Mining has substantial impacts on the natural environment, and we aim to manage and minimise these both during operations and after site closure. This means using energy, water and other resources efficiently; reducing greenhouse gas emissions, waste, and emissions to air, land and water; and responsibly managing and restoring our land to prevent loss of biodiversity.

As part of the integrated HSE management systems our divisions are implementing, we are putting in place measures to systematically identify and control our environmental impacts, and ensure we consider them when making operational decisions. A programme of environmental auditing is providing a performance baseline to improