Las Bambas Project Xstrata Perú S.A.
Xstrata Worldwide Global leader in the copper, coal, ferrochrome, and zinc markets, with a presence in Australia, South Africa, Spain, Argentina, Chile, Germany, the United Kingdom and Peru
Xstrata Worldwide A highly diversified global mining group, widely quoted on international exchanges 24,000 employees, including contractors Global leader in the copper, coal, ferrochrome and zinc markets
CUSCO ABANCAY COTABAMBAS Trujillo Pucallpa GRAU Las Bambas Project Lima BAMBAS Cuzco Arequipa Mollendo
2005 Results 56,010 meters drilled in Ferrobamba, Chalcobamba and Sulfobamba. Mineral Resources (0.5% Cu cutoff) Inferred Inferred Mt Copper % Gold g/t Mt Copper % Gold g/t Ferrobamba Skarn 84 1.7 0.20 30 0.9 0.2 Ferrobamba other 48 0.82 0.08 30 0.7 0.2 Chalcobamba Skarn 33 1.1 0.05 40 1.0 0.05 Chalcobamba other 16 0.71 0.03 2 0.8 0.05 Sulfobamba Skarn 14 1.1 0.04 8 0.7 0.04 Sulfobamba other 7.6 0.86 0.04 0
2006 Program PERMIT EXPANSION EXPLORATION PERMIT Chalcobamba COTABAMBAS PROVINCE Sulfobamba Charcas PROGRESO Ferrobamba Ajuljaja GRAU PROVINCE CENTROMIN CONCESSIONS OPTION BOUNDARY CHALLHUAHUACHO AIRPORT
2006 Program 100,000 meters drilling Ferrobamba, Chalcobamba and Sulfobamba for resource definition. Initial drilling Charcas and Azuljaja Environmental baseline studies Geophysical studies
Option Contract Extension of the option (up to 2 years) Addit. pmt: US$ 2.5M Social contr.: US$ 2.5M Option Contract On signing the contract: US $45.5M Social Contribution : US $45.5M (Trust Fund) Commitment for investment in sustainable development Exploration stage (4 to 5 years) Investment Commitment : 1st year US $2M 2nd year US $10M 3rd year US $15M 4th year US $15M Social Contribution of US $500,000 per year (first 4 years ) Transfer Contract US $ 13.5M Social Contribution of US $13.5M on exercising the option (Trust Fund) Royalties: 3% over net sales US$ 1Bn investment in treatment plant (50,000 MT/ day) Bankable feasibility study
Context and Area of Operations The Las Bambas Project is located in a remote, hard-toget-to site. Apurímac is one of Peru s poorest regions, with a 77% poverty rate Illiteracy is around 60% The local economy is based on subsistence farming Limited use of cash barter transactions
Xstrata Sustainable Development Xstrata is committed to the highest standards in health, safety, environment, working together with communities, and sustainable development. Sustainable development is understood as the search to satisfy the needs of current generations without compromising the ability of future generations to satisfy their needs (United Nations, 1987) Xstrata bases its efforts on the sustainable development principles from the ICMM (International Council on Mining and Metals) www.icmm.com
Sustainable development Las Bambas To construct, together with local residents, a vision for development in the short, medium and long term, based on productive activities in the area and incorporating all those stakeholders that, in one way or another, would be able to work together to achieve these objectives All of which implies acting under the principles of: Non-dependency Sustainable development Honesty Transparency Dialogue Consultation and Participation Respect for both the community and the environment
Community Relations Plan Management Tool Local Employment Local Purchasing Land Purchases Training Consultation Program Participatory Monitoring Safety in transportation Social Development Program Social Closing Program Code of Conduct
Social Involvement Plan (SIP) To decrease malnutrition rates: children < 5 years; nursing mothers. To generate knowledge that could contribute to improving production and competitiveness Improvement of production and competitiveness through productive infrastructure To strengthen the planning capacity of local authorities. To promote the strengthening of small and medium businesses and the development of productive chains.
