Day 2- Session 6: Strategic Metals and the Clean-tech Revolution Sustainable Mining Objective Capital Global Mining Investment Conference 2010 Stationers' Hall, City of London 28-29 September 2010 Speaker: Aidan Davy - International Council on Mining and Metals

1. day 2 - session 6: Sustainable Mining & conflict resources Sustainable MiningAidan Davy – Senior Programme Director, ICMM

2. GLOBAL MININGINVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations:

3. www.icmm.com Sustainable Mining:Extracting value from ESG performance Aidan Davy, Senior Program Director

5. Mining sector risks overall and ESG issues

6. Investor interest in ESG risks

7. Selected ESG risks and ICMM activities/ members performance

9. Report payments by project and by recipient government (1504)

10. Provide quarterly reports on a variety of Health & Safety related matters (1504)

11. Due diligence measures on “conflict minerals” from the DRC (1502)

12. SEC issued guidance on Climate Change Disclosures (02/10):

13. Requires listed companies to disclose impacts of climate change

14. ‘Physical impacts’ includes changes in water availability or quality

16. War/civil disturbance

17. Expropriation

18. Breach of contract

19. Life cycle aspects, e.g. recyclability, disposal

20. Chemicals management/ inherent HSE risks

21. Supply/value chain

22. Market access

23. Resource access – land, energy, water

24. Access to capital & talent

25. Climate change

26. Reputation

27. Business interruption

28. H&S and ESG

29. Failure of systems

30. Regulatory non-compliance

31. Commodity price

32. Interest rate risks

33. Currency Risks

35. Chemicals management/ inherent HSE risks

36. Supply/value chain

37. Market access

38. Political instability

39. War/civil disturbance

40. Expropriation

41. Breach of contract

42. Resource access – land, energy, water

43. Access to capital & talent

44. Climate change

45. Reputation

46. Business interruption

47. H&S and ESG

48. Failure of systems

49. Regulatory non-compliance

50. Commodity price

51. Interest rate risks

52. Currency Risks

54. Top 10 Global Pension Fund Markets ($20.4 trn) www.icmm.com Source: UNCTAD (2010). Investment and Enterprise Responsibility Review

55. Scope and influence of Responsible Investment www.icmm.com UNCTAD analysis of world’s 100 largest pension funds: 135 51 Average AUM per fund (SUS bn) 73 No. of pension funds 27 66 22 No. of Responsible Investment indicators No. of Responsible Investment indicators As of February 2010, PRI had 700+ signatories (currently 800+) with AUM of over US$20 trn Source: UNCTAD (2010). Investment and Enterprise Responsibility Review

57. Examined perceptions of analysts on value creation (or value destruction) potential of CSR strategies

58. Initially, CSR strategies perceived as value-destructing. Later, CSR strengths seen as value-creating: shift from sell to buy recommendations

60. IFC Performance Standards embraced by EPFIs – represents over 90% of project finance deals

61. Mining investments of over $26 bn between 2005 and 2009

62. Despite a dip in 2009, likelihood is that activity will increase

63. IFC Performance Standards under review – bar likely to be raisedProject finance rise.... and fall 35 30 25 US$ billions (mining) US$ billions (total) 20 15 10 5 Source: Harvard Business Review (2010). An overview of project finance and infrastructure finance

64. Value of global mining sector M&A deals (US$ bn) www.icmm.com (September) Transaction service providers increasingly address ESG risks as part of M&A due diligence Source: PwC (Sept, 2010). Mining Industry Briefing: M&A in the Global Mining Sector

65. Carbon Disclosure Project – Global 500 (2009) www.icmm.com Includes mining & metals Performance scores Disclosure scores Note1: Materials includes: Metals & Mining (45%), Chemicals (35%) and Construction Materials, Containers & Packaging, and Paper & Forest Products (20%). Note 2: As of September 2010, CDP initiative backed by 534 institutional investors with more than $64trn in AUM Source: PwC (2009). On behalf of The Carbon Disclosure Project

67. Mining industry estimated to contribute approx. 1.8% to global GHG emissions

68. Many metals produced are essential to pollution prevention ‘green technologies’

69. ICMM members working to establish themselves as part of the solution to the climate change challenge

72. EIRIS, CAER and The Ethical Funds Company all promoting FPIC (ideally large ‘C’)

73. Not just NGO’s advocating: Co-Operative Bank’s support for Beaver Lake Cree Nations vs. Tar Sands in Alberta

75. ICMM member ‘policy’ commitments www.icmm.com 10 Principles for Sustainable Development 1. Implement ethical business practices and apply good corporate governance 2. Integrate SD in corporate decision-making 3. Uphold fundamental human rights 4. Manage risks based on sound science 5/6. Improve EHS performance 7. Conserve biodiversity & participate in integrated land use planning 8. Encourage life cycle approach to materials management 9. Contribute to community development 10. Publicly report, independently assure and engage openly and transparently 6 Position Statements Mining and Protected Areas Mining: Partnerships for Development Climate Change Mining and Indigenous Peoples Mercury Risk Management Transparency of Mineral Revenues

77. Undertaking robust assurance of sustainability reports to enhance credibility and trust

78. Understanding how/which ESG efforts contribute to value creation/protection

81. Not just buy-side analysts, but increasingly sell-side analysts who have an interest and influence

82. ESG factors will continue to grow in importance in terms of project finance and M&A activity

83. ICMM members demonstrate leadership in terms of ESG commitments and performance“ESG analysis will benefit from improved reporting and corporate governance structures. But attention should also be paid to the need for improvements in the coherence and consistency of ESG analysis itself.” UNCTAD (2010). Investment and Enterprise Responsibility Review

84. For further information please contact: Aidan Davy, Senior Program Director aidan.davy@icmm.com www.icmm.com

85. GLOBAL MININGINVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations: