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Full Disclosure 2016

Glencore plc's disclosure of environmental non-compliances in annual reports

Xstrata’s annual reports

No mention is made in either Xstrata’s 2011 or 2012 Annual Report of the inspection conducted in August 2011 by the Department of Environmental Affairs, or the findings of that inspection.

All Xstrata reports and statements regarding “environmental incidents” are applicable to its global operations.

2011 company reports

Xstrata states in its 2011 Annual Report that:

We grade environmental incidents according to severity. Category 1 represents very minor incidents with negligible impact. Category 3 incidents cause moderate, reversible environmental impact and require moderate remediation. Categories 4 and 5 represent major or disastrous incidents with medium-to longer-term impacts respectively. We aim for zero category 3, 4 and 5 incidents. This target was achieved for a second consecutive year in 2011.1

Xstrata’s 2011 Annual Report does not provide any further references to environmental non-compliances, incidents, complaints or sanctions.

While Xstrata produced separate Sustainability Reports in 2011 for certain operations, such as the Xstrata Mount Isa Mines Australia, Xstrata Copper North Queensland Operations, and Xstrata Zinc Australia, no separate sustainability report appears to have been produced for Xstrata’s South African operations.

2012 company reports

Xstrata states in its 2012 Annual Report that:

We grade environmental incidents according to severity. Category 1 represents very minor incidents with negligible impact. Category 3 incidents cause moderate, reversible environmental impact and require moderate remediation. Categories 4 and 5 represent major or disastrous incidents with medium-to longer-term impacts respectively. We aim for zero category 3, 4 and 5 incidents. This target was achieved for a third consecutive year in 2012.2

Xstrata’s 2012 Annual Report does not provide any further references to environmental non-compliances, incidents, complaints or sanctions.

While Xstrata produced separate Sustainability Reports in 2012 for certain operations, such as Xstrata Copper Canada and Xstrata Copper North Queensland Operations, no separate sustainability report appears to have been produced for Xstrata’s South African operations.

Glencore’s annual reports

Glencore’s Annual and Sustainability Reports are applicable to its global operations. The 2014 and 2015 Sustainability Reports include “regional reports” which are sections in the Sustainability Report dealing specifically with the separate regions in which Glencore operates. These regional reports are no more than 10 pages each and are not particularly detailed. While these regional reports can be downloaded separately, they are not standalone reports.

2011 company reports

Glencore reports in its 2011 Annual Report that:

We experienced no serious environmental accidents (classified as “Class A: Major” by our environmental incident reporting system) in 2011.3

Glenore explains that it classifies “disastrous or close to disastrous environmental accidents as Class A accidents” and that “Class A stands for incidents or spills with a major environmental impact that have a long-term effect reversible only by long-term remediation with aftercare.”4

In relation to environmental incidents generally, Glencore states that it “is unaware of any material environmental incidents at its locations”.5 Glencore’s states in its 2011 Sustainability Report that:

337 incidents were reported in 2011, of which none were classified as major, 42 as moderate and 295 as minor. Furthermore, we experienced 188 NMIs [near miss incidents]. The 42 moderate spills amounted to around 614 tons in weight and approximately 570 m3 in volume. Almost half of the spills involved the release of acidic/base solution; about 20% were of tailings, with the remainder mineral oils, effluents and others. The majority of the spills/releases impacted the soil, followed by surface water and air. All spills were cleaned up appropriately and the reasons for the incidents investigated fully to avoid recurrences.6

Moderate incidents are classified as an “incident or spill with a significant reversible environmental impact requiring remediation but not necessarily aftercare” and minor incidents are classified as an “incident or spill with a minor reversible environmental impact requiring minor to no remediation with no aftercare”.7

In relation to complaints received from community members, Glencore states that:

In 2011, all our major industrial operations had a formal complaints management system in place. Around 1,900 individual complaints were registered, although the data relating to the number of complaints may not always be complete. A review of our processes has identified that, while procedures were in place to capture community complaints, there were variations in how these were applied between assets. About 85% of these complaints related to two issues raised over several months by communities near one of our assets. One was water shortage, caused by a defective municipal water pump outside our control, and the other was dust exposure. The asset is voluntarily drilling wells to provide water relief and applying dust suppressant to limit airborne dust. The remaining complaints primarily related to issues with odour, working conditions, dust, traffic conditions, water, noise and others.8

