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

Environmental, Health & Safety and Social risks in the mining Industry: current trends MINEX Central Asia 5th Forum, Astana 01 April2014

Agenda • Introducing ERM • EHSS risks in the mining industry – current trends • EHSS management solutions for mining companies – ERM experience • Contacts 2

Introducing ERM • 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 3

ERM: Services across the Mining Project Cycle Closure Exploration and Appraisal Design Construction Operation Decommissioning ERM provides services across the entire mining value chain • 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 • 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 4

ERM in the Eurasia region – Key Facts • 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. 5

There are no more “easy minerals” – only difficult ones in regions of high sensitivity 7

Despite good corporate intent sustainability execution lags on many projects Long Term Perspective Short Term Perspective HQ Risk Management Project Team Execution Project Operations Team Long Term Project Development Team Short Term CSR Approach Manage Risk Procurement Outsource Risk Sustainability Advisors Qualitative Drivers Technical, Project Managers Quantitative Drivers Stakeholder Engagement Build Relationships Project Schedule Minimize Timelines 8

Extractive industries are being impacted by non-technical risks 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 Non-technical issues (e.g. stakeholder, community, environmental, political etc.) Type of Delay Reported 73% of sample GS Top 190 Commercial (e.g. cost or contract-related) 63% of sample GS Top 190 Technical Reporting Frequency by Type of Delay (%) 9

Main Global Trends • 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. 10

Main Trends in CIS • 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 11

ERM’s selected Case Study 13

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