sstainale development.
In the spirit o the Philippine governments
polic declaration that mining is a ke driver
o or econom and an important sector thatis ringing in signicant levels o investment,
creating jos or the people and sprring
exports, we contine to view the TampakanProjects milestones oth as essential steps
towards its evental operation, and also proo
that responsile minerals development canand will ring aot genine and sstainale
development or Mindanao and the contr.
The Tampakan Project shall contine to e a
genine partnership etween the companand or government and commnit
stakeholders. We thank o or or
contined spport.
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6 TAMPAKAN PROJECT
Targets and Scorecard
2009 Targets Stats
SAFETy
Zero Fatalities 0
Fll year TRIFR < 3.4 0
Fll year LTIFR < 0.9 0
Fll year DISR < 2.5 0
Fll year DIFR < 1.3 0
Complete the training o ke SMI personnel on project response and recover Ongoing
Achieve ll compliance to the reqirements o the Mines and Geosciences brea (MGb) and
Department o Laor and Emploment -brea o Working Conditions (DOLE-bWC):
Attained
Zero saet nes or penalties Attained
All Departments achieve a Saet Qarterl Adit score o >65% in Q4 Attained; Average Department Qarterl Adit
or Q4 o 2009 is 70%
Two emergenc drills per site (internal onl) Done
One emergenc drill with external services Done
Complete 90% o corrective actions raised in 2009 and 95% o all preceding actions 80% accomplished
CSHEC (Committee on Saet, Health, Environment and Commnities) meeting attendance o
>85%Attained
An average o 50 behavioral based Saet (bbS) oservations per month or drivers and a total
o 100 per month or other work gropsOngoing
Contine monitoring and implementation o 17 SD Standards. Attained
Condct SD Adit Q2 2009 Done
Develop Emergenc Response Team to all Camps Q3 2009 Done
Sstain Sae or Work program implementation to achieve a drg and alcohol ree workplace Attained
Maintain zero incidents related to drg and alcohol Attained
2010 SAFETy Targets
Zero Fatalities
Fll year TRIFR < 3.4
Fll year LTIFR < 0.9
Fll year DISR < 2.5
Fll year HPRI and CI 1.0
Hazard Reports o 30 per month
200 behavior-based Workplace Oservations (bbWOs) per month
Train contractors on SMI Sstainale Development Standards
All Departments achieve a Saet Qarterl Adit score o >70% in Q4
Condct contractor inormation workshop to explain the SMI Occpational Saet and Health Management Sstem (OSHMS) and coach contractors in
saet management
Develop training matrix and improve present training packages
Develop a joint plan with CCSD on a commnit saet training program
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SuSTAINAbILITy REPORT 2009 7
2009 HEALTH Targets Stats
Zero occpational illnesses Attained
Develop nctional capacit gidelines identiing all emploment positions and nctional
capacities linked to those positions and ormlate a dataase that will aid the doctors to decide
retrn to work condition end o Q4
Jo Famil Task Analsis not completed. Carried
over to 2010
Identi workplace health hazards, assess conseqence proailit, estalish control measres
and develop exposre limits end o Q4
Workplace health hazards identied and captred
in SMI health risk register
Estalish control measres on health hazards in the work place Mitigating/control measres or health
hazards have een designed and validated or
eectiveness the health consltant
2010 HEALTH Targets
Zero occpational illnessesZero new Hepatitis b cases
Administer vaccine to eld workers ased on the risk exposre to the ollowing iologicals: Tetans, Tphoid, Hepatitis A, Hepatitis b, f, and malarial
prophlaxis.
HIV-AIDS test in pre-emploment medical reqirement and annal phsical examination (APE) or existing emploees
Contine internal/external health awareness campaign
2009 ENVIRONMENT Targets Stats
Develop and implement the Environmental Management Sstem (EMS) so that it is compliant
with ISO14001
Targeted or 2008, ongoing as o Decemer
2009
Progress the Environmental & Social Impact Assessment (ESIA) process inclding the Plic
Consltation Process
Attained; contrited to the completion o the
plic scoping activities or the mine ootprint onNovemer 2009
Achieve a cmlat ive average site EMS qarterl adit perormance score o 75% Attained; registered cmlat ive average o
83.3% with each qarterl perormance score
higher than 75%
Develop and implement across the Project an eective environmental incident and complaints
management sstem
25% achieved; or completion in 2010
Complete the limnological std o Lake blan 75% complete; completion set or Q2 2010
No Categor 3, 4 or 5 Environmental Incidents Attained
Prepare a biodiversit and Land Management Plan or the Project area Ongoing
2010 ENVIRONMENT Targetsundertake caron cost impact assessment or project easiilit analsis
No Categor 3, 4 or 5 environmental incidents or nes, penalties or prosections
Develop a Waste Management Plan
Complete the mine site Environmental & Social Impact Assessment (ESIA) process inclding the Plic Consltation Process
Identi and integrate ke HSEC sstems (incident management, Adits and Risk)
Commence phase 2 o the limnological std o Lake blan social perception and edcation program
Plan and commence rehailitation cover and er zone planting trials
Constrct Commnit Inormation Center and expand the existing Field Trial Research Station
Targets and Scorecard
attained ongoing not attained n/a = not applicale
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8 TAMPAKAN PROJECT
2009 COMMuNITy Targets Accomplishments
Spport the achievement o ke siness perormance indicators
Eectivel implement the ESIA stakeholder consltation process Condcted 43 Inormation, Edcation and Commnication (IEC) Pre-
Scoping meetings and 4 Plic Scoping meetings extending to 2,863
national, provincial and local stakeholders.
Facilitated the estalishment o 21 inormation and eedack ooths
within the project area.
Eective deliver o rights-ased approach in the condct o the FPICprocess
On-going nalization o the Cltral Sstainailit / Free & PriorInormed Consent (FPIC) Exection Strateg and Operational Plan
Facilitated the Annal Planning o blaan Fondations and Trial
Concils
E ective implementation o involntar resettlement plan On-going nalization o the Sstainale Reset tlement Action Plan
On-going censs o aected persons or resettlement
On-going nalization o resettlement operations manals
Eective deploment o resorces to address ke isses related to access
to drill or exploration sites
Facilitated access to 89 drill sites
Develop and spport commnit-ased enterprises Developed six new enterprises on vegetale prodction, aacaprodction and handicrats enterprises eneting 204 armers, 50hoseholds, and 40 trial women
Eective deliver o rights-ased approach in the condct o the FPICprocess
On-going nalization o the Cltral Sstainailit / Free & PriorInormed Consent (FPIC) Exection Strateg and Operational Plan
Facilitated the Annal Planning o blaan Fondations and Trial
Concils
Spport skills development and instittional capacit ilding ocommnit ased organizations and trial ondations
Provided technical assistance on organizational development to vecommnit-ased organizations, 13 aranga local government nitsand 22 trial concils.
Improve the deliver o asic social services Approved 20 commnit inrastrctres (inclding nine alreadcompleted) eneting 2,722 hoseholds and 517 stdents.
Invest in health
Provide spport to improve commnit-ased health programs and
access to qalit health services
Constrcted 1 maternal irthing center
Provide PhilHealth insrance or indigent memers o the trialcommnities
Enrolled 3,011 commnit memers to PhilHealth (health insrance)
Spport the improvement o health acilities Constrcted 3 potale water sstems to help eradicate incidence o
water orne diseases, eneting 815 hoseholds
Help improve health indicators o children and women o reprodctive
age
Provided asic health services to 12, 236 commnit memers
Invest in the development o cltrall sensitive and sstainale
traditional health program
Postponed, to e taken p in 2010
Spport the campaign o the government to ght the ve neglected
tropical diseases
Provided lariasis elimination and deworming services to 259
commnit memers
Generate social acceptailit throgh eective stakeholder engagement
Develop strategic and eective Social Marketing Implementation Plan Organized 4 Commnit Moilization & Partnership Das reaching 4host mnicipalities covering 3 arangas and 2 trial commnities
Condcted 10 project and mine visits participated in trial andnon-trial commnities and representatives rom local governmentagencies
Develop and estalish air and eqitale processes or engagement withindigenos peoples and local commnities
Signed eight pdated principal agreements, which estalished termso engagement etween the compan and 6 local government nitsand 2 trial commnities.
Develop commnit grievance mechanism Estalished a grievance resoltion mechanism
Received 16 commnit grievances, 53% less than the 2008 tall o32
Resolved 15 commnit grievances. The 1 remaining grievancerelated to site rehailitation is eing processed
Mainstream and poplarize the practice o Volntar Principles onSecrit and Hman Rights (VPSHR)
Condcted a Trainers Training on VPSHR participated in 34individals composed o 21 emploees and 13 stakeholders romlocal NGOs, local government agencies and the militar. The training
was acilitated the uS-ased bsiness or Social Responsiilit(bSR) which is a co-secretariat or the gloal eorts o VPSHR
Oriented 187 secrit gards on the compans policies andgidelines that promote the protection o hman rights
Targets and Scorecard
Spread the Projects enets o growth in directl aected commnities and srronding areas as part o the compans vale chain
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SuSTAINAbILITy REPORT 2009 9
Targets and Scorecard
Invest in edcation
Contrite to the provision o qalit edcation throgh mlti-stakeholder governance in local edcation sstem, teacher training andimprovement o school acilities
Implemented Snergeia Program (a commnit-ased edcationmanagement initiative) in 15 elementar schools
Trained 40 teachers on IP Crriclm integration
Ssidized salaries o 18 teachers
Provide spport to increase access to primar edcation Provided scholarships or 14,332 elementar, high school andcollege stdents
Forge partnership with credile organizations Forged partnership with:
The Philippine bsiness or Social Progress (PbSP), a leadingsiness collective in the contr, or the implementation o SMIsinitiative on the Volntar Principles on Secrit and Hman Rights
Partnership with uN Program or Hman Settlements (uNHS) orsstainale resettlement
Cor Jes Fondation, a leading academe ased NGO in Davao delSr or the prodction o pschosocial preparation n modles or
the FPIC process
Ateneo School o Environmental Governance in the condct o astakeholder governance training in mining provinces
Asian Institte o Management (AIM)s Ramon V. del RosarioCenter or Corporate Social Responsiilit (CSR) or the prodctiono a case std on CSR in the Mining Sector eatring SMI
Mitigate iodiversit loss and improve the qalit o the environment progressivel rehailitating the Project site throgh the estalishment oer zones
Prodced, distrited and planted more than 126,000 seedlings incooperation with varios local grops
Reported illegal mining and arming practices to concernedagencies
Strengthen components o the Field Trials & Research Stations (FTRS):diversied arming technolog, organic arming, sloping agricltral landtechnolog
Maintained two FTRS centers in Tampakan (Liert Farm) and inKilawan
Recommended rther FTRS site options or development
Develop Commnit-based Disaster Preparedness program Postponed, to e taken p in 2010
Estalish a mlti-stakeholder mechanism to monitor the Projects
environmental perormance
On-going development o a program plan or developing mlti-
stakeholder monitoring teams, which will cover the compansenvironmental, socio-economic and cltral sstainailit
perormance
Promote the concept and practice o sstainale development in the commnities in the Project site
Free and Prior Inormed Consent (FPIC)
Gain consent rom the indigenos peoples (IP) commnities or resettlement and mining operations
Enable IP traditional institutions to develop their Strategic Plans based on the Ancestral Domain Sustainable Development and Protection Plan (ADSDPP) and IP Development Plans (IPDP)
Sstainale Resettlement
Roll-ot the Sstainale Resettlement Action Plan to LGus and aected persons and implement the plan as schedled
Commnit Environmental Sstainailit
Implement a reforestation program in partnership with LGus and commnity-based organizations that complements socio-economic and cltral sstainability
Sstainailit Management Sstem
Instittionalize commnity engagement management system across the bsiness to ensre the continos improvement of policies and procedres throghot
the different phases of mining operations
Monitor stakeholder perception and lead in the development of strategic initiatives to poplarize the leading edge practices in corporate-commnity sstainability
across the bsiness
Commnit Socio-Economic Sstainailit
Address ke commnit isses related to access to drilling to complete the technical and geological stdies or constrction.
Spport the enhancement o management sstems o local government nits and government agencies to improve the deliver o edcation and
health services and spport the achievement o the millennim development goals
Complement the governments initiatives to enale the commnit to develop and implement jo-creating commnit-ased enterprises
2010 COMMuNITy Targets
Stakeholders Engagement
Gain acceptailit o the Project among stakeholders throgh meaningl and open engagements within the onsite and osite mining development
areas as well as indirectl aected commnities
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10 TAMPAKAN PROJECT
Scope o this report
This report details the economic, health,saet, environment and social perormanceo Sagittaris Mines, Inc.s (SMI) Tampakan
Project rom 01 Janar 2009 to 31Decemer 2009. We plish or reportsannall and this is the third report prodced the Tampakan Project.
A general description o oth XstrataCoppers and SMIs SD policies and standardshas een provided in this report. The ll texto these policies are plished on the Xstratawesite:
http://www.xstrata.com/corporate/commodities/copper/plications
All monetar vales are expressed inPhilippine pesos and uS dollars at a
conversion rate o uSD1 = PhP47.37 nlessotherwise stated.
The Tampakan Project report is one o 11sstainailit reports plished XstrataCopper in 2010 that will report on 2009sstainailit perormance. As part o XstrataCoppers commitment to transparenc andstakeholder engagement, all its operatingdivisions and major development projectsare reqired to plish their sstainailitperormance annall. An overview o XstrataCoppers sstainailit perormance is alsoprovided in the Xstrata plc SstainailitReport. All these reports are availale on
the Xstrata sstainailit wesite: www.xstrata.com/sstainailit. The Xstrata plcSstainailit Report will e availale rommid-April 2010.
Defning report content
Sstainale development topics or issesthat are material to the Tampakan Project orhave the potential to ecome material to the
long-term sccess o or siness have eenprioritized in this report. We have aimed toprovide a complete and alanced view oor sstainailit perormance tailored to theexpectations and interest o or stakeholders.In determining which isses or topics arematerial to the Tampakan Project, we haveconsidered:
Feedack on or sstainailitperormance and reporting rom kestakeholders;
Compan-specic isses raised eitherdirectl or indirectl externalstakeholders inclding NGOs,
governments, commnities andinvestors;
Indstr challenges raised in indstrassociations and orms;
Or bsiness Principles; SstainaleDevelopment (SD) ramework, policiesand standards; and Indicators and topicsotlined in the GRI G3 Gidelines,International Concil o Mining andMetals (ICMM) principles, and otherest practice gidelines and initiatives.
The Global ReportingInitiative (GRI)
This report has een prepared in accordancewith the Gloal Reporting Initiatives (GRI)Sstainailit Reporting G3 Gidelines,the worlds most widel sed sstainailitreporting ramework. These gidelinesenale readers o or sstainailit reportsto enchmark or SD perormance withrespect to laws, norms, codes, perormancestandards and volntar initiatives; and tocompare or SD perormance over time.
A GRI index detailing how Xstrata Copperhas addressed the G3 Gidelines withinthis report can e ond at page 44 o thisreport.
Report assuranceThe data management and reportingsstems in place or the collation andaggregation o sstainailit data andinormation are sject to Xstratas internalverication processes, and inormation inthis report draws on the same data andreporting sstems as the Xstrata plc GropSstainailit Report 2009. Independent,external assrance o Xstratas sstainailitdata, reporting sstems and the Xstrata plcGrop Sstainailit Report is provided Ernst & yong. A rie description o theassrance process, its ndings, the signedassrance statement and Ernst & yongsrecommendations are provided in the Gropreport, availale rom www.xstrata.comrom April 2010.
Targets and Scorecard
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SuSTAINAbILITy REPORT 2009 11
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12 TAMPAKAN PROJECT
Or approach to sstainale developmentWe continall invest to improve or SD perormance, ensre the ecient se o resorces andmaintain a sae and health workplace, creating vale or or stakeholders and contriting to a
sstainale environment.
Xstrata Copper is committed to alancingsocial, environmental and economic
considerations in how we manage orsiness. Althogh the liespan o or
activities is nite, we aim to invest in skills,
edcation, health, social and enterprisedevelopment that lead to economic enets
and sstainale commnities that otlive or
operations.
We strive to preserve the long-term
health, nction and viailit o the natral
environments aected or operationsand to maintain sae and health workplaces
ased on mtal respect, airness andintegrit.
Xstrata Copper takes a sstematic approachto setting targets, monitoring perormance
and reporting (oth internall and plicl)
against or targets in each o the kesstainailit areas, as demonstrated in this
report.
The Xstrata Copper SD Strateg andManagement Framework is plished in ll
on Xstratas wesite nder:
www.xstrata.com/corporate/commodities/
copper/plications
The SD ramework interprets and spports
the Xstrata plcs SD polic and 17 SD
Standards, which were revised in 2008 and isconsistent with or Denition o Prpose.
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SuSTAINAbILITy REPORT 2009 13
Our strategic objectives
Injury-free,safeworkenvironments
Recognizedleadershipinenvironmental
perormance
Reputationforsocialresponsibility
Realizationofthefullpotentialoforipeople
Achievementofthefullcapacityofouroriphsical assets
Costcompetitivenessthroughthecycles
Valuecreationthroughdynamicgrowthoriand continos improvement
Effectiveimplementationofcommonkeyorisstems and strategies
Or approach to sstainale development
Precautionary approach
Xstrata Copper takes a precationar
approach to the environmental
management o its gloal activities. We
se a comprehensive risk-ased approach
to manage the potential detrimental
impacts o or activities. This approach
means that even in the asence o
evidence that environmental degradation
is occrring or will occr, we take action
to mitigate the possiilit that it will.
SMI Sstainale Development Polic
Sstainale Development descries SMIs approach to ensring the long term viailit and contined sccess o
or siness activities.
We invest in the long-term or the Tampakan Project, which provides a asis or social and economic developmentin the region. Althogh the liespan o or activities is nite, we aim to invest in skills, social development, andeconomic enets that otlive these activities.
We aspire or the highest condct in siness as set ot in or bsiness Principles, to protect and enhance orcorporate reptation and ensre or ongoing access to mineral resorces.
We aim to create vale or or stakeholders contriting to a sstainale environment throgh investments inor siness to improve perormance ecienc, to ensre the ecient se o resorces sch as water and energ,and to maintain sae and health workplaces.
To ensre a harmonios relationship with or stakeholders, minimize risk and secre an ongoing license tooperate, we aim to create mtal enets or stakeholders, working in partnership with the varios parties who
have an interest in or are aected or siness.
We work ethicall.
We work responsil.
We work openl.
We work together and with others.
Xstrata Coppers Defnition o
PurposeWe will maximize vale or shareholders sccessll growing and managing an indstr-
leading portolio o copper assets that deliver
sperior retrns.
We will achieve this in a sae, environmentalland sociall responsile wa, in open partnerships
etween or people and with commnities,
governments and other stakeholders.
Our values
Or decisions and actions willdemonstrate the ollowing vales:
Honesty
Dependability
Respect
Condence
Ingenuity
Courage
Passion
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14 TAMPAKAN PROJECT
Key sustainabilitychallenges
SMI contines to ndertake extensive, openand transparent plic consltation withstakeholders regarding the developmento the Tampakan Project. Throgh theseengagements, we received valale eedackrom or stakeholders and identied several
ke challenges, inclding:
Open pit mining and the proposed SouthCotabato Environment Code
As part o the Projects extended pre-easiilit phase, SMI ndertook extensivetechnical stdies, led internationalspecialists in mining, environmentalmanagement and engineering, to assesspotential mining methods or the Tampakandeposit.
These stdies identied open pit mining asthe most appropriate, economic and saeextraction method given the location o thedeposit and the geolog o the region.
SMI is crrentl ndertaking rther specialiststdies in ke areas sch as soil and land se,grond and srace water, terrestrial andreshwater iolog, and site rehailitation aspart o the Tampakan Projects Environmentaland Social Impact Assessment (ESIA). Thereslts o these stdies will e sed to reneSMIs environmental management planto avoid, minimize and mitigate potentialimpacts o an proposed operation.
The Sanggniang Panlalawigan, the provinciallegislative concil o Soth Cotaato,
proposed an Environment Code that containsa provision anning the open pit miningmethod in the province.
Shold the Concil pass the Code, the matterwold ecome a legal isse etween theProvincial Government o Soth Cotaato andthe Philippine government. The Departmento Environment and National Resorces(DENR) and the Department o Jstice (DOJ)have conrmed that the proposed ancontravenes the National Polic and thePhilippine Mining Act o 1995.
Sarangani Province to be part o theProject ootprint
Sarangani Province has een identied as anarea that ma e aected the proposedmining operation. The addition o Saranganito the nal Project area ma case concernamong some stakeholders.
SMI is in discssion with local athoritiesand stakeholders aot hosting possiilities,and given the challenge o acing a iggerenvironmental ootprint and stakeholderpoplation, SMI has engaged with the newstakeholders according to or bsiness
Principles, presenting the enets thecompans presence can ring Sarangani.
We will contine to ndertake extensive,open and transparent plic consltationwith stakeholders regarding the developmento the Tampakan Project.
Illegal small-scale mining activities
SMI recognizes the potential environmentaland health impacts o illegal small-scalemining activities in the Project area. We willcontine to spport sstainale livelihoodprograms and capailit-ilding initiativesor local commnities to provide alternate
emploment and income-generatingopportnities or commnities.
Distribution o economic benefts
The distrition o economic enets andexcise taxes etween national, provincialand local government nits and how theseenets will e determined is a signicantconcern or regional stakeholders. SMI andits stakeholders are keen to ensre that theeconomic enets rom the proposed mineare invested into regional commnities and
are shared eqital among the provinceshosting the operations.
SMI will contine to conslt with national,regional and local governments, localcommnities and indigenos peoplesregarding the distrition o economicenets in accordance with the PhilippineMining Act and sstainale development estpractices.
The Tampakan Project crrentl deliverssignicant enets to the host mnicipalitiesand srronding commnities in terms oemploment, prchase o goods and services,taxes and other charges and commnitdevelopment projects.
In 2009, the Tampakan Project contritedPhP1.3 illion to the Mindanao and Philippineeconomies and created direct emploment ormore than 252 people and 1,065 contractors,inclding a weekl average o 202 localcommnit residents, to spport the projectsexplorator drilling and other operationalneeds.
SMI contines to spport commnit andsocial development programs in the areaso health, edcation, capacit ilding,livelihood and skills development, and
in 2009 invested PhP79 million on theseinitiatives.
For rther inormation see pages 20 and 33o the report.
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SuSTAINAbILITy REPORT 2009 15
We strive to preserve the
long-term health, nction
and viailit o the natral
environments aected or
operations and to maintain sae
and health workplaces ased
on mtal respect, airness and
integrit.
Resettlement
The Tampakan Project is one o the largestndeveloped copper-gold deposits in SothEast Asia and has the potential to signicantlimprove the qalit o lie o commnities inthe region.
SMIs polic is to avoid the need orresettlement wherever possile. However,where resettlement is reqired, we willadhere to national laws and internationalest practices inclding World bank andthe International Finance Corporation (IFC)gidelines.
SMI has identied some lands within theproposed mine development area that willneed to e acqired or the exclsive seo the mine which will aect arond 850hoseholds.
Resettlement will onl take place when SMIgains ree and prior inormed consent rom
aected land occpants, IPs and non-IPs.We will also partner with the appropriateprovincial governments throgh the ProvincialDevelopment Concils (PDCs) and in theplanning and implementation o SMIsresettlement program or the commnitiesliving within the Project area.
SMI will ndertake its consltation processesin accordance with the Philippine IndigenosPeoples Rights Act and in-line withinternational est practices.
For rther inormation see page 34 o thereport.
Security and human rights
Xstrata has dened secrit and hman rightsas high-risk isses in the Philippines de tohigh levels o violence arond the TampakanProject area. The sitation has exposed SMIto alse allegations that it is involved in thetraining o local people as paramilitaries,and the se o militarization to infencecommnities to spport mining activities.
Criminal grops and individals possessnlicensed rearms in the Project area thatpose a contining threat to commnitmemers. This challenge is eing addressed SMI throgh constant and reglardialoges with the local governments andathorities to explore the most appropriateand sstainale was to ensre the saet,secrit, health and environment o Projectstakeholders.
SMI has adopted and externall promotes theVolntar Principles on Secrit and HmanRights (VPSHR) and or major ndingshareholder, Xstrata, is a signator to theuN Gloal Compact. SMI does not engageplic secrit personnel to protect orworkorce or assets. We emplo a licensed,private secrit service provider and wework closel with them to ensre all secrit
personnel deploed to saegard or peopleand assets have received appropriate hmanrights training.
The saet and secrit o or emploeesand contractors is or priorit and wespport a mlti-stakeholder approach, wherecommnities and national, provincial andlocal government nits all pla importantroles, to improving secrit conditions in theTampakan Project area and promoting peaceand order in the region.
For rther inormation on SMIs approach tosecrit and hman rights, please see pages17, 27 and 34.
Food security
SMI is committed to advancing the TampakanProject in line with leading environmentaland indstr est practices and in partnershipwith or stakeholders.
However, SMI contines to spport localarmers in the region throgh or partnershipwith the Tampakan Farmers Federation,which represents over 3,000 armers, and
throgh or investment in commnit oodsecrit and livelihood programs.
We are crrentl ndertaking rtherspecialist stdies in ke areas sch as soil andland se, grond and srace water, terrestrialand reshwater iolog, and site rehailitationas part o the Tampakan Projects ESIA.
The reslts o these stdies will e sed torene SMIs site management plan to avoid,minimize and mitigate potential impacts oan proposed operation.
Water security
SMI nderstands that water qalit andsecrit are important isses or man oor stakeholders and or Project planningis ocsed on maintaining the long-termenecial and eqitale se o waterresorces in the Project area.
As part o the extended pre-easiilit phase,SMI has ndertaken extensive aselinemonitoring stdies to assess water qalit,srace and grondwater fow, aqaticiolog and rainall in the region.
We are crrentl ndertaking rtherspecialist stdies on water management aspart o the Projects ESIA.
The reslts o all these stdies will e sed torene SMIs engineering designs and watermanagement plan to ensre downstreamwater spplies will not e adversel aected the Tampakan Project. It is expected toemplo a closed water sstem to recclewater within the operation which willminimize emissions to the environment.
The water management plan is eingdeveloped ased on extensive riskassessments and in the context o othclimate change and water stress.
For rther inormation on SMIs watermanagement plan, see page 38.
Awards or sustainabledevelopment
The Tampakan Projects commitment tosstainale development contines to erecognized.
SMI was awarded the Presidential MineralIndstr Environment Award (PMIEA) inNovemer 2009 rom the Philippine MineSaet and Environment Association (PMSEA).The PMIEA is the highest award conerredto a mining compan in the Philippinesor otstanding sstainale developmentpractices. SMI received this same award in2004 and 2006.
SMI was also PMSEAs 2nd rnner-p inthe best Mining Forest Program (MFP) orexploration categor. SMI received the bestMFP award in 2006 and 2008.
In Decemer 2009, recognizing the socio-
economic enets that ma e derived romthe project and the manner with which SMIoperates, the Regional Mineral DevelopmentConcil (RMDC) XII and RegionalDevelopment Concil (RDC) XII named theTampakan Project as Flagship Project orRegion XII and, together with RMDC XI,recommended to the Mindanao Economicand Development Concil its adoption asMindanaos Flagship Project in MineralsDevelopment.
Governor Migel Rene A. Domingez, RMDCXII Chairperson, in the joint RMDC XII andRDC XII meeting in Decemer said: SMIs
track record over the past several ears andits commitment to sstainale development,not onl or Soth Cotaato t also orthe other two regions and or provincesin which it operates, demonstrate the areworth recipients o this prestigios title.
Or approach to sstainale development
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16 TAMPAKAN PROJECT
Governance structure
Xstrata Copper operates within the strctre
o Xstratas rost standards o corporate
governance as set ot in Xstratas Statement
o bsiness Principles and SD management
standards. Frther inormation aot Xstratasgovernance mechanisms is provided in the
corporate governance sections o the grops
Annal Report and Sstainailit Report.
Governance and management sstemsThe highest standards o health, saet, environmental perormance and commnit engagement thats the Xstrata commitment.
This approach is spplemented Xstrata
Coppers own common sstems and
policies in the areas o saet and health,
environment, commnit, risk management,
hman resorces and sstainale
development.
Xstrata Coppers SD perormance is
monitored and evalated its SD
Committee (renamed rom Health, Saet,
Environment and Commnit Committee
to refect the contining evoltion and
roadening scope o SD isses), that meets
monthl. Throgh the Xstrata Copper
board, the bsiness units SD perormance
is reglarl reported to the Xstrata Exective
Committee.
At the Tampakan Project, SMIs SD
perormance and isses are monitored
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SuSTAINAbILITy REPORT 2009 17
the SD Committee (ormerl the HSECCommittee), in compliance with the Philippine
Mine Saet and Health Standards o the
Mines and Geosciences brea (MGb), and
the Occpational Saet and Health nit o
the Department o Laor and Emploment
(DOLE). SMIs Hman Resorces, Saet &
Health Manager chairs the SD Committee
that convenes department sperintendents
and ocers, other emploees, contractors
and service sppliers. Once a month, the SD
Committee explores local initiatives to ensre
that qalit assrance is achieved.
To enale the SD Committee to identi ke
areas and create a road map or rther
development, the Tampakan Project, throgh
an external third part adit, condcted a
gap analsis on the adherence to Xstratas 17
SD standards. The reslts are as ollows:
The development and perormance o
the overall SD management sstems
reqired improvement,
Social and Commnit Engagement
processes were assessed as strong, and
Commnication and Engagement were
also assessed as strong.
SMI respects oth Philippine laws and
the cltre o the commnities where it
operates. Or activities in 2009 are proo
o or commitment to working sael,
sstainal and in genine partnership with
or stakeholders. These SD principles are
ndamental to or siness model and
gide or dail decision-making.
In Jne 2009 we emarked on a uSD74
million easiilit std. As part o the
easiilit std the Tampakan Project team
met with over 90 stakeholder grops and
held or plic meetings attended over
2,863 people.
Human rights
Or bsiness Principles are consistent with
the principles set ot in the united Nations
universal Declaration o Hman Rights
and the International Laor Organization
Conventions.
For SMI, the main areas o ocs are
protecting the rights o emploees and
contractors to work or eqal pa, to
associate reel, and to work in a sae and
health work environment. We oserve non-
discrimination and air treatment and legal
rights, and spport the rights o emploees,
commnit memers and other stakeholdersto e treated with dignit in a manner that
respects cltral heritage, traditions and
norms.
In areas where SMI emplos secrit
personnel (either directl or as contractors) to
protect or people and assets, it ensres that
appropriate hman rights training has taken
place. We diligentl monitor compliance
with or bsiness Principles, SD polic and
standards, in line with SMIs management
standard or sppliers, contractor and
partners.
In April 2008, SMI ecame a memer obsiness or Social Responsiilit (bSR),
a leading provider o sociall-responsile
siness soltions headqartered in San
Francisco and engaged it to condct training
on the Volntar Principles on Secrit and
Hman Rights in General Santos Cit. SMI
secrit sta and representatives o SMIs
secrit contractors attended this training.
SMI also worked with the government, the
Chamer o Mines o the Philippines and a
non-governmental organization (NGO), the
Philippine bsiness or Social Progress (PbSP),
to train another 67 individals working in
government, siness, NGOs and othermining companies to raise awareness o the
Volntar Principles across the region.
In March 2009, a Trainors Training or
SMI ocers was condcted bSR to
instittionalize the Principles within SMIs
sstems and organization. In Decemer,
SMI commenced training or 182 niormed
secrit gards deploed within its oces
and acilities in Tampakan and Kilawan
areas. The roll-ot was assisted three
memers o the sta o PbSP.
Secrit services are provided Catena
Secrit, Inc. and Genric Holdings, Secritand Risk Consltants.
In addition, SMI emplos a Secrit Advisor
or Kilawan to assist the Corporate
Secrit Team in Davao del Sr, particlarl
in Kilawan area, and a Regional Secrit
Consltant to assist in the development and
implementation o secrit strategies.
In 2009, gidelines and sstems were
reinorced to garantee the sstematic
monitoring o all sppliers, contractors, and
partners to ensre that their operations
compl with or siness standards.
Child and orced laborOr bsiness Principles phold the elimination
o all orms o orced or complsor laor
and stiplate that no orm o child or orced
laor will e tolerated. All Xstrata operations
report the age o their ongest emploee or
contractor on an annal asis and are adited
throgh the internal adit risk management
program.
In adherence to the bsiness Principles, the
united Nations Declaration on Hman Rights,
and the Philippine Laor Code, the ongest
emploee o the Tampakan Project is 20,
while the ongest contractor is 18.
Bribery and corruption
SMIs bsiness Principles state that we
do not oer, solicit or accept an orm o
indcement or rie. The internal adit
nction, spported KPMG, takes into
accont identied rad and compliance
risks associated with or ke siness
activities, inclding the ethical perormance
expectations contained in or Statement o
bsiness Principles.
In addition, SMIs Frad Polic explicitl states
that the organization will not tolerate an
incidence o rad committed emploees
or others, either rom within or otside
the organization and will take immediate
and serios action against those persons
committing a rad, irrespective o length o
service or position. The Polic otlines the
channels availale or emploees or others to
sael and condentiall report rad or other
nethical ehavior that is contrar to SMIs
bsiness Principles. Each SMI emploee signs
an agreement that s/he will compl with the
Polic, and the agreement is renewed earl.
Inormation aot the SMI Ethics Lineis provided dring the indction o new
emploees or the Tampakan Project.
Sanctions or sppliers ond to e involved
in corrption incldes the cancellation or
revocation o accreditation with the compan.
In 2009, the Procrement team oriented
contractors and sppliers on SMI Procrement
Policies and Procedres, inclding SMI Frad
Polic. A Contractors & Sppliers Edcation
program was also oered to local sinesses
to improve management o acconts, cash
fow and the dgeting process.
There was no incidence o corrptionreported at the Tampakan Project in 2009.
Governance and management sstems
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18 TAMPAKAN PROJECT
Governance and management sstems
Public policy participationand political contributions
Or bsiness Principles prohiits politicalcontritions o an kind. Xstrata plas
an active role in a nmer o signicant
international and national indstr
organizations and mlti-stakeholder grops,
throgh memership, nding, provision o
expertise and participation in committees
and working grops. Xstrata Copper plas
a similar role in organizations that are
copper-specic and those that are niqe
to geographical areas where Xstrata Copper
is the onl Xstrata commodit siness in
operation.
Ke activities among Xstratas gloal plicpolic participation commitments are or
memership with the International Concil o
Mining and Metals (ICMM), and or spport
or and involvement with the Extractive
Indstries Transparenc Initiative (EITI).
In line with the polic, the Tampakan Project
did not provide an nancial or in-kind
contrition to political parties or individals
in 2009.
In the Philippines, virte o Exective Order
No. 469, the Mineral Development Concil
(MDC) nder the Oce o the President is
tasked to advance the government polic
o responsile and sstainale development
o the States mineral resorces. The same
presidential order provides or the activation
o Regional Minerals Development Concils
(RMDCs) in ke regions where priorit
minerals development projects exist. SMI
represents the Chamer o Mines in the
Regional Mineral Development Concil o
Region XII (RMDC XII). Its presence in the
RMDC is an extension o the inter-agencmlti-sectoral partnership at the national and
local levels o the Chamer o Mines.
We oserve non-discrimination
and air treatment and
legal rights, and spport
the rights o emploees,
commnit memers and other
stakeholders to e treated
with dignit in a manner that
respects cltral heritage,
traditions and norms.
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SuSTAINAbILITy REPORT 2009 19
Principal memberships & associationsSMI makes an important contrition to the Mindanao and Philippine resorces and siness commnit, and the economicdevelopment o the region and contr. As sch, the Project activel participates in a range o indstr and siness associationsand advocac organizations, and contines to ild relationships with the ollowing:
Chamer o Mines o the Philippines
Philippine Mine Saet and Environment Association (PMSEA)
Philippine Minerals Exploration Association
Philippine Societ o Mining Engineers
Geological Societ o the Philippines
Societ o Metallrgical Engineers o the Philippines
Mindanao Association o Mining Indstries
Mindanao Association o Mining Engineers
Regional Minerals Development Concil o Region XII
Provincial Mining and Reglator board o Soth Cotaato
Provincial Mining and Reglator board o Davao del Sr
Philippine Chamer o Commerce and Indstr
Philippine-Astralia bsiness Concil
Philippine bsiness Leaders Form
Philippine bsiness or Social Progress
Mindanao bsiness Concil
Soth Cotaato Chamer o Commerce and Indstr Fondation, Inc.
General Santos Chamer o Commerce and Indstr, Inc.
Astralia-New Zealand Chamer o Commerce o the Philippines
british Chamer o Commerce o the Philippines
Eropean Chamer o Commerce o the Philippines
bsiness or Social Responsiilit
International Finance Corporation (Philippines)
Ateneo School o Government
Asian Institte o Management Center or CSR
Stdents in Free Enterprise Philippines
SMIs General Manager was accepted as a memer o the PMSEA board o Directors in Octoer 2009.
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20 TAMPAKAN PROJECT
In 2009, the Project contrited PhP1.3illion (uSD26.8 million) to the Mindanao andPhilippine econom throgh:
Employmentofmorethan252peopleand 1,065 contractors, inclding aweekl average o 202 local commnitresidents, to spport the Projectsexplorator drilling and other operationalneeds.
AnnualwagesinexcessofPhP189.4million (uSD4 million)
PhP207.2million(USD4.37million)paidto government in taxes and charges owhich PhP2.2 million (uSD46,500) waspaid in taxes to local government nits
PhP27million(USD608,000)inpower
and el charges
Or operations and economic contritionThe Tampakan Project provides opportnities or local sinesses and commnit projects, throgh governmenttaxes and charges reslting in considerale enets to Tampakan and its srronding commnities.
PhP328million(USD7million)forprchase o goods and services
Communitypartnerships,sponsorshipsand donations totaling more than PhP79million (uSD1.7 million)
I SMI receives the necessar permits,inclding FPIC or mining and resettlement,
the tre enets o the Tampakan Project
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SuSTAINAbILITy REPORT 2009 21
Or operations and economic contrition
as o the Pre-Feasiilit Std inclde theollowing:
ThePhP260billion(USD5.2billion)ininitial capital investment or the Project
Theanticipatedtotalrevenuestreamtothe Philippine econom in excess o PhP2trillion (uSD40 illion) over the lie omine
Employmentopportunitiesforupto8,000 to 9,000 dring constrction
Employmentforover2,000duringoperations;
Othereconomicbenetsdirectlyemanating rom the developmento small and medim enterprises tospport the Project like transport,constrction, tilit services, increaseddemand or agricltral prodcts to
sstain the operation o the mine, and
jo opportnities that ma e generatedrom the irth o enterprises andsinesses as sprred the Project.
Local suppliers
A spplier or contractor located and
registered within the Project area (Tampakan,Kilawan, Colmio and Malngon) is givenpriorit i it has the capailit to providegoods and/or services according to the criteriaindicated in the procrement polic.
Prodct sppliers are assessed ased on theollowing criteria:
Prices and qalit o prodct
Proximit to the site where the sppliesare intended or
Availailit and completeness ospplies/stores
Capailit to deliver the spplies on time
Local spplier in the Project area
On the other hand, service sppliers areassessed on the ollowing:
Commercial (prices, nancial strength)
Technical (resorces availale, qalito prodct and services, previosexperience, ailit to deliver oncommitment, etc.)
Compliance with Health, Saet andEnvironment standards
Engagement and negotiation are condctedin the interest o the Compan. Prchases ogoods and services are made onl throghSMI accredited sppliers &/or contractors,who have ndergone SMIs accreditationprocess.
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22 TAMPAKAN PROJECT
Tampakan Conceptual Mine Layoutas o Octoer 2009
22 TAMPAKAN PROJECT
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SuSTAINAbILITy REPORT 2009 23SuSTAINAbILITy REPORT 2009 23
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24 TAMPAKAN PROJECT
Local business
The Tampakan Project has helped oostlocal livelihoods where its acilities arelocated. Local sinesses like constrction,manpower, transport, ood, and spplservices have grown in spport o the Project.It has generated emploment and a markedincrease in amil income, contriting toimproved literac and skills in the process.Locals now also have etter access toasic health services with the enrolmento commnit hoseholds with PhilHealthinsrance and throgh the nmeros medicaland dental missions condcted reglarlin the Project area and in SMI exploration
tenements.
In 2009, SMI paid local sppliers a total oPhP328 million (uSD7 million) or goods andservices:
Goods PhP136 million (uSD3 million)
Services PhP192 million (uSD4 million)
Local inrastructure
The Tampakan Project is committed todeveloping and maintaining inrastrctre inthe Project area and in expansion areas schas Malngon in Sarangani, Kilawan and
other Davao del Sr mnicipalities.
In 2009, SMI provided commnitinrastrctre spport. Projects inclded:constrction and rehailitation o potalewater sstems and a reservoir, constrction oone irthing and ntrition center, repair o atrial hall, road opening and repairs, drainageinstallation, and pgrading o school acilities.
Assessment and spport o local needs isplanned to contine throgh engagementswith local governments, trial concils andcommnities; compliance with the Free andPrior Inormed Consent (FPIC) reqirements
and technical stdies.
Or operations and economic contrition
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SuSTAINAbILITy REPORT 2009 25
baranga Kimlawis is one o the TampakanProjects host commnities. It is in Kilawan,a orth-class mnicipalit in the province oDavao del Sr.