In relation to compliance with environmental laws, it is stated that:

Glencore’s operations, mainly those arising from the ownership in industrial investments, are subject to various environmental laws and regulations. Glencore is in material compliance with those laws and regulations.9

In relation to “environmental fines” paid, Glencore reports that:

In 2011 we incurred significant environmental fines totalling approximately USD 210,000 (compared with USD 780,000 in 2010). One, which accounts for 80% of Glencore’s 2011 environmental fines, related to a permitting error during construction of a new storage facility and the others to isolated cases of improper waste disposal and uncontrolled discharges of untreated rain and snow water. The incidents were inadvertent and were reported and studied to prevent recurrences.10

In relation to the upgrading of its facilities, Glencore states that:

The majority of Glencore’s industrial assets are brownfield, rather than greenfield, operations. Greenfield projects are particularly prone to issues that involve disturbing land upon which people live or rely for their livelihoods, or which has specific environmental value: for instance natural beauty, or valuable ecosystems, habitats or biodiversity. In contrast, brownfield legacy issues often require equipment upgrades or, in extreme cases, partial or complete rebuilding of facilities. This must generally be done while continuing production to maintain local levels of employment. This may result in a situation where our approach is challenged and subjected to scrutiny by local or global stakeholders, such as NGOs or the media. Challenges typically focus on the timescales of our improvement projects, rather than our end objectives. This is because timescales for complex projects can be particularly lengthy and may not match the expectations of observers and other stakeholders. This has been the case for some of our operations in 2011.11

2012 company reports

Glencore’s 2012 Annual Report states that:

We experienced no serious environmental incidents (classified as “Class A: Major” within our environmental incident reporting system) in 2012, as in 2011 and 2010.12

As set out in Glencore’s 2011 report, “Class A: Major” incidents are “close-to disastrous incidents” which involve “accidents or spills with a major environmental impact and a long-term effect, reversible only by long-term remediation with aftercare.”13

Glencore again states that it is “unaware of any material environmental incidents at its locations”.14 Glencore’s 2012 Sustainability Report states that:

In 2012, Glencore reported a total of 583 environmental incidents, of which 113 were classified by Glencore’s reporting system as moderate and 470 as minor. There were also 60 high potential risk incidents (HPRIs) reported. No serious incidents were recorded. Xstrata recorded 3,918 minor incidents and no incidents of any greater severity.15

In its “Glossary” of reporting terms, Glencore states that “High potential risk incidents are incidents that could potentially have resulted in a catastrophic (Category 5) or a major (Category 4) outcome according to the Glencore Xstrata risk management framework”.16 Despite the seriousness of these HPRIs, no further information is provided on the nature of the 60 environmental HPRIs reported.

In relation to complaints received from communities, Glencore states that:

We received 1,530 complaints from the communities close to former Xstrata sites and 1,284 from those near former Glencore sites in 2012. Noise was the subject of the largest number of complaints from former Xstrata sites, while over 50% of complaints received by former Glencore assets related to water. The majority of complaints relating to noise at former Xstrata assets were in relation to Mangoola and Ulan coal mines in New South Wales, Australia… The majority of complaints received by former Glencore assets related to Katanga and Mopani in Africa. Katanga received 98% of Glencore’s complaints about water. The majority of comments are requests for water rather than complaints that the operations have impacted either quality or access to water.17

As stated in 2011, the 2012 Annual Report notes, in relation to compliance with environmental laws that:

Glencore’s operations, mainly those arising from the ownership in industrial investments, are subject to various environmental laws and regulations. Glencore is in material compliance with those laws and regulations.18

Glencore discloses, in its 2012 Sustainability Report, that in 2012 Glencore paid $41,724 in “fines for environmental incidents” and that Xstrata paid $68,971 in “fines for environmental incidents”.19

2013 company reports

The classification system for incidents in 2013 is different to that used in 2011 and 2012. Glencore states, in its 2013 Annual Report, that:

We grade environmental incidents according to severity. In 2013, we classified incidents against a four point scale from serious/disastrous (Class A+) to minor (Class C). We aim for zero serious to disastrous environmental incidents.20

The report then notes that there were “zero serious or disastrous incidents” in 2013.21

