Environmental, Health & Safety and Social risks in the mining Industry: current trends

The world’s leading sustainability consultancy

Environmental, Health & Safety and Social risks in the mining Industry: current trends

MINEX Central Asia 5th Forum, Astana01 April 2014


Introducing ERM

EHSS risks in the mining industry – current trends

EHSS management solutions for mining companies – ERM experience

Contacts

Agenda

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Leading consultancy providing environment, health, safety, risk and social services for over 40 years

Delivers innovative solutions to enable our clients to maximize earnings, comply with regulations and improve their corporate reputation and public perception

Sustainability is at the heart of the services we provide and how we operate our business

150 offices in 40 countries worldwide

> 5000 professional staff

Completed projects in > 190 countries

Introducing ERM

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ERM: Services across the Mining Project Cycle

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ERM provides services across the entire mining value chain

Impact Assessment and Planning

•Strategic and economic assessments•Environmental planning and environmental impact assessments•Environmental mitigation actions•Social impact assessment and management plans•Environmental management plans•Integrated environmental, social, health impact assessments•Site selection•Best Available Technology (BAT) studies•Best Practicable Environmental Option (BPEO) studies

Performance Assurance and Operation Risk Management

•Air quality and noise•Water, wastewater and water management•Environmental management information systems (EMIS)•Auditing and verification•Management systems•Compliance auditing•Health and safety•Risk management•Safety culture•SHE cases•SHE management systems•Safety culture transformation•Reliability / Availability analysis•HAZID / HAZOP

Contaminated Site Management

•Site investigation and remediation•Strategies for contaminated sites•Construction management services•Decontamination, decommissioning and demolition•Water, wastewater and water management•Sustainable remediation

Sustainability and Climate Change

•Sustainable business strategies •Water sustainability•Energy auditing•Supply chain management •Reporting, assurance, communication & branding•Stakeholder engagement & local communities•Life cycle assessment (LCA) and life cycle management•Carbon and water footprinting

Transaction Services

•Quantification of sustainability risks and liabilities•Evaluation of potential sustainability opportunities•Fair value / ARO assessments•Gap analysis and benchmarking•Strategic advice pre due diligence phase•Technical support during deal negotiation•Liaison with other advisors•Post-merger integration support

Closure


ERM in the Eurasia region – Key Facts

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ERM’s Moscow & Almaty branches established in 2005

Senior staff working as a team for over 20 years

Current staff is 40 plus external consultants and subcontractors

ERM holds all required certifications to conduct EHS consulting services in Kazakhstan and Russia

Major Clients: mining and metals, oil and gas, power, finance, etc.


Introducing ERM



Contacts

Agenda

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There are no more “easy minerals” – only difficult ones in regions of high sensitivity

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Despite good corporate intent sustainability execution lags on many projects

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HQRisk Management

Project TeamExecution

Project Operations TeamLong Term

Project Development TeamShort Term

Sustainability AdvisorsQualitative Drivers

Technical, Project ManagersQuantitative Drivers

CSR ApproachManage Risk

ProcurementOutsource Risk

Stakeholder EngagementBuild Relationships

Project ScheduleMinimize Timelines

Long Term Perspective Short Term Perspective


Extractive industries are being impacted by non-technical risks

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Reporting Frequency by Type of Delay (%)

Type of Delay Reported

Non-technical issues (e.g. stakeholder, community, environmental, political etc.)

Commercial (e.g. cost or contract-related)

Technical

73% of sample GS Top 190

63% of sample GS Top 190

Study of Sample of 19 Goldman Sachs Top 190 Projects by Cause of Delay “Of the 190 projects, we

have seen an average of 12 months delay for

non-producing fields”

Goldman SachsResearch


EHSS issues are seen as a part of the so-called “Licence to Оperate” – a consent to uninterrupted operation of the business;

Shareholder value is on top of the agenda - EHSS risks minimization as a factor of sustainable business growth and increasing returns to the business;

Increasing pressure from stakeholders (including shareholders, investors and consumers) with regard to reputational risks;

Organizational effectiveness impacts shareholder value;

Priority attention is paid to Health & Safety aspects (in relation to both workers and surrounding communities) and especially behavioral safety;

EHSS management through requirements of international investors.

Main Global Trends

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Increasing request from business to obtain practical policies & procedures in the area of EHS management and Social Responsibility;

Attention to social aspects – in particular stakeholder engagement (trend during the last 3-5 years);

The main driver of EHSS awareness is reputation improvement in order to ensure access to capital markets through project financing mechanisms and IPO – and gain a competitive advantage;

Change of paradigm – a shift from having an EIA/ESHIA process to obtaining a full-scale HSE management system developed in accordance with international requirements (which would include impact assessment tools);

Management of behavioral safety factors – still not a common standard for the industry in CIS, but already under implementation in some companies

Main Trends in CIS

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Introducing ERM



Contacts

Agenda

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Project:

Client:

Development of HSE management and ERP Standards and Tools for Major national and international Capital Projects

Confidential Mining Client

Location & Date: Russia, 2013-ongoing

Scope: ERM has been retained to develop a package of procedures for the management of environmental, safety, health (HSE) and emergency preparedness and response (ERP) of major capital mining projects, including the “stage-gate” concept. These will be applied for existing projects in Russia but also as a cornerstone for the international expansion of the company, for which joint-venturing with other majors is a key factor.

Key Aspects: The primary objective of the project is to improve the performance of the HSE & ERP risk control in major capital projects in the company and introduce the concept of “stage-gate” reviews in alignment with international best practices.

ERM’s selected Case Study

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Project:

Client:

Safety Leadership Train-the-Trainer course

Confidential Mining Client

Location & Date: Russia, 2012

Scope: This highly interactive course was designed using Accelerative Learning principles and provides tools and techniques that facilitators can use to deliver high-impact safety leadership trainings.

Key Aspects: The course objectives were to identify and implement habits to build confidence when delivering high impact safety leadership training and facilitating; understand the Accelerative Learning Cycle; Practice using the Four Skills of Facilitation: Attending, Observing, Listening and Questioning. The course has also included Hazard Management and Front Line Supervisor modules


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Project:

Client:

Development and implementation of a corporate EMS, 2010-2012

Confidential iron ore mining client

Location & Date

Russian Far East, 2010 – 2012 г

Scope ERM consultants have successfully developed and implemented an Environmental Management System in accordance with ISO 14001:2004 at the facilities of one of the largest Russian iron ore mining companies. The Company’s assets included an operational iron-ore mine near the Baikal-Amurskaya railroad, license areas and an ore mining and refining enterprise under construction. The EMS is aimed to meet the expectations of the international shareholders.

Key aspects:

The project continued during 15 months and in 2012 the company has successfully achieved an international certification of its EMS, becoming the first iron ore mining company in the Russian Far East who started developing an ISO compliant management system at the early stages of mining lifecycle.


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Contacts

Gulmira KhobdabergenovaExecutive Director | Almaty office | ERM Eurasia Respubliki ul., 15, office 437-443 Almaty 050013 | Republic of Kazakhstan

| [email protected]

Valery KucherovPartner, Performance & Assurance Services | ERM Eurasia Tryokhprudny pereulok, 11/13, office 1 Moscow 123001 | Russia

| [email protected]

Elena AmirkhanovaPartner, Global Lead Sustainable Finance Services | ERM UK 2nd Floor | Exchequer Court33 St Mary Axe | London EC3A 8AA | UK

| [email protected]

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Environmental, Health & Safety and Social risks in the mining Industry: current trends