The center o Kimlawis stles with activities.Stores selling anthing rom wet prodctsto dr goods line the streets, crowds gatherjst a ew steps rom the aranga (village)hall, resh arm prodce is eing sorted at theplaza, and modern concrete hoses are eingilt one ater the other.
Szette, the sister o baranga CaptainCristitto Dazo, tells the stor o howcommnit memers now own vehicleswhere previosl there were no more thantwo in the whole area. A ke actor to thisincrease in the nmer o privatel-ownedvehicles has een SMIs investment inimproving the road connecting Kimlawis to
near areas, ths providing etter access ormovement o prodcts and services.
Compan activities in 2009 in barangaKimlawis contrited to the local econom
an eqivalent o PhP321 million or itsexploration and environmental stdactivities in the area. This amont incldesthe emploment o local laor, inrastrctreinvestment or exploration spport activities,rental o eqipment and machines, andother incidental expenses incrred within thecommnit.
The amont does not inclde additionalconsiderale commnit investment programsndertaken in partnership with or hostcommnit involving livelihood training andspport, instittional development, and othercommnit and environmental sstainailitprograms.
Progress in Barangay Kimlawis
The investments made SMI and the josgenerated Project activities are clearlhaving a mltiplier eect in Kimlawis. Thiscold not e taking place withot thedetermination to ring progress and withot
the cooperation among the local governmentnit, the trial concil, the memers o thecommnit, and SMI.
case study
SuSTAINAbILITy REPORT 2009 25
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26 TAMPAKAN PROJECT
The workplace and or peopleWe strive to create and sstain injr-ree, sae work environments or everod in orworkplaces. Zero harm is or goal.
To achieve or goal o zero harm in theworkplace, ever emploee is accontale orsaet perormance, training them to improvetheir saet knowledge and skills and makethem aware that the have a responsiilit tothemselves, their amil and riends to workand ehave sael.
We also ensre that ever task ndertaken inor workplace has a sae sstem in place andthat or people have tools and eqipmentthat are t or specic prposes and well
maintained to complete tasks sael andprodctivel. Frthermore, or reglar health
screening programs monitor or emploeeshealth, well-eing and tness.
SMI ses a risk management sstem toidenti, assess and eliminate or controlsaet risk. When an nsae condition isidentied or when a saet incident occrs,it is investigated immediatel and action istaken to eliminate the risks involved. Saetaditing occrs reglarl across or sinessto improve saet standards and practices,and or saet perormance, saet initiatives
and isses are reglarl commnicated to orpeople.
Saety perormance
At the Tampakan Project, varios saetprograms have een implemented toprovide edcation and training, conseling,prevention or risk control, and treatmentor serios diseases. SMI also reorganizedits saet department and created acommnit saet training role to work withthe Corporate Commnit SstainailitDepartment (CCSD) to spport saetawareness in the commnit.
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SuSTAINAbILITy REPORT 2009 27
The workplace and or people
SMI 2009 Saety Perormance
Monthly Moving Average
JAN
0
5
10
15
20
25
30
FEb MAR APR MAy JuN JuL AuG SEP OCT NOV DEC
TRIFR, DIFR & DISR(MMA)
Xstrata reqires all its sites to record andinvestigate all High Potential Risk Incidents(HPRI) as reporting and investigation o anincident, a hazard or near-miss incidentare vital to prevention. Wherever possile,hazards are identied eore these can resltin injr. HPRI reporting can help achieveinjr prevention identiing potentialhazards and soltions that can protect theworkorce.
Jo Saet Environment Assessment (JSEA)and hazard reporting orms were lanchedwithin the compan in 2009 in or eort to
achieve zero harm.
Since Ma o 2008, when an LTI waslast recorded, SMIs saet perormancecontinosl improved, registering no LTIsor the whole o 2009. In the 2009 calendarear, SMI logged a total o 3,210,614 manhors withot LTI.
Security challenges
Xstrata is a signator to the uN GloalCompact, and SMI has adopted the VolntarPrinciples on Secrit and Hman Rights(VPSHR). With saet and secrit o
emploees and contractors as a priorit, SMIis committed to work with local athoritiesand commnities to contine to ildconstrctive relationships with stakeholders,minimize risk, and secre an ongoing licenseto operate.
No incident perpetrated organizedgrops, e.g. New Peoples Arm (NPA), wasrecorded in the Tampakan Project in 2009.However, on 26 Jl 2009, a uPD drillerwas atall shot an nidentied assailantin Nakoltana, bongmal, baranga Kimlawis,Davao del Sr. Athorities have preparedlegal action to arrest and ring the sspect tocort. The incident was o a personal natreand not compan-related. The compan wassaddened the incident and the companoered spport to the amil.
There were or other shooting incidentswhere no serios injries were reported.Police investigations indicated the incidentswere o personal natre and not compan-related.
SMI spports a mlti-stakeholder approachto improving secrit conditions in the
Tampakan Project area in which thecommnits participation and spport, aswell as the national, local and provincialgovernments all pla important roles. We willcontine to work with the host commnities,or secrit service provider, and the localathorities to promote peace and order in theregion.
Occupational health
SMIs Health and Occpational Hgienestandard is sed to identi, assess andcontrol occpational health hazards throghpractical and reasonale measres that, when
DISR 2008
DIFR 2008TRIFR 2008
DIFR 2009
DISR 2009
TRIFR 2009
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28 TAMPAKAN PROJECT
SMI spports a mlti-
stakeholder approach to
improving secrit conditions
in the Tampakan Project area
in which the commnits
participation and spport, as
well as the national, local and
provincial governments all pla
important roles.
implemented, help eliminate work-relatedillness and injries.
Health monitoring programs were strictlimplemented at the Tampakan Project.Emploees were given their annal healthexamination while new emploees werereqired to ndergo a pre-emploment
health examination. SMI also introdceda Hepatitis b vaccination program or allemploees and the immnization program ispart o its emploment indction program.
There were no occpational diseases recordedin 2008 and 2009.
Home saety and basic frst
aid
Reglar emploees and contractors were
given special training on:
Snake bites First Aid and Emergenc
Response
basic First Aid Orientation
basic Emergenc Extrication Orientation
Deensive Driving, accredited theTESDA
Radio Land-ased Moile Seminar
Driver Saet Reresher Corse
Risk Management Training
behavioral based Sstem Program
Behavioral Based Saety(BBS)
SMI adopted a program called behavioralbased Saet (bbS) to give positivereinorcement o driving ehavior withde emphasis on conseling. In 2009, SMIexpanded the horizon in the implementationo the bbS.
A generic behavioral based WorkplaceOservation (bbWO) was ormlatedapplicale to an work activit. SevenbbS training sessions were condcted andattended 59 personnel. The programstimlated the emploees interest andcooperation in incident prevention recognizing Sae and At-Risk behavior.
OriginEmployees
Employees and
Contractors
Other areas in South Cotabato Province 29 11.5% 76 5.8%
General Santos City 32 12.7% 76 5.8%
Davao del Sur Province 2 0.8% 24 1.8%
Sultan Kudarat Province 1 0.4% 4 0.3%
TOTAL 252 100% 1,317 100%
Sarangani Province 1 0.4% 3 0.2%
Australia 4 1.6% 4 0.3%
Kiblawan 19 7.5% 426 32.3%
Columbio 7 2.8% 10 0.8%
Luzon Island Group 34 13.5% 37 2.8%
Visayas Island Group 10 4.0% 10 0.8%
Other areas in Mindanao 31 12.3% 44 3.3%
Tampakan 82 32.5% 603 45.8%
Headcount % Headcount %
Total workorce by employment type,
employment contract and region
Employees
Manpower Headcount Dec 2009
Regular 183
Probationary 24
Project Employees 41
Secondees 4
Contractors 1,065
Sub-Total 252
Total 1,317
Employee healthcare
Workorce memers and their amilies receivestattor healthcare ssidies throgh thePhilippine Health Insrance Corporation(PHIC), while premier private healthcareservices or all emploees and ve qalieddependants are provided IntelliCare,
a third part Healthcare MaintenanceOrganization (HMO).
Preparation or crises andemergencies
The implementation o Emergenc Crises andbsiness Continit, an SMI standard, ensresthat appropriate resorces and eectiveemergenc response, crisis managementand siness continit plans are in place tomanage emergenc and crisis sitations.
SMI pdated its crisis response procedresin late 2009 to spport the crrent and short-term tre state o the siness.
The workplace and or people
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SuSTAINAbILITy REPORT 2009 29
case study
Tre to its goal o zero harm in the
workplace, SMI recorded no incidents o
injr or illness that reslted in the non-
completion o a work shit in 2009. between
Ma 2008 and Janar 2010 SMI emploees
and contractors worked in excess o ve
million hors withot Lost Time Injr (LTI).
The record was achieved despite the
challenges o transporting and operating
eqipment within ran conditions and
across the rgged and montainos terrains
o sothern Mindanao, also considering
that SMI engages contractors rom drivers,
constrction personnel, laorers to short-
term administrative personnel that increase
potential saet concerns.
The culture of safety in the workplaceand the community
SMIs Hman Resorces, Saet and Health
Manager, Graham Almond, attrites the
accomplishment o the ve million hors LTI
ree to the acceptance SMI emploees
and contractors to emrace the goal o zero
harm.
The saet measres we have implemented
sch as holding reglar saet talks,
departmental adits and ehavior-ased
saet programs have een widel accepted
throghot the siness, Mr. Almond said.
These measres have een ke to reaching
this signicant health and saet milestone.
In 2009, SMI also sponsored training on a
Heav Eqipment Saet program in Kiamo,
Kimlawis designed to promote a Cltre o
Saet among its host commnities.
Rogelio bong Qito, SMI Saet
Sperintendent, elieves capacit ilding in
the eld o saet shold e the compans
legac to its host commnities.
When SMIs operations are complete, the
training we have condcted and its impact on
the commnit will e or most signicant
legac, Mr. Qito said.
5,000,000+ working hors with no LTI
SuSTAINAbILITy REPORT 2009 29
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30 TAMPAKAN PROJECT
New Memoranda o Agreements (MOAs)signed with host commnities stiplate thatSMI will give priorit to the indigenoscltral commnities (ICC) / indigenospeoples (IP) in the host arangas aected its operation in an work capacitcommensrate to their qalications andtness. In no case shall an IP applicant e
considered or placement i s/he is not dlrecommended the concerned elder /leader o his trie.
Employee training
SMI sends its emploees to training onsstems and procedres, inclding estpractices that are to e applied in theTampakan Project. In 2009, SMI spentPhP4.3million (uSD90,097) and 5,309 horson training:
Employee perormanceevaluation
SMI has adopted Xstrata Coppers gloalperormance evalation sstem and in 2009,proper eedack on emploee perormance,evalation and career development reviews
were completed as schedled.
Workorce by role type
Position Level Headcount %
As o December 2009
Managers 7 3%
Superintendents 21 8%
Supervisors / Ofcers 89 35%
Rank and File 135 54%
Total Training Programs 252 100%
Labor relations
Laor relations are a ndamentalresponsiilit o operational management andwe seek to have a direct relationship etweenor emploees and line managementonded on qalit leadership, eectivecommnication, mtal respect and trst.
We conslt with emploees in advance onan signicant operational change.
SMI grants enets to ll-time emploeesthat are not provided to project emploees,sch as Annal Vacation Leave and Sick Leavecredits o 15 das each. Project emploeesare entitled to the stattor enet ove das Service Incentive Leave (SIL) atercompleting one ear o work.
SMIs standard entr wage rate or thelowest stratm is 9.2% higher than the localminimm wage.
Employing locally
The Principal Agreements with hostmnicipalities, arangas (villages) and trial
commnities have individal provisions statingthat SMI will give priorit o emploment(other than in secrit) in mining operationsto competent and qalied long-terminhaitants living in the commnit.
Employee Training Jan - Dec 2009Total Training Hours 5,309
Average Training Hours per Employee 21.07
Total Number o Participants 724
Total Training Cost USD90,097
Average Training Cost per Employee USD125
Total Training Programs 49
Position Hours
Senior Management 23
Management 1,135Supervisors, administration, technical 4,149
Operational production, maintenance 2
Total 5,309
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SuSTAINAbILITy REPORT 2009 31
Diversity and equalopportunity
SMI emplos a diverse workorce, to enetrom a varied range o skills, ackgrondsand perspectives. It emplos people asedon the skills and experience reqired or each
particlar position, withot discriminationaccording to gender, race, age, sexalorientation, religion, nationalit or an otheractor. The Projects workorce is crrentl65% male and 35% emale.
As a polic, there is no dierence in the asicsalar o men and women. The salar scaleis applied in the same manner regardless ogender.
case study
Key to culturally sensitive community engagement
In 2009, SMI introdced a Cltral Indction
program to provide its emploees with a
etter nderstanding o the local cltre,
specicall that o the blaans.
The Cltral Indction program consists o
three modles that aim to provide sta and
contractors an insight on how to relate with
the blaans.
The rst modle is an introdction to
blaan cltre, throgh an extensive
Cltral Indction
discssion o the blaans histor, elie
sstems, worldviews, cstoms and
traditions
The second modle gives tips on
practices that shold e oserved when
in a blaan village, and dealing with
blaans in an oce setting
The third modle nderscores cltralcommonalities with other dominant
Philippine ethno-lingistic grops
encoraging the participants to
nderstand and respect cltral
dierences.
b the end o 2009, a total o 173
contractors and emploees rom the
compans varios departments nderwent
the Cltral Indction program, enhancing
their interaction with commnit memers
and overall cltral awareness.
To achieve or goal o zero
harm in the workplace, ever
emploee is accontale or
saet perormance.
Non-discrimination policy
As otlined in or bsiness Principles, wevale the contrition made emploees,and or policies and practices respect theirpersonal dignit and rights. We do nottolerate an orm o workplace discrimination,harassment or phsical assalt.
There has een no incidence o discriminationreported in 2009.
SuSTAINAbIL