Towards Sustainable Mining Initiative TSM

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• Towards Sustainable Mining Initiative (TSM)
• to the
• Non-Ferrous Metals Consultative Forum
• March 10, 2002

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The Bottom Line for TSM

• Why Towards Sustainable Mining ?
• The status quo simply isnt sustainable
• We have been and continue to be concerned about
  ensuring our social license to operate, in Canada
  and around the world
• The bar continues to be raised and the challenges
  facing our industry are increasingly complex
• We know we must change -- improve our
  performance, both operational and social -- or
  our social license to operate will continue to
  erode
• We must improve stakeholder judgement of our
  industry by taking action, and act collectively,
  in a way that is aligned with the interests and
  priorities of our stakeholders

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Insights from ResearchA Business Case for TSM
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Potential Measures of Business Success

• We will
• Become a partner of choice
• Earn a positive international reputation
• Increase our global competitiveness
• Improve our productivity
• Experience higher ROIs

• As We...
• Gain easier access to land...
• Accelerate permitting...
• Decrease our cost of business...
• Reduce or avoid legal fees...
• Reduce our insurance rates...
• Minimize financial penalties for social
  contingencies...
• Experience fewer expensive regulatory command
  initiatives...
• Earn recognition as a workplace of choice...
• Are seen as a strong investment...

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Background 1998 - 2000

• March 2000, Task Force Mandate
• To continue to earn the opportunity to thrive
  and contribute by demonstrating the social
  relevance and value of our industry through a
  stewardship process that aligns our actions with
  the evolving priorities of our stakeholders.
• 2000 Objectives
• Develop a research-based initiative
• Ensure consistency and alignment with similar
  initiatives
• Recommend the scope and next steps of an
  initiative for Board consideration November 2000

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Process (TSM Approach)

• Research Based Approach
• Insight vs. Intuition
• Decision Partners mental models research
• Comparative analysis of the internal industry vs.
  external stakeholder values
• Low risk
• Well managed staged approach
• Low cost
• Inclusive (both internal and external)

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General ObservationsInternal Research Results

• The internal research demonstrates that MAC has a
  strong foundation upon which to build this
  initiative. This research included a cross
  section of MAC member companies
• It is a priority for MAC. Many see it as an
  imperative
• We want to improve our performance as an industry
• We want to be publicly accountable for what were
  doing, for what were going to do, and for our
  achievements

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General ObservationsExternal Research Results

• The external research was encouraging
• Our external stakeholders have a solid
  understanding of our industry and, in many ways,
  our interests are aligned
• Our stakeholders want our industry to succeed
• They are concerned about the growing pressures on
  our industry, brought about in part by our
  inadequate performance in some areas
• There is very strong support for an initiative of
  this kind

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Comparison Between Internal and External
ResearchTrust in the Mining Industry

• Internal
• Trusted for Providing a safe working
  environment Economic benefits Environmental
  management.
• A quarter believed the industry was not trusted
  at all.
• Trust reduced by Negative environmental impacts
  Safety, accidents, fatalities and Abandoned
  mines.
• About half thought the industry could improve
  trust by promoting what industry is doing right.

• External
• Trusted for Safety in the workplace Mining
  operations, in terms of engineering, technology,
  production Providing employment.
• A third believed industry not trusted at all.
• Trust reduced by Negative environmental impacts
  and how industry has handled incidents Abandoned
  mines Investment scandals.
• Over a third suggested improving trust through
  open communication.

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Comparison Between Internal and External
ResearchKey Features (In descending order of
Priority)

• Internal
• Standards for operation, including environmental
  management.
• Plans for communicating about the initiative to
  industry and public.
• A commitment to social responsibility.
• Stakeholder dialogue.
• Making TSM an ethic.
• Progress measurements and reporting.
• Clear goals and definition.
• Plans for mine closure and land remediation.

• External
• Stakeholder involvement in development of
  initiative.
• Environmental stewardship, performance which
  exceeds requirements.
• Two-way communication and education.
• Plans for increased community consultation in
  mine development.
• Clear goals.
• Plans for building relationships with government.
• Performance measurement.

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TSM Research Outcomes

• Strategic process of cultural change
• Identification of key gaps in industry
  performance
• Social responsibility
• Crisis communications
• Legacy of orphaned and abandoned mines
• Capacity for dialogue with communities of
  interest
• Refocused approach at MAC/national level

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Changing Industry Culture

• Board leadership
• Company champions (Initiative Leaders)
• Top to bottom and across industry
• Development of Guiding Principles
• Performance objectives
• Stronger criteria for MAC membership

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The Guiding Principles

• Research provided initial base
• Input from Internal dialogue process
• Input from external dialogue / consultations
• Goals -- a tool for performance evaluation and
  priority setting
• Still draft

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Phase I Implementation Revised Draft Guiding
Principles

• As members of the Mining Association of Canada,
  our role is to responsibly meet societys needs
  for metals and minerals.
• We believe that our opportunities to contribute
  to and thrive in the economies in which we
  operate must be earned through a demonstrated
  commitment to sustainable development .
• MAC draws on the 1987 Brundtland Commission
  definition of Sustainable Development
  Development that meets the needs of the present
  without compromising the ability of future
  generations to meet their own needs.

