INTEGRITYT CARER ACCOUNTABILITYU RESPECTS COLLABORATIONT

Transcription

1 Annual Review 2012 BUILDING INTEGRITYT CARER ACCOUNTABILITYU RESPECTS COLLABORATIONT

2 accountability rus Catherine Coumans, MiningWatch Canada TRUST Distrust will continue so long as individual companies profess to respect human rights or, for example, the need to achieve a social licence to operate, while lobbying against mechanisms that ensure these rights in policy or law. Perception about the industry has come a long way, but we still have a way to go. Advances in modern, sustainable mining techniques as well as efforts in the areas of environmental stewardship, corporate governance and disclosure have supported improving public perceptions. These efforts are starting to achieve external recognition amongst socially responsible investors, governments, NGOs and civil society. Charles Jeannes, President and Chief Executive Officer, Goldcorp respect The challenge we face is to continuously advance our sustainable development performance so that we can provide economic and social benefits to our stakeholders, and continue to build strong partnerships with local communities and host countries in which we operate. Richard Adkerson, President and Chief Executive Officer, Freeport-McMoRan Copper & Gold

3 integrity Yoshimasa Adachi, President and Chief Executive Officer, JX Nippon Mining & Metals The mining industry must win the public trust to stay in our own business. To this end, our first priority must be full compliance with laws and regulations, but we also need to go beyond our legal obligations, fulfilling our duty to society through corporate social reponsibility programs and engaging in regular communication with the public about those activities. There are few short cuts to trust building. It relies on industry to commit to continuous disclosure, information sharing, openness to engagement and dialogue. Marketa Evans, Extractive Sector CSR Counsellor, Government of Canada t car Jamie Sokalsky, President and Chief Trust is a vital component of our bond with society and especially with our local communities and stakeholders. ICMM members are working hard to build broad-based and durable privilege to operate by improving social performance and addressing concerns raised by their stakeholders. Jochen Tilk, President and Chief Executive Officer, Inmet The mining industry has to create shared value, whereby both communities and shareholders benefit from the development of natural resources. If we share common goals, we can more easily build the trust that s necessary for a successful mining operation today. Executive Officer, Barrick Trust is a long-term investment. For us, ICMM sets a benchmark and a guide to ensure we protect and build that investment for the long term. Andrew Michelmore, Chief Executive Officer, Minerals and Metals Group (MMG) 3 ICMM Building trust

4 CONTENTS ABOUT ICMM 4 About ICMM and this review 5 Vision, values, goal, objectives 6 Chair s foreword 7 Council members 8 President s report 10 Members 12 Member performance assessment 14 Strategy and Action Plan Mining s contribution to sustainable development 18 Social and economic development 20 Environment and climate change 22 Health and safety 24 Materials stewardship 26 Strategic alliances 27 Communications 28 Financials The International Council on Mining and Metals (ICMM) was established in 2001 to act as a catalyst for environmental and social performance improvement in the mining and metals industry. Today, the organization brings together 22 mining and metals companies and 34 national and regional mining associations and global commodity associations to address the core sustainable development challenges faced by the industry. ICMM is a not-for-profit association formed under the Canada Corporations Act. Its 24 permanent staff members are all based at ICMM s premises in Portman Square, London. ABOUT THIS REVIEW Welcome to ICMM s Annual Review This publication highlights some of the most significant events ICMM has been involved with in 2012, reviews the progress we are making with our various work programs and outlines some of the challenges we face moving forward into The theme of this year s review is building trust. Trust is central to what we do at ICMM. It underpins the collaborative relationships we have, both with our members as well as all the other stakeholders involved in our work. ICMM s focus is on improving sustainable development performance in the mining and metals industry. Details of the performance of our member companies in meeting their member commitments are on pages 12 to 13. In 2012, ICMM set out its strategic direction for the next three years with the new Strategy and Action Plan (page 14). At the same time, we reaffirmed our vision, values, goal and objectives. It is partly through establishing and acting in accordance with these values that we are able to build trust as an organization. Examples of how ICMM has worked to demonstrate each of its values in 2012 can be found throughout this review on pages 18 to 25. We also launched an important new series of publications in 2012, which we hope will both inform and prompt dialogue and discussion about mining s contribution to sustainable development (page 16). Reports from our work programs Social and Economic Development, Environment and Climate Change, Health and Safety, Materials Stewardship, Communications are featured on pages 18 to 27. Financial information for the organization can be found towards the back of the review (page 28). For a more regular update on ICMM s work, please subscribe to our online news service by ing us at info@icmm.com or follow on Twitter. We hope you enjoy the review. 4 ICMM Building trust

5 VISION AND VALUES GOAL AND OBJECTIVES Leading companies working together and with others to strengthen the contribution of mining, minerals and metals to sustainable development. Working collaboratively with others, to enhance the value creation role and long-term net contribution of the mining, minerals and metals industry and its products to people, the environment and economies. Care For the safety, health and wellbeing of workers, contractors, host communities and the users of the materials we produce. Respect For people and the environment, ensuring that we are sensitive and responsive to the values of host societies. Integrity As the basis for engagement with employees, communities, government and others. Accountability To do what we say we will do and uphold our commitments. Collaboration Working with others in an open, transparent and inclusive way as we address the challenges Improve sustainability performance To catalyze and facilitate the definition and continuous improvement of social, environmental and economic practices. Listen to others and anticipate change To listen to others, identify public concerns and anticipate change so members can better understand evolving societal values, proactively address risks, avoid crises and serve in a leadership position in addressing issues of public concern. Communicate To identify and communicate the nature of the contribution of the mining, minerals and metals industry to sustainable development. Strengthen engagement capacity To build and maintain effective relationships with those important for ensuring the industry s licence to operate. Seek fair and consistent regulation To seek and support the collaborative development and implementation of fair and consistent policies and regulations for governing the performance of companies involved in mining-, minerals-, and metalsrelated activities around the world. Represent To represent the collective views and interests of member companies as appropriate and act as a principal point of contact with the industry s key constituencies in the international arena. 5 ICMM Building trust