Social Involvement Plan (SIP) To construct and support the improvement of educational infrastructure and the strengthening of human capital To facilitate residents access to having identity cards. To support the implementation of a plan for territorial ordering and environmental education from elementary and secondary schools and institutes To support with grants in very specific cases, contributing to the well-being of children, young people and adults
SIP Summary of activities Fish nursery Pamputa 80% Ready Phase II: Training in March Sprinkler irrigation systems Infrastructure 90% done Beginning of planting improved grass 5 communities - 250 beneficiary families Phase II Training in February begins begins
SIP Summary of activities Guinea pig Project Commercialisation Phase began in Dec. Beginning of second phase (production centre) NGO CARITAS Cooking and baking program First module executed Education Workshop for training to 20 area teachers
SIP Summary of activities Education and training Provided by contractors (GEOTEC, ORUS, BSI) Health Programs Xstrata, Contractors and Residents Donation of X-ray machine, ambulance Employment 70 new positions. Minimum goal 40% from local communities
Local environmental committee In 2005 4 planning meetings (sampling) 2 apprenticeships in Lima Creation of 4 sub-groups: air, soil, water and solid waste A monitoring exercise was held in January In 2006 Taking of samples and analysis Beginning of the environmental base line Support from an environmental consultant
Plan of Involvement Education & Training Support for local training - content Farming Training productive activities Work with local universities Preparation of our future labour force - HR
SIP Summary of activities Culture, citizenship and development ID card campaigns Formalization of communities and land PETT Program for cultural reassessment Independent advice on the use of land Strengthening local administration Workshops with mayors
Plan of Involvement Environment and society Environmental fellowships for 21 community members MEM Training workshops IIMP (Peruvian Institute of Mining Engineers) Participatory audits and monitoring Ongoing accompaniment by Xstrata, MEM, DIGESA
SIP Summary of activities Health and Nutrition / small and medium businesses Small Animals - Fuerabamba Beneficiaries - 10 families Training provided by the Ministry of Health Workshops held to prevent family violence Projected beneficiaries phase II = 100 families
SIP Summary of activities Small Animal commercialisation Project in reproduction and commercialisation phase Design of rooms NGO CARITAS in charge of constructing a Guinea pig production centre 2006 Beneficiaries: 100 families
To date - 2005 Fish nurseries Pamputa Beginning construction September 2005 6 growth and 2 hatching pools Initial capacity 250 kg 50 beneficiary families 50 jobs
SIP Summary of activities Sprinkler irrigation system Choquecca 50 beneficiary families Training workshop held System in construction Children s Land 4 beneficiary communities Inculcate values and respect for the environment and sustainable development
SIP Children s Land Objectives of the Children s Land Promotion Center To motivate, advise and enable children to create their CL. To motivate, advise and enable adults to support the children creating and maintaining their CL. To access the CL portal. To know, rescue and value local biodiversity and culture. To learn and apply environmental health practices. To facilitate the children s expression in subjects related to their surroundings. To recognize the children s contribution through an annual festival and prizes. To promote tourist visits and volunteer participation.
SIP Summary of activities Education and Training SENCICO Construction Fuerabamba: executed SENCICO Construction Pamputa: executed Training in Hotel and Restaurant professions - SENATI, Sodexho, Xstrata: in execution
SIP Summary of activities Improvement of grass, irrigation and cattle 350 beneficiary families Communities: Pamputa, Huancuiri, Chicñahui, Pallca Picosayhuas, Choquecca 3-year Project Technical file completed in August 2005 participatory approach Project in construction phase 90% 160 job opportunities
SIP Summary of activities Strengthening of capabilities/citizenry Training in land use and negotiation - I Training in land use and negotiation II ID Campaigns 7 SWOT workshops vision of community development
SIP Summary of activities Environment and society Training in Environment MEM part I Training in Environment IIMP part II Installation of the participatory environmental monitoring group Monitoring committee training plan ready for execution
Conclusions Project in the stage of exploration, under international standards Commitment to sustainable development Sustainable development as part of an integrated process, well-founded and progressive Continual innovation Transparency in our deeds Commitment to dialogue, openness and working in a concerted manner