However, Glencore’s 2014 Annual Report states that:

During 2014, there were zero major to catastrophic environmental incidents, compared to one in 2013, which arose from an arson incident.22

Glencore again states that it is “unaware of any material environmental incidents at its locations”.23 Glencore’s 2013 Sustainability Report states that:

In 2013, there were 4,592 environmental incidents reported at our industrial operations. None were of the highest classification, while 1, involving arson at an agricultural asset in Brazil, was of the second-highest classification. There were also 75 moderate, 914 minor and 3,602 negligible incidents. Of these, 48 of the reported environmental incidents were additionally classified as high potential risk incidents (HPRIs), i.e. incidents that could have resulted in a serious environmental incident. All HPRIs are reported and investigated.24

No further details are provided on the nature of the 48 high potential risk incidents, despite Glencore’s remarks that:

We are making great efforts to increase transparency around high potential risk incidents (HPRIs). We wish to improve the reporting of HPRIs throughout the business, as they are one of our most important sources of learning for making continual improvements. We actively encourage the reporting and investigation of all HPRIs.25

In relation to complaints received from communities, Glencore states that:

In 2013, our operating assets received 1,481 complaints. 44% of these related to noise, mostly originating from our coal operations in Australia. The management teams at our Australian coal operations continue to engage with the complainants and we monitor noise levels through real-time measuring units and seek further opportunities to reduce levels. 11% related to odour and fumes: of these a significant number related to an agricultural crushing plant in Germany, which is investigating chemical scrubbers or biofilters as a solution, to be implemented in 2014. 7% were about dust and another 7% related to damage claims from environmental fallout.26

As reported in 2011 and 2012, Glencore states, in its 2013 Annual Report, that:

Glencore’s operations, mainly those arising from the ownership in industrial investments, are subject to various environmental laws and regulations. Glencore is in material compliance with those laws and regulations.27

In relation to “environmental fines” paid, Glencore reports that:

In 2013, Glencore Xstrata paid $3,261,992 in environmental fines, compared to $111,445 in 2012 and $287,897 in 2011. The significant increase in 2013 is mostly related to a single violation of regulations on the storage of waste products at Kazzinc, our production facility in Kazakhstan.28

2014 company reports

In 2014, Glencore once again introduces a new classification for environmental incidents, stating in its 2014 Annual Report that:

We grade environmental incidents according to severity. We classify incidents against a five-point scale from catastrophic (Category 5) to negligible (Category 1). We aim for zero major to catastrophic environmental incidents.29

It is further stated in Glencore’s 2014 Sustainability Report that:

We classify incidents against a five point scale, from catastrophic (category 5), through major, moderate and minor, to negligible (category 1).30

No further details are provided on the nature of the incidents falling within these categories.

Glencore states that:

During 2014, our operations did not record any environmental incidents that were classed as major or catastrophic.31

In its 2014 Sustainability Report, however, Glencore records that there were “3,181 environmental incidents and spills in 2014” and that these incidents were “those in categories 3, 4 and 5”.32

In relation to high potential risk incidents of an environmental nature, it is stated that:

We also report and record high potential risk incidents (HPRIs, or events that could have resulted in a serious environmental incident).33

No further details are provided on whether there were any HPRIs recorded for environmental incidents in 2014.

In relation to complaints received from communities, Glencore states that:

Our assets received 1,208 external complaints in 2014. Over a third related to noise: we make significant investments in noise attenuation, upgrading our equipment whenever relevant improvements arise. The next most common topic was odour/fumes; most complaints related to a single event at Mopani. This has been addressed by installing a desulphurisation plant. Another contributor, our asset at Mount Isa, has improved emission monitoring and management, shutting down production during adverse conditions. Next were complaints about dust: our operations regularly review their dust management initiatives. These include wetting down roads, washing vehicles before they leave sites, and covering truck loads.34

Asin 2011, 2012, and 2013, Glencore’s 2014 Annual Report states that:

Glencore’s operations are subject to various environmental laws and regulations. Glencore is in material compliance with those laws and regulations.35

In relation to “environmental fines” paid, Glencore reports that:

In 2014, Glencore paid $790,031 in environmental fines, compared to $3,261,992 in 2013 and $111,445 in 2012. The majority of our fines in 2013 and 2014 were related to a single violation of regulations each year at our production facility in Kazakhstan.36