6 CHAIR S FOREWORD Marius Kloppers, ICMM Chair It has been an important year for ICMM. As an organization, ICMM s role is to work with its members and others to strengthen social and environmental performance and through that, mining and metals contribution to sustainable development. Strengthening that contribution is fundamentally important to our industry. The mining and metals industry provides many benefits to society, including employment, business development, training, education and capacity building, as well as the more obvious ones such as royalties and taxes. Through our engagement with stakeholders, we must continue to build a deeper understanding of the broad-ranging contributions the industry makes to economies and societies at large. Demand for the minerals and metals we produce is expected to increase over time, driven by population growth and the way societies are evolving. The industry needs to make long-term investments to meet this demand, often in the face of an uncertain economic outlook. Industry needs to partner with stakeholders in providing predictable policy frameworks that reflect a full understanding of the broad contribution the mining and metals industry makes to society. In many ways, ICMM was created just over a decade ago to close this gap in understanding. It is a major, critical challenge. As ICMM chair, I work with my fellow industry CEOs on ICMM s Council to set the overall priorities and governance mechanisms for the organization. As a Council, we are determined that ICMM focuses its resources and efforts wisely on where it can make a difference to addressing the sustainability challenges we face. To that end, we encouraged a number of important actions in 2012 that are now entrenched for the next three years in ICMM s Strategy and Action Plan Internal controls have been strengthened, priorities have been focused and governance processes have been streamlined. These are all significant and important steps for ensuring ICMM s ongoing success. In hosting its second Health and Safety Conference in Santiago, Chile, ICMM emphasized its commitment to the issues of health and safety. The threeday conference was attended by over 300 health and safety experts and mining and metals executives, and opened by the Chilean Minister of Mines, Mr Hernán de Solminihac. The ICMM Council is deeply committed to further reductions in injury rates and the absolute elimination of fatalities within our businesses. Mining and metals are vital for economic growth and prosperity, and ICMM continues to help demonstrate the contribution of mining to society. In 2012, we produced a new series of publications that detailed mining s contribution to sustainable development. These publications offer a fresh approach to the subject and are a starting point for the industry and others to more fully examine the benefits, costs, risks and responsibilities related to mining and metals in the twenty-first century. It was pleasing then for ICMM to receive recognition in 2012 for the new series in the form of the Mining Journal s Outstanding Achievement Award for sustainable development. Equally, it was rewarding to have ICMM s contributions acknowledged in the International Institute for Environment and Development s (IIED) review publication MMSD+10: reflecting on a decade of mining and sustainable development. Besides commending a number of ICMM s initiatives and affirming our organization as a foundation for driving change throughout the industry, IIED highlighted the fact that it is dialogue and collaboration that underpin ICMM s success. And it is here that trust, the theme of this year s review, is paramount. ICMM s Council of CEOs recognizes the value of strong trusting relationships among the industry and its key stakeholders. It is why we as a group of CEOs ordinarily in competition with each other come together at ICMM to collaborate in strengthening environmental and social performance and through that, our contribution to sustainable development. Marius Kloppers, Chair 6 ICMM Building trust

7 COUNCIL OFFICERS COUNCIL MEMBERS Marius Kloppers ICMM Chair Chief Executive Officer BHP Billiton Cynthia Carroll ICMM Deputy Chair Chief Executive Officer Anglo American Mark Cutifani ICMM Treasurer Chief Executive Officer AngloGold Ashanti Patrice Motsepe Executive Chairman African Rainbow Minerals Luc Oursel Chief Executive Officer Areva Jamie Sokalsky President and Chief Executive Officer Barrick Thomas Keller Lippold President and Chief Executive Officer Codelco Richard Adkerson President and Chief Executive Officer Freeport-McMoRan Copper & Gold Charles Jeannes President and Chief Executive Officer Goldcorp Nick Holland Chief Executive Officer Gold Fields Svein Richard Brandtzæg President and Chief Executive Officer Hydro Jochen Tilk President and Chief Executive Officer Inmet Yoshimasa Adachi President and Chief Executive Officer JX Nippon Mining & Metals Simon Scott Acting Chief Executive Officer Lonmin Andrew Michelmore Chief Executive Officer Minerals and Metals Group Hiroshi Yao President Mitsubishi Materials Richard O Brien President and Chief Executive Officer Newmont Sam Walsh Chief Executive Officer Rio Tinto Nobumasa Kemori President Sumitomo Metal Mining Donald Lindsay President and Chief Executive Officer Teck Murilo Ferreira President and Chief Executive Officer Vale Mick Davis Chief Executive Officer Xstrata 7 ICMM Building trust

