Xstrata Nickel Chief Executive Officer Ian Pearce on Sustainability in 2010

Xstrata Nickel CEO Ian Pearce

The following excerpt by Xstrata Nickel Chief Executive Officer Ian Pearce is from the 2010 Xstrata Nickel sustainability report. The full report is available at: Our Approach to Sustainability-Xstrata Nickel

DEAR STAKEHOLDERS,

At Xstrata Nickel, we recognize sustainability as fundamental to our long-term success and connected to everything we do. We believe that we must take a principled approach to doing business and continually balance economic, social and environmental considerations in order to create value today and for generations to come. To this end, we have clearly defined Xstrata Nickel’s Vision and Values, as well as a set of Behaviours and Leadership Traits, to guide our actions in all circumstances and through all business cycles.

These guiding principles shaped our responses during the global economic crisis of the past couple of years, as customer demand collapsed. We made some bold decisions in placing sites on care and maintenance and deferring certain growth projects in order to ensure that Xstrata Nickel remained financially robust while preparing for the future. As a result, the organization now operates from a much lower cost base. We are also developing and optimizing a leading growth portfolio through projects such as Nickel Rim South and Koniambo, and have attractive future growth options at Kabanga, Fraser Morgan, Sinclair and other projects.

As we restructured our business, our first priority was to ensure that displaced employees were treated fairly and respectfully. In places such as the Dominican Republic, we stepped up our tree-planting program and were able to offer many employees jobs planting trees instead of mining. In Sudbury, we offered early retirement incentive programs to lessen the impact of moving high cost, end-of-life mines to care and maintenance.

Throughout this difficult period, we continued to deliver on the objectives of our sustainability strategy. We never allowed our focus to be diverted from working safely, collaborating with our workforce, improving our environmental performance, and engaging with and supporting communities associated with our operations.

We continued to instill a broader and more rigorous approach to risk management, taking into account regulatory, reputational, physical and marketplace risks that have the potential to challenge the sustainability of our operations. All sustainability risks and responses are logged in individual site and Xstrata Nickel risk registers, and reviewed quarterly by the Xstrata Nickel Sustainability Committee. As a result, we have a much better understanding of our vulnerabilities and can continue to shape our actions accordingly.

We made great strides in stakeholder engagement, improving our grasp of how to work with external and internal groups to strengthen decision-making and achieve better outcomes. Engagement initiatives in the past year included:

• The Sudbury Soils Study, which set a high standard for transparency and community consultation
• A public consultation and disclosure program at Koniambo implemented with each new phase of development, which has been essential for building community support for the project
• Internally, a new organizational structure that facilitated the creation of cross-functional employee teams to develop strategies and action plans in regards to pressing issues, such as climate change and energy management
• Discussions with various levels of government in many jurisdictions related to certainty and clarity around policy issues, such as energy and emissions and the need to foster competitiveness
• The renewed three-year collective agreements with both our unions in Sudbury, driven by respect and good working relationships
• Collaborative efforts with our union at the Nikkelverk refinery to reduce costs in response to the economic crisis, while improving productivity and efficiency

In summary, 2009 was a year of challenge and transformation, driven, to a large extent, by economic circumstances. Through it, we continued to demonstrate an ability to deliver on sustainability targets and commitments, and uphold our Core Values and principles. We would like to thank all of our stakeholders for their interest, engagement and involvement with Xstrata Nickel.

Sincerely,

Ian Pearce
Chief Executive Officer
Xstrata Nickel

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