2015 company reports

The classification system for incidents used by Glencore in 2015 is the same as that used in 2014:

We have a five-level incident classification scheme, from catastrophic (category 5), through major, moderate and minor, to negligible (category 1).37

In relation to environmental incidents recorded, Glencore reports that:

Any material environmental incidents are reported to the Board HSEC committee and, in particularly severe cases, presentations are made by operational management teams. During 2015, our operations did not record any environmental incidents that were classed as major or catastrophic.38

It is further stated, in Glencore’s 2015 Sustainability Report, that:

We reported no moderate, major or catastrophic environmental incidents in 2015.39

In relation to high potential risk incidents of an environmental nature, it is stated that:

We also report and record high potential risk incidents (HPRIs, or events that could have resulted in a serious environmental incident).40

No further details are provided on whether there were any HPRIs recorded for environmental incidents in 2015.

In relation to complaints received from communities, Glencore states that:

In 2015, we received 1,742 complaints from our surrounding communities. We are currently reviewing our complaint topic categorisation to find the indicators that will be most meaningful for stakeholders, but the majority of complaints dealt with lack of access, and damage, to property; noise; odours or fumes; water; and dust. All our assets must carry out community perception surveys every three years, to check on the effectiveness of their engagement strategies.41

As stated in 2011, 2012, 2013, and 2014, it is stated in Glencore’s 2015 Annual Report that:

Glencore’s operations are subject to various environmental laws and regulations. Glencore is in material compliance with those laws and regulations.42

In relation to “environmental fines”, Glencore reports that:

In 2015, we paid $231 643 in environmental fines, compared to $790 031 in 2014.43

No further details are provided on the circumstances giving rise to the payment of these fines.

  1.  Xstrata Annual Report 2011, at p49.
  2.  Xstrata Annual Report 2012, at p12.
  3.  Glencore Annual Report 2011, at p19.
  4.  Glencore Annual Report 2011, at p23.
  5. Glencore Annual Report 2011, at p152.
  6.  Glencore Sustainability Report 2011, at p78.
  7.  Glencore Sustainability Report 2011, at p77.
  8.  Glencore Sustainability Report 2011, at p47.
  9.  Glencore Annual Report 2011, at p152.
  10.  Glencore Sustainability Report 2011, at p63.
  11.  Glencore Annual Report 2011, at p19.
  12.  Glencore Annual Report 2012, at p18.
  13.  Glencore Annual Report 2012, at p21.
  14. Glencore Annual Report 2012, at p160.
  15.  Glencore Sustainability Report 2012, at p39.
  16.  Glencore Sustainability Report 2012, at p68.
  17.  Glencore Sustainability Report 2012, at p34.
  18.  Glencore Annual Report 2012, at p160.
  19.  Glencore Sustainability Report 2012, at p39.
  20.  Glencore Annual Report 2013, at p14.
  21.  Glencore Annual Report 2013, at p14.
  22.  Glencore Annual Report 2014, at p24.
  23.  Glencore Annual Report 2013, at p192.
  24.  Glencore Sustainability Report 2013, at p50.
  25.  Glencore Sustainability Report 2013, at p3.
  26.  Glencore Sustainability Report 2013, at p43.
  27.  Glencore Annual Report 2013, at p192.
  28.  Glencore Sustainability Report 2013, at p50.
  29.  Glencore Annual Report 2014, at p24.
  30.  Glenore Sustainability Report 2014, at p60.
  31.  Glencore Annual Report 2014, at p18.
  32.  Glenore Sustainability Report 2014, at p124.
  33.  Glenore Sustainability Report 2014, at p60.
  34.  Glencore Sustainability Report 2014, at p46.
  35.  Glencore Annual Report 2014, at p183.
  36.  Glencore Sustainability Report 2014, at p61.
  37.  Glencore Sustainability Report 2015, at p54.
  38.  Glencore Annual Report 2015 at p23.
  39.  Glencore Sustainability Report 2015, at p54.
  40.  Glenore Sustainability Report 2015, at p54.
  41.  Glencore Sustainability Report 2015, at p46.
  42.  Glencore Annual Report 2015, at p173.
  43.  Glencore Sustainability Report 2015, at p54.