8 PRESIDENT S REPORT Dr R Anthony Hodge, ICMM President ICMM has much to be proud of. In its 2012 discussion paper MMSD+10: reflecting on a decade of mining and sustainable development, the International Institute for Environment and Development (IIED) notes that ICMM is now considered the port of call on industry standards for best practice. Yet, at a recent meeting, one of our Council members quietly noted that the greatest insurance policy I have is community trust. We know that the mining and metals industry continues to face a substantial trust deficit. At the same time, mining-related conflict in many countries is increasing the tragic events at Marikana in South Africa being the most high-profile example in Recent work by public opinion research consultants GlobeScan highlights the scale of the trust challenge, particularly in countries such as South Africa and Peru. ICMM and its members have a vital role to play in reducing this trust deficit. The ICMM values care, respect, integrity, accountability and collaboration are key drivers of trust. But trust must be founded on more than words. It needs concrete actions that demonstrate consistent delivery of commitments. It requires effort to understand the perspectives of others and solution building that respects the values of all interested parties. Within the industry, there is a growing sense that the full benefits of mining and metals activities and the resulting products are rarely understood and recognized, particularly when public policy is debated and enshrined in law. This realization gives rise to a feeling of frustration. But the industry has not been very good in articulating the full benefits, costs, risks and responsibilities of mining and metals activities and products. However, while the industry s story is not being fully recognized, neither is that of the host communities and countries. This overall lack of understanding and articulation of the full range of benefits, costs, risks and responsibilities associated with mining and metals is a serious gap. It is leading to bad decisions, hard feelings, undermined trust and, in the extreme, conflict. ICMM s work on understanding the full contribution of mining and metals is just beginning. It is a critical task and fundamental to building trust. During 2012, we launched our Mining s contribution to sustainable development series of five publications. For the first time, we published a listing of the role of mining in the economies of 212 countries. This is a small step forward and 2013 will see more work on this front. Like all organizations, ICMM must periodically reassess its own activities and ensure priorities are strategic and activities are focused. The year 2012 saw completion of our next Strategy and Action Plan ( ). Mining and metals contribution is the integrating thread of our work during this next threeyear cycle. Importantly, we introduced a comprehensive project prioritization process. We have also put in place a set of organizational performance indicators that extends the system of performance measurement and progress assessment introduced in the previous action plan. Matching all of this is a streamlining of ICMM structure that matches the changing priorities moving forward. For many across the world, mining is seen as dangerous and injuries and fatalities inevitable. In 2012, we held the ICMM Health and Safety Conference in Santiago, Chile. What struck me about this event was the attitude of the participants. The inevitability of injuries and fatalities was put aside in favour of an unequivocal commitment to fight fatalities. This is a significant step change in attitude. On another front, we continued to strengthen our capacity to recognize trends in society that might lead to changing social, economic, political, cultural and environmental conditions important to both our industry and society in general. More than ever, we need to anticipate emerging trends and address challenges positively to avoid the reactive and defensive stance that has so often characterized the mining and metals industry in the past. The richness of our work programs is reflected throughout this review. All of it is aimed at reducing the industry s trust 8 ICMM Building trust

9 KATHRYN MCPHAIL deficit through strengthening our contribution to sustainable development. Doing so is a huge but critical challenge. ICMM s team is deeply committed, highly professional and fully engaged. I am proud to work with my colleagues in the secretariat and the many individuals from across our 22 company members and 34 associations who contribute vast amounts of time to the projects we work on together. Twice a year we bring some 200 people together from across the world to review, strengthen and direct our work. For our members this is a huge commitment and without this commitment, we cannot succeed. Finally, I would like to extend a welcome to ICMM s newest member company, Inmet, who passed through the ICMM new member process in We look forward to continuing our work with them, and the rest of our membership, as we move into Dr R Anthony Hodge, President Kathryn McPhail is moving on to a new a career challenge as Vice President of Sustainability at BG Group, having been with ICMM since its inception. I would like to thank Kathryn for her outstanding contribution to ICMM over the past decade on behalf of our members, employees and our many stakeholders. Kathryn, who worked for the World Bank prior to joining ICMM, was involved in the genesis of ICMM. She joined ICMM in 2002 for a limited period in order to help establish the organization, and has been with us ever since. Over the last 10 years she helped guide ICMM through its early evolution, contributed to the creation and establishment of our core principles and led ICMM s highly regarded Mining: Partnerships for Development project. No one who has met Kathryn can be in any doubt about her passion, drive and commitment to her work, shaping ICMM s role as a change agent for the improvement of social and environmental performance in the mining and metals industry. In particular, she has been a leading advocate of collaboration and open, honest dialogue as a means to creating win win situations for host communities, developing countries and companies. We will miss Kathryn at ICMM though we look forward to collaborating with her in her new role. We wish her every success in her new position and hope that she continues to make a difference through her work, just as she has done so effectively at ICMM these past 10 years. 9 ICMM Building trust

10 MEMBERS ICMM has 22 member companies and 34 member associations. Our member companies are many of the largest in the sector based on 2012 data for the value of mineral production, five of the largest 10 companies are ICMM members. Together, our members operate at over 1,200 sites in 68 countries across the globe. Exploration activities extend this reach significantly. They are responsible for a significant proportion of global minerals production for example, copper (47%), platinum group metals (42%), iron ore (37%), gold (34%), nickel (32%) and zinc (22%) (Intierra RMG, Sweden). Our member associations are a mix of national and regional mining associations and global commodity associations. Through them we reach another 1,500 companies in the sector. They contribute specialist (regional or commodity-specific) expertise and knowledge to the development and implementation of ICMM s work. They act as partners in raising the profile of the sustainable development agenda within the industry. The ICMM-hosted Associations Co-ordination Group serves as a forum for knowledge exchange on issues of common interest. For the fourth time in the annual review, we have conducted an assessment of the progress that each member company is making against their reporting and assurance commitments. The table overleaf gives full details. For their 2012 reports, members were required to report in-line with the GRI G3 Guidelines and the Mining and Metals Sector Supplement, declare an application level of A and obtain independent external assurance of subject matters 1 5 (see the assurance procedure publication for details). We have seen our members make significant progress again this year. Twenty of our 22 member companies obtained a G3 A+ application level compared to 17 last year and 15 in In addition, 21 companies have sought external assurance in 2012, an increase of three companies from The only member company not to declare a G3 application level was Areva who joined ICMM in The full ICMM requirements apply within two years of becoming an ICMM member. MEMBER OPERATIONS The maps are indicative of where our 22 member companies are currently active across the globe; we do not claim that the data is comprehensive (especially regarding early-stage exploration activity and post-closure). The sites displayed range from pre-feasibility exploration sites through mines under construction to operating or temporarily closed mines, refineries and smelters. Please note that in some areas a single dot represents multiple operations in a concentrated area. NORTH AMERICA EUROPE 10 ICMM Building trust

11 ASSOCIATIONS Cámara Argentina de Empresarios Mineros (CAEM) Cámara Asomineros Andi Colombia Cámara Minera de México (CAMIMEX) Cámara Minera de Venezuela (CAMIVEN) Chamber of Mines of South Africa Chamber of Mines of the Philippines Chamber of Mines of Zambia Cobalt Development Institute Consejo Minero de Chile A.G. Eurometaux Euromines Federation of Indian Mineral Industries Ghana Chamber of Mines Instituto Brasileiro de Mineração International Aluminium Institute International Copper Association (ICA) International Iron Metallics Association International Lead Association International Manganese Institute International Molybdenum Association (IMOA) International Wrought Copper Council International Zinc Association ITRI Japan Mining Industry Association Minerals Council of Australia Mining Association of Canada Mining Industry Associations of Southern Africa (MIASA) National Mining Association (NMA) USA Nickel Institute Prospectors and Developers Association of Canada (PDAC) Sociedad Nacional de Minería (SONAMI) Chile Sociedad Nacional de Minería, Petróleo y Energía (SNMPE) Peru World Coal Association World Gold Council ASIA SOUTH AMERICA AFRICA AUSTRALASIA 11 ICMM Building trust

12 MEMBERS Sustainable development (SD) or integrated report for the financial year ending Alignment between members policy frameworks on SD issues and ICMM s SD principles and mandatory requirements set out in ICMM s position statements** Process and outcome for identifying and prioritizing material SD risks and opportunities Reported on Assured Reported on Assured Company subject matter 1 subject matter 2 African Rainbow Minerals Anglo American AngloGold Ashanti Areva * Barrick BHP Billiton Codelco * Freeport-McMoRan Goldcorp Gold Fields 30 June December December December December June December December December 2011 Integrated annual report for the six months ending 31 December 2011 Hydro * Inmet * JX Nippon Mining & Metals Lonmin Minerals and Metals Group Mitsubishi Materials Newmont Rio Tinto Sumitomo Metal Mining Teck Vale Xstrata 31 December December March September December March December December March December December December 2011

13 Systems and approaches to manage material SD risks and opportunities Performance for the identified SD risks and opportunities Global Reporting Initiative Reported on Assured*** Reported on Assured G3 application level subject matter 3 subject matter 4 subject matter 5 A+ B+ NOTES Column 1: a dot in this column indicates that members have reported on the alignment of their policies with ICMM s 10 principles (ie subject matter 1) and any mandatory requirements set out in ICMM s position statements. In some cases, this has included a tabular summary of the 10 principles mapped against a company s policies. Column 2: a dot in this column indicates that members have sought independent third party assurance on subject matter 1. Column 3: a dot in this column indicates that members have reported on processes to identify and prioritize the SD risks and opportunities faced by the business during the reporting period and the outcome (ie its list of material issues, subject matter 2). Column 4: a dot in this column indicates that members have sought independent third party assurance on subject matter 2. Column 5: a dot in this column indicates that members have reported on the systems and approaches that the company is using to manage each (or a selection) of the material SD risks and opportunities (ie subject matter 3). Column 6: a dot in this column indicates that members have sought independent third party assurance on subject matter 3. Column 7: a dot in this column indicates that members have reported on their performance during the given reporting period for each (or a selection) of the identified material SD risks and opportunities (ie subject matter 4). Column 8: a dot in this column indicates that members have sought independent third party assurance on subject matter 4. Column 9: the letter in this column indicates a company s self-declared application level of the GRI G3 Guidelines (ranging from A to C, ie subject matter 5). The application levels indicate whether the reporting company is a beginner (C), intermediate (B) or advanced (A) reporter. To achieve a GRI application level of A, companies must report against the indicators in either the pilot Mining and Metals Sector Supplement (MMSS) or the final MMSS, produced by GRI to guide reporting in the mining and metals sector. The + in this column indicates that members have sought independent third party assurance on subject matter 5. * Areva, Codelco and Hydro became members in 2011 and Inmet became a member in The full ICMM requirements apply within two years of becoming ICMM members. ** In a number of instances, there is still some ambiguity about whether all applicable requirements of ICMM s position statements are fully addressed. ICMM will work with member companies to ensure this aspect is clarified in all 2013 member reports. *** In a number of instances, the existence of management systems and approaches is implied rather than explicitly stated in the assurance statement. ICMM will work with member companies to ensure this aspect is clarified in all 2013 member reports.

14 STRATEGY AND ACTION PLAN ICMM s latest strategy was finalized and approved in The Strategy and Action Plan sets ICMM s strategic direction for the next three years. Development and approval of the strategy was made against a backdrop of significant change globally, nationally and locally. At a global level, we see strong demand for minerals and metals continuing in the long term though unstable economic conditions will greatly challenge the industry. The mining-related role of many low- and middle-income countries continues to increase. However, trust in the mining and metals industry remains low and there are demands for greater transparency linked to increasing social awareness of consumers. Interestingly, there is increasing willingness from civil society organizations to work with industry. At a country level, concern about health and safety in the mining and metals industry continues. And resource nationalism remains apparent. Political advantage, and a sense that nations are not receiving their fair share of the benefits derived from mining and metals, continues to prompt some countries to consider such actions as increased taxes and royalties and greater controls on foreign participation. Often, these steps are being taken with minimal consultation and limited understanding of the full range of benefits, costs, risks and responsibilities associated with mining and metals manufacturing. Strengthening this understanding which amounts to an expression of mining and metals contribution to sustainable development is the integrating theme of the strategy. At the local level, mining-related conflict is increasing. The Mines and Communities website detailed 40 community conflicts between January and August 2012, up from 36 in Geographically, conflict is also more widespread, being reported in 21 countries (mostly in Latin America and Asia, but also in Africa, Canada and New Zealand), up from 13 in ICMM recognizes the increasing complexity and range of issues faced by the mining and metals industry and that no single interest can address these issues effectively. Collaboration is essential in bringing together companies, governments and civil society to address these issues. To effectively operate in the environment described above, ICMM must be focused and strategic in what it does. To that end, the Strategy and Action Plan entrenches three key administrative improvements. First, we have introduced an annual project prioritization process based on an assessment of the value created by the project outputs relative to the resource inputs. Second, we have streamlined ICMM s structure to reflect new priorities and the governance changes that have been approved. Matching human resources adjustments have been made, including the appointment of Aidan Davy in a new role as deputy president and senior program director. And third, we have introduced a concrete set of organizational key performance indicators to improve the performance measurement assessment system presented in the previous Strategy and Action Plan. Looking forward, the plan outlines a number of questions that ICMM and its members need to reflect on. Are our actions really achieving the kind of lasting change that is needed? Should we be setting much clearer aspirational goals in terms of how we would like the mining and metals industry to be or are our task-oriented goals adequate? Over the next three years, ICMM aims to provide constructive answers to these questions as it delivers on its Strategy and Action Plan. 14 ICMM Building trust