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Phase I Implementation Revised Draft Guiding
Principles

• Accordingly, our actions must demonstrate a
  responsible approach to social, economic and
  environmental performance that is aligned with
  the evolving priorities of our communities of
  interest. Our actions must reflect a broad
  spectrum of values that we share with our
  employees and communities of interest, including
  honesty, openness and integrity. And they must
  underscore our ongoing efforts to protect our
  employees, communities, customers and the natural
  environment.
• We use the term Communities of Interest to
  include all of the individuals and groups who
  have or believe they have an interest in the
  management of decisions about our operations that
  may affect them. This includes employees,
  contractors, Aboriginal or indigenous peoples,
  mining community members, suppliers, customers,
  environmental organizations, governments and
  shareholders.

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2000 - 2003 Design to Implementation

• 2000 Design Phase Research and Planning
• Complete.
• 2001 Implementation Phase I
• Building a Strong Base Internal Alignment
• 2002 Implementation Phase II
• Building External Support
• 2003 Implementation Phase III
• Demonstrating Performance

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2002 TSM PlanAnticipated 2002 Outcomes

• Building internal alignment completed.
• External outreach and dialogue sessions conducted
  by member companies.
• Work started to position TSM externally (in
  support of external dialogue).
• Progress on Orphaned Mines.
• Progress on Lifecycle Responsibility Recycling.
• Social Responsibility measurements under TSM
  defined and best practices reported.
• Training in Crisis Communications conducted as
  first step in enabling member companies to
  develop their Crisis Communications plan by June
  2003.
• Integration of MAC activities under TSM umbrella
  begun.
• Value case for MAC with TSM defined and, if
  appropriate, a business plan for optimizing the
  value of TSM.

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Comparison Between Internal and External
ResearchSocial Performance

• Internal
• 57 thought the industrys current social
  performance was good. Companies contributed to
  the local economy and treated their employees
  fairly.
• 14 thought the industrys social performance was
  poor. There was social and economic disruption
  after site closures as well as disruption to
  aboriginal culture.
• 14 thought the industrys social performance was
  mixed.

• External
• 34 thought the industrys current social
  performance was good. Jobs were created,
  companies supported schools and hospitals and
  developed infrastructure.
• 32 thought the industrys social performance was
  poor. Companies did not handle mine closures
  well, and there were negative psychological
  impacts on aboriginal groups because of altered
  landscapes.
• 26 thought the industrys social performance was
  mixed. Some companies were more socially
  responsible than others.
• Believed there was a lot of room for improvement
  in companies social performance.

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Comparison Between Internal and External Research
Maximizing Social Performance

• Internal
• Thought the mining industry needed to
• Develop relationships with the community to
  jointly manage the impact of mining operations.
• Develop a community which can be sustained after
  a mine closes or, for most remote locations,
  dont develop a community at all, operate instead
  on a fly-in, fly-out basis.
• Be transparent corporate citizens.
• Be more accountable for incidents.
• Promote the value of the industry.

• External
• Thought the mining industry needed to
• Continue to support community development, build
  relationships with community leaders and
  participate in community events.
• Provide employment opportunities to local people,
  aboriginals, and offer training.
• Have more consultation with stakeholders, such as
  aboriginal groups.

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2002 Priorities for ActionA Glance at Other MAC
Activities

• Objective Demonstrate continual improvement in
  industry performance
• Key Activities
• Work towards implementation of MMERs, Dioxin
  testing
• Continue participation in multi-stakeholder base
  metal smelter advisory group
• Pursue multi-stakeholder partnerships on CEAA,
  SARA and other policy/regulatory opportunities
  (e.g. National Parks)
• Continue multi-stakeholder environmental research
  (MEND, TIME, MITE)
• Review MAC Environmental Policy in TSM context --
  dialogue-based
• Continue energy efficiency commitments
• Publish and adopt tailings operations manual
• Examine new environmental reporting opportunities
  -- consultations
• Continue efforts on Lifecycle Responsibility --
  Recycling multi-stakeholder alliance

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Phase I Implementation Revised Draft Guiding
Principles

• We will demonstrate leadership worldwide by
• Involving communities of interest in the design
  and implementation of our Toward Sustainable
  Mining initiative
• Proactively seeking, engaging and supporting
  dialogue regarding our operations
• Fostering leadership throughout our companies to
  achieve sustainable resource stewardship wherever
  we operate
• Conducting all facets of our business with
  excellence, transparency and accountability
• Contributing to global initiatives to promote the
  production, use and recycling of metals and
  minerals in a safe and environmentally
  responsible manner
• Respecting the quality of the environment while
  seeking to minimize the impact of our operations
  on the environment, including bio-diversity
• Practicing continuous improvement through the
  application of new technology, innovation and
  best practices in all facets of our operations.

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Phase I Implementation Revised Draft Guiding
Principles

• In all aspects of our business and operations, we
  will
• Respect human rights and treat those with whom we
  deal fairly and with dignity.
• Not obtain or maintain business through illegal
  conduct.
• Comply with all laws and regulations in each
  country where we operate and apply the standards
  reflecting our adherence to these Guiding
  Principles and our aspiration to best
  international practices.
• Respect the cultures, customs and values of
  people with whom our operations interact.
• Support the capability of communities to
  participate in opportunities provided by new
  mining projects and existing operations.
• Be responsive to community priorities, needs and
  interests through all stages of mining
  development, operations and closure.
• Provide lasting benefits to local communities
  through self-sustaining programs to enhance the
  economic, social, educational and health care
  standards they enjoy.