Sustainable Development Risk Register Our Sustainable Development Risk Register is the primary process we use to identify and prioritize environmental, social and economic challenges and opportunities across operations. Local management teams use a company-wide procedure to maintain Sustainable Development Risk Registers focused on current operations. This procedure provides for a site-level, cross-functional review of operational risks using a risk matrix with eight consequence categories that range from community or environmental harm to reputational or financial impacts. Importantly, this tool also enhances decision making regarding operational planning and resource allocation as we track progress in reducing sustainability-related risks. It also promotes identification of opportunities to leverage our resources for improved community and stakeholder engagement, as well as environmental performance.
During 2012, we are engaging our internal audit function to review select action plans resulting from the Sustainable Development Risk Register process to increase our level of assurance that our sustainability programs are adequately addressing key issues for our business and our stakeholders. As we roll up site-level results, commonalities and materially distinctive sustainability risks are presented on our corporate Sustainable Development Risk Register and tracked by senior management.
|Key Sustainability Challenges
(in alphabetical order)
At PTFI and TFM, illegal artisanal and small-scale miners operate in the mining concession or project areas. They have limited equipment and expertise at operating in hazardous conditions and have the potential to create significant environmental impacts, as well as placing their own health and safety at risk.
Our social and economic development programs are responsive to issues raised by communities and help us maintain good relations and avoid disruptions of operations. Nevertheless, social demands or instability in the areas
of our operations may adversely impact our mining operations.
As an international mining company our business may be adversely affected by issues related to corruption.
Violations of anti-corruption laws could result in criminal liability, serious fines and imprisonment. Reputational harm from the violation of anti-corruption laws can be significant.
|Energy and Greenhouse Gases
New regulatory requirements or legislation related to greenhouse gas emissions can pose risks associated with
increased raw materials and energy costs. Energy generally represents approximately 20-25 percent of our
consolidated copper production costs. An inability to procure sufficient energy at reasonable prices could adversely
affect our profits, cash flow and growth opportunities.
|Health and Safety
Protecting the safety, health and welfare of our workforce is a core value. Despite another year of improving our
Total Recordable Incident Rate (TRIR), we unfortunately incurred five workplace fatalities at PTFI in 2011.
Our business performance can be adversely affected by significant reductions in productivity or protracted work
stoppages. During 2011, PTFI was adversely affected by labor disruptions, including an eight-day work stoppage in
July and an approximate three-month strike that concluded in December. In fourth-quarter 2011, there also was an
approximate two-month labor strike at Cerro Verde during the negotiation of a new labor agreement.
Diseases such as HIV/AIDS, malaria and tuberculosis can have devastating impacts on local communities including
members of our workforce.
|Security and Human Rights
Between July 2009 and February 2012, there were 32 shooting incidents in and around the Grasberg minerals
district, including along the road leading to our mining and milling operations, which resulted in 15 fatalities and 56
injuries. Unrelated to the shooting incidents mentioned above, during the strike a fatality occurred as a result of a
confrontation between police and strikers on October 10, 2011 and subsequently another employee injured in the
confrontation died from unknown causes. The security of our workforce is a critical concern.
|Tailings and Waste
We maintain systems to manage physical or chemical impacts associated with tailings and waste rock including
stability, potential spills, dust generation and impacts to groundwater and surface water.
In the presence of air, water and naturally occurring bacteria, some mined material can generate acid rock drainage
(ARD), which if not properly managed, can adversely affect the environment. Uncontrolled seepage of process
solutions or sulfate can also cause impacts to water.
Our operations require significant quantities of water for mining, ore processing and related support facilities. Our
operations in North and South America are in areas where water is scarce and competition among users, including
local communities and agriculture, for continuing access to water is significant.
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