15 ICMM ORGANIZATIONAL STRUCTURE R Anthony Hodge PRESIDENT Rheanna Hazeldine PRESIDENT S OFFICE Sarah Stern MANAGER PROGRAM OFFICER Kayley Gafur PROGRAM OFFICER John Drexhage DIRECTOR Aidan Davy DEPUTY PRESIDENT and René Aguilar John Atherton Ben Peachey Duncan Robertson SENIOR PROGRAM DIRECTOR Anne-Marie Fleury Kate Carmichael Fernanda Diez MANAGER Ruth Thomas Benjamin Davies Helen Atkinson Claire White Casilda Malagon Laura Pocknell PROGRAM OFFICER Eva Kirch Gemma James Mark Holmes SENIOR PROGRAM OFFICER Meera Thankey SENIOR PROGRAM OFFICER Holly Bassett PROGRAM SOCIAL AND ECONOMIC DEVELOPMENT ENVIRONMENT AND CLIMATE CHANGE HEALTH AND SAFETY MATERIALS STEWARDSHIP COMMUNICATIONS ADMINISTRATION AND OPERATIONS 15 ICMM Building trust

16 MINING S CONTRIBUTION TO SUSTAINABLE DEVELOPMENT The contribution of mining and metals to sustainable development across the full life cycle and from the perspective of all interests is not widely or well understood. This lack of understanding is impeding the development of well-founded public policy and contributing to the industry s trust deficit. Capturing mining s contribution to sustainable development is not an easy task. It involves an assessment of costs, risks, benefits and responsibilities from the perspectives of companies, government, communities, civil society organizations and others. However, strong public policy, regulation and law are unlikely without this foundation. There is an urgent need for developing and articulating an honest and full picture of mining s contribution. This task has been set as the integrating thread of our Strategy and Action Plan. In 2012, we took a small first step in this regard. At the UN Conference on Sustainable Development (Rio+20) summit in June 2012, we launched the first three of a series of short publications on mining s contribution to sustainable development. Our aim with the series is to spark a more open and broad-reaching discussion about the contribution the industry makes to specific countries and to society in general. We want all perspectives to emerge and we want to offer a foundation of good information to inform that discussion. The first publication, Mining s contribution to sustainable development, provides an overview of the series and introduces the concept of contribution analysis. The role of minerals and metals in a low carbon economy discusses mining s contribution to meeting the climate change challenge. It explores the way mining and metals companies measure, manage and reduce greenhouse gas emissions. Human rights, social development and the mining and metals industry covers the respective roles of the state and business with respect to human rights and discusses the links between social development, poverty alleviation and human rights, plus the role the mining and metals sector can play. In October 2012, two more were added to the series Trends in the mining and metals industry and The role of mining in national economies. The first of these provides an overview of the industry s structure, explores key trends affecting the industry and considers how these trends will impact mining in the future. The role of China is a key driver. The role of mining in national economies examines mining s economic contribution in the national 16 ICMM Building trust

17 INTEGRITYT CARER ACCOUNTABILITYU RESPECTS COLLABORATIONT economies of 212 countries, the first time that this has been attempted. To do this, it uses an innovative mining contribution index. In developing the index, we received valuable input from the World Bank, Natural Resources Canada, the International Monetary Fund and others. These short publications are an initial step in ICMM s mining s contribution to sustainable development initiative. They do not yet capture the full spectrum of benefits, costs, risks and responsibilities related to the industry. However, they are a start. The work will continue in 2013 as a matter of high priority. ICMM s honest and consistent adherence to a set of sustainable development principles is the core to all that we do. Our integrity serves to underpin our credibility, supporting the relationships that we enter into to collaboratively implement all of our projects. In 2012 we co-sponsored a series of workshops across the globe concerning the Voluntary Principles on Security and Human Rights. These workshops focused on the practical application of the Voluntary Principles and the related guidance we have published. Workshop success is made possible through a sense of integrity and respect across all participants who in this case included International Alert, IPIECA, Talisman Energy and ICMM member companies. INTEGRITY

18 SOCIAL AND ECONOMIC DEVELOPMENT Mining and metals are highly significant to the economies of over 50 of the world s countries many of them lowand middle-income. For the millions of people in these countries, mining is critical for generating the economic means to achieve their social aspirations. ICMM s social and economic development work focuses on ensuring that beneficial opportunities are realized and the potential adverse impacts of mining activities on society and the environment are effectively managed. The mining industry cannot do this alone and for this to happen, engagement and collaborative action is very important. In 2012, ICMM published The mining sector in Brazil: building institutions for sustainable development in English and Portuguese, showcasing the results and insights gained from the application of the Mining: Partnerships for Development Toolkit in Brazil. This report is ICMM s sixth case study using the toolkit (following earlier case studies on Peru, Chile, Ghana, Tanzania and Lao PDR), demonstrating that multistakeholder partnerships can enable mining to make a positive contribution to sustainable development. One of the core principles that company members are required to implement is to uphold fundamental human rights and respect cultures, customs and values in dealings with employees and others who are affected by our activities. In 2012, ICMM launched a comprehensive guide focused on integrating human rights due diligence into corporate risk management processes. The aim of the guide is to describe some of these existing positive practices through case studies and to assist companies in checking whether their approach in this area is sufficient. We strive to ensure the information and products we provide are timely and up to date. With this in mind, ICMM updated its Community Development Toolkit in July The original toolkit was released in 2005, a product of a joint project between the World Bank s Oil, Gas and Mining Policy Division, the Energy Sector Management Assistance Program (ESMAP) and ICMM. It provides practical guidance for all stages of the community development process from exploration through construction, operations, decommissioning and closure. The revised version draws upon work that has emerged since the 2005 version was published. ICMM also translated the Mining: Partnerships for Development Toolkit into Spanish and seven of the Mining: Partnerships for Development publications into simplified and traditional Chinese throughout the year. As we move into 2013, ICMM s focus is evolving from developing good practice guidance to implementing good practice on the ground. Five regional workshops will be held to encourage peer learning and exchange on human rights due diligence and grievance mechanisms, as well as on Indigenous Peoples issues and free, prior and informed consent (FPIC) implementation challenges. A seventh application of the Mining: Partnerships for Development Toolkit will be conducted, most likely in Zambia. Finally, ICMM will conduct an evaluation exercise of the toolkit in consultation with in-country stakeholders. This will help direct our work going forward and improve toolkit application techniques in the future. 18 ICMM Building trust

19 INTEGRITYT CARER ACCOUNTABILITYU RESPECTS COLLABORATIONT ICMM member companies employ many hundreds of thousands of people. Therefore, it is appropriate that care for the health, safety and well-being of these people is paramount for ICMM and drives our work in this area. An expression of this is ICMM s publication of a report towards the end of 2012 detailing a framework for developing leading indicators for health and safety, and guidance on how to use and implement these indicators. ICMM hopes that this will enable organizations to take preventative action before an incident occurs rather than having to react and cure after the harm has been done. CARE

20 ENVIRONMENT AND CLIMATE CHANGE As part of the new Strategy and Action Plan approved in 2012, governance changes were introduced that included a merging of the previously separate Environmental Stewardship and Climate Change work programs. The newly merged program area now encompasses activities related to water, biodiversity and climate change. Environment A key milestone in 2012 was the launch of ICMM s Water management in mining: a selection of case studies at the 3rd International Congress on Water Management in the Mining Industry held in Santiago, Chile. The case studies aim to promote dialogue within the industry and beyond about water-related issues and concerns. In 2013, a major focus is to develop an ICMM mining, metals and water strategy and related work plan for 2014 and Since its inception, ICMM has maintained a dialogue with the International Union for Conservation of Nature (IUCN). IUCN is the world s largest global environmental organization. It brings together some 11,000 voluntary scientists and experts from 200+ member government organizations and 900+ nongovernment organizations. Together, they oversee thousands of field projects and policy initiatives around the world, many of which have implications for the mining and metals industry. Early in 2012, ICMM and IUCN published an independent report exploring current World Heritage sites, processes, practices and their relationship to the extractives sector. Subsequently, ICMM, IUCN and the UN Educational, Scientific and Cultural Organization (UNESCO) convened a joint workshop to further review the many related issues. This took place at the IUCN World Conservation Congress held in Jeju, Korea. The theme of mining, metals and biodiversity has been set as a priority for and ICMM s relationship with IUCN is a key element moving forward. In addition, ICMM will also be collaborating with the global oil and gas industry association for environmental and social issues (IPIECA) and a number of the Equator Principles banks to explore a broad range of biodiversity issues that are facing the extractive industries. Climate change Throughout 2012, ICMM s Climate Change work program continued to focus on the priorities set by ICMM s Council when the program was established in The program aims to ensure that the industry plays its role in contributing to sustainable development while remaining competitive in a low carbon economy. In support of this role, ICMM is focusing its efforts on establishing itself as a thought leader on key climate change topics. At the same time, we aim to enhance members awareness and understanding around different climate change perceptions. Several important discussions in the climate change policy arena were held with key developing country governments and international organizations during In addition, ICMM continued to develop a strong, credible reputation with the wider business community through participation at the 18th session of the Conference of the Parties (COP18) of the UN Framework Convention on Climate Change in Doha, Qatar, and the UN Conference on Sustainable Development (Rio+20). 20 ICMM Building trust

21 INTEGRITYT CARER ACCOUNTABILITYU RESPECTS COLLABORATIONT In 2012, ICMM focused its thought leadership efforts in three areas of research. The first looked into how different carbon pricing schemes may affect the competitiveness of the industry. The second researched current climate change revenue recycling schemes. The final area explored climate change-related adaptation strategies for the industry. At COP18, ICMM convened two side events demonstrating mining and metals role in a low carbon economy. They featured presentations on our research in the thought leadership areas. The final reports on all three are scheduled for release in ICMM s prioritization process led to a decision to focus its climate change efforts in 2013 on national policyrelated work. To that end, the climate change team will develop an approach to testing government policy against the ICMM climate change principles. Everyone across ICMM understands that accountability goes with responsibility. We must deliver on our promises and uphold our commitments, and do so in a way that allows others to assess our performance. The MMSD+10 report, published by the International Institute for Environment and Development (IIED) in 2012, did just that it held ICMM to account. It set the achievements of ICMM over the last decade against the challenges and aspirations outlined in IIED s report Breaking New Ground (2002), which emerged from the process that led to ICMM s creation. ICMM is deeply committed to broad application of accountability to all who hold responsibility companies, governments, communities and civil society. ACCOUNTABILITY

22 HEALTH AND SAFETY Health and safety have a focus on the well-being of people. People are not only employees, but are also members of families, communities and broader society. Therefore, considerations of health and safety extend beyond the boundaries of the operation. Mining is inextricably part of the society in which it operates through its people. Across the world, mining-related injuries have been dramatically reduced in many operations. Mining companies have enhanced their health and safety systems, risk assessment processes, improved training and put in place physical controls to avoid injuries and work-related illnesses. Nevertheless, the number of fatalities remains high. This fact continues to undermine the trust of the industry in the eyes of the public and policymakers. Recognizing the challenges faced by the industry, ICMM convened a conference in Santiago, Chile from 13 to 16 November Over 300 executives and health and safety experts, drawn from across ICMM s member companies, gathered together with five member CEOs to put the industry performance under the microscope. The discussions at the conference reinforced: l the people first message l the need to shift some old health and safety paradigms l the role of leaders in making a difference at the ground level l the importance of having an integrated approach to well-being l the need for more collaboration across the industry. All reinforced a sense that elimination of fatalities is the industry s main challenge. As one of our CEOs said, Just one fatality is too many. Reflecting the shift in health and safety paradigms, ICMM launched a report on leading indicators for occupational health and safety in the mining industry. Leading indicators look ahead they illuminate the root causes of unwanted events and outcomes and provide guidance on preventing undesired outcomes. In doing so, they help organizations to implement effective and proactive control measures before an incident occurs. The report provides examples of company approaches to leading indicators currently in use. Fatigue is often observed as a major contributing factor in work-related accidents and fatigue management continues as a high priority. In addition to being discussed at the Santiago conference, in 2012 ICMM co-organized its second two-day workshop on fatigue management in Perth, Australia. The workshop was held in collaboration with IPIECA, the global oil and gas industry association for environmental and social issues, and the International Association of Oil and Gas Producers. An emerging theme is that effective management regimes will be based on a holistic lifestyle approach that requires a mix of people, systems and 22 ICMM Building trust

23 INTEGRITYT CARER ACCOUNTABILITYU RESPECTS COLLABORATIONT technology with fatigue detection being only one part of the equation. Building on the outcomes and energy from the conference, the work program will be undergoing a strategic review in 2013 that will lead to a concrete set of tasks aimed at strengthening members overall health and safety performance. In particular, it will focus on eliminating fatalities. The industry has tended to focus on systems, processes, procedures and technology. However, health and safety is more than this. First and foremost, it is about the well-being of people: building relationships with everyone at every level, building trust and enacting the belief that human life and well-being is more important than production or economic value. ICMM and its members recognize that respect for people and the environment is fundamental to trust. The commitment of our members to not explore or mine in World Heritage sites, areas that society has set aside to conserve biological and cultural diversity, is an expression of such respect. This commitment was reviewed at a workshop that ICMM cohosted with the International Union for Conservation of Nature and UNESCO in September Actions speak louder than words and it is through demonstrating such respect both for the values of society and for the environment that ICMM will earn others respect and be in a position to strengthen the contribution of mining and metals to sustainable development. RESPECT

24 MATERIALS STEWARDSHIP While the demand for minerals and metals continues to grow across the world, customers, investors, governments and civil society organizations are increasingly looking for assurance that the materials they buy or use have been produced in an environmentally and socially responsible manner. This concern extends from the extraction process along the full chain of activities. Increasingly, stakeholders are demanding more transparency from industry and governments regarding the source of materials. They also want to know who was involved in the transformation or transport of the material prior to it arriving at the ultimate end-user along with the associated economic, social and environmental implications. Given these expectations, ICMM conducted a review during the first half of 2012 that set out the current issues, drivers and implications for ICMM members related to this challenge. We focused on operational performance and developed preliminary thinking on actions that companies might take. In addition, a work plan for the planning cycle was established that included two main tasks: defining an approach for describing sustainability profiles for the products of the mining and metals industry, and developing a framework for achieving and reporting on responsible sourcing. These tasks were subsequently supported by ICMM s Council in its approval of the new Strategy and Action Plan. A large part of the management of mining and metals production is the management of chemicals: their sourcing, transport, storage, use, production, and the management of their occupational health and environmental risks through their life cycles. This is because minerals and metals, and their products, are classified and regulated as chemicals. Chemicals are also used extensively in metals processing. Reflecting the global rise in societal expectations for the responsible use of chemicals, the mining and metals industry has worked hard to tighten its approach to chemicals management. In 2012, ICMM launched Minerals and Metals Management 2020: a chemicals management progress report at the third session of the International Conference on Chemicals Management in Nairobi, Kenya. The publication is the first report of progress in the implementation of ICMM s commitments made in 2009 and sets out where the industry stands regarding chemicals management. Delivery of ICMM s Materials Stewardship work program is based on collaborating with other industries and governments in the design and implementation of effective and innovative solutions. The fifth Materials Stewardship Roundtable took place in 2012, bringing together ICMM members and downstream users to discuss the attributes of various responsible sourcing schemes, as well as the common elements in sustainable procurement policies and programs. 24 ICMM Building trust

25 INTEGRITYT CARER ACCOUNTABILITYU RESPECTS COLLABORATIONT In 2013, we will put effort into staying abreast of chemicals managementrelated issues and developing a long-term strategy for ICMM and its members to consider. There are a number of important policy initiatives in the international arena that ICMM will also track. A significant event in 2013 will be the signing of the international mercury convention in Minamata, Japan. ICMM has been active in the negotiations of the convention throughout. Its signing will mark the first international convention addressing a specific metal. Because of the significance of this issue, ICMM s Council approved a position statement on mercury in The year 2013 will see further work on related practical implementation. Collaboration is central to the way ICMM operates. It is impossible to achieve our objectives without working effectively with each other and with others. Every ICMM project is implemented with a collaborative set of processes and we are always reaching for ways to do this more effectively. Not surprisingly, collaboration with others was a topic of discussion at the ICMM-led breakout session at the Rio+20 BASD 2012 Business Day. Panellists acknowledged the value of engaging in multilateral processes such as Rio+20, and the need to build better partnerships at all levels local and international to improve clarity around the contribution of industry to sustainable development. COLLABORATION

26 STRATEGIC ALLIANCES ICMM recognizes that sustainable development outcomes depend on collaborative actions by governments, companies, communities, labour and financial institutions. To that end, ICMM has entered into a number of strategic alliances to help further its objectives. Extractive Industries Transparency Initiative (EITI) Through its position statement on mineral transparency, ICMM companies commit to participating in EITI a tripartite initiative involving governments, companies and civil society organizations. EITI champions a global standard to ensure transparency of payments from natural resource extraction. Companies must publish what they pay and governments must publish what they receive. Seeking integrity and the elimination of corruption, this transfer is audited and the entire process is monitored in each country by a multi-stakeholder group. The year 2012 marks the end of the first three-year memorandum of understanding (MOU) between ICMM and EITI. The MOU will be renewed in ICMM serves as the co-ordinator of the mining company sub-constituency, which includes 29 companies. Investors In 2012, ICMM focused on engaging with the investor community. Recognizing that investors views on social and environmental issues are critically important to the mining and metals industry, we reviewed how investment analysts, investment research organizations and the investment press view the social and economic performance of the industry. ICMM also made over 20 presentations to investment houses. Over the past 18 months, there has been an increased interest in ICMM approaches by the investment community that signals a significant change. Global Reporting Initiative (GRI) ICMM s system of reporting on sustainable development performance is guided by the multi-interest GRI. As a result, in 2012 ICMM remained heavily engaged in discussions with GRI about potential changes to its reporting template. GRI is currently developing its fourth generation of Sustainability Reporting Guidelines (G4). We have input into the process through participation in the Application Level Working Group. With input from members, ICMM also co-ordinated an industry response to the GRI exposure and thematic drafts that were released for public comment in Committee for Mineral Reserves International Reporting Standards (CRIRSCO) CRIRSCO is a specialist advisory body for promoting and maintaining best practice in estimating reserves and resources, something that is critical to the valuation of all mining companies. ICMM has been supporting this effort for a number of years and will continue to do so. World Bank ICMM has been actively interacting with the World Bank Group since its inception. In 2012, a formal MOU was negotiated and is due to be signed in ICMM Building trust

27 COMMUNICATIONS The role of ICMM s Communications work program is to enhance external recognition for ICMM, build internal awareness and alignment and support collaboration between staff, members and others. We promote our work through convening high-level panels at global events. This year we held three successful panels. Eight CEOs discussed common sustainability challenges the mining industry faces at the Investing in African Mining Indaba in Cape Town, South Africa, and at the Prospectors and Developers Association of Canada (PDAC) International Convention in Toronto. ICMM also hosted an event at the China Mining Congress & Expo 2012 in Tianjin. Three Chinese business leaders spoke about how their companies activities are contributing to sustainable development and how the principles of responsible modern mining are being applied in China. We continued to increase our efforts in digital communications through ICMM s website and social media channels with notable results. There was a 58 per cent rise in visits to our website compared to the same period in Over 60 per cent of this traffic was from new visitors, indicating our success in building awareness with new audiences. provide space for ICMM members, professionals in the wider industry and other interested stakeholders to easily interact with ICMM and each other. In 2012, ICMM released 17 publications in six languages. Download rates continued to grow and ICMM USB sticks (carrying ICMM s full back catalogue) have proved to be popular. The website had over 100,000 publication downloads and some 3,000 USB sticks were distributed at conferences and meetings. In 2013, we will be launching the refreshed ICMM website with new design and increased interactivity options. We will be commencing a new project with members that will focus on deepening our understanding of reputation drivers for the industry. The goal of the project is to develop a reputation measurement model for use by mining and metals companies. Our hope is that we will develop an enhanced understanding of the link between performance improvement and reputation. ICMM s followers across all social media channels increased significantly, our Twitter audience growing by 60 per cent and our Linkedin group now with over 2,200 members. Both channels

28 FINANCIAL STATEMENT A breakdown of 2012 operational income and expenditure and 2013 forecast income and expenditure is shown below. The figures are broken down in the way illustrated to provide a transparent overview on the source of our income, and how we spend that money to achieve the outcomes described throughout this review. Company fees are split proportionately between the 22 member companies with 25% based on sales revenue and 75% based on operating profit. Minimum and maximum fee levels are set to balance the range of fees applied and ensure that no one company contributes more than 12% of total revenues INCOME B C Income forecast* m m Company member fees Association member fees Unspent income (prior year) Interest receivable Total revenue Work program expenditure Social and Economic Development Environment and Climate Change Health and Safety Materials Stewardship Communications President s Office including Reporting and Assurance Salaries and benefits (work program expenditure) Sub-total A Company member fees (96%) B Association member fees (2%) C Unspent 2011 (2%) 2012 EXPENDITURE H I A A B C D E F Secretariat expenditure Operating costs and overheads Salaries and benefits (administration and support) Sub-total Total expenditure Balance *2013 forecast includes 2012 carry forward and 2013 budget Notes i) The 2012 figures are based on unaudited accounts audited figures are reviewed by ICMM s Council in May of each year and can be obtained from ICMM on request. The audited figures differ from those above in their treatment of capitalized program expenditure, unspent prior-year income and some long-term reserves. ii) Association members pay a flat membership fee of 3,000. iii) Expenditure on salaries and benefits has been distributed between work program and secretariat expenditure proportionately in-line with the job responsibilities of each ICMM staff member. G A Social and Economic Development (5%) B Environment and Climate Change (10%) C Health and Safety (2%) D Materials Stewardship (3%) E Communications (5%) F President s Office (10%) G Salaries and benefits (work program expenditure) (42%) H Operating costs and overheads (18%) I Salaries and benefits (administration and support) (5%) 28 ICMM Building trust

29 PHOTOGRAPHY Front cover: In consultation with local communities, Rio Tinto s Bunder project is monitoring surrounding wells to provide comprehensive long-term baseline data that will allow us to assess the impacts of our activities on water quality (Rio Tinto). Page 5: Madibeng bulk water supply project, Black Rock operations, Northern Cape, South Africa (African Rainbow Minerals). Page 16: Sustainable development projects emalahleni the Zibulo Colliery opencast operations. The mine has a life of some 15 years to provide both thermal and export coal and is mined by contractor Benicon. A dragline at work (Anglo American). Page 18: Children at Quehira School supported by the educational resource program of our Las Bambas copper project in Peru (Xstrata). Page 20: Vale s employees working at the seedling nursery located in Vale s Nature Reserve (Vale). Page 22: Plant personnel safety meeting, Lubambe Copper Mine (African Rainbow Minerals). Page 24: Suspended sand and slime from leaching are separated by hydrocyclones after washing in the rotoscoops to remove traces of uranium-bearing solution (Rio Tinto). Page 29: A member of the community living close to Xstrata Nickel s Kabanga project in Tanzania (Xstrata). CREDITS Design Westgatecomms.com and The Communication Solution Ltd Writing Laura Pocknell and Steve Coomber Printing CPG Produced by the Business Communication Forum ( This review is printed on Edixion Challenger Offset manufactured by UPM-Kymmene from ECF (elemental chlorine-free) pulp. The pulp is sourced from sustainable producers based mainly in Finland. Online copies of this review can be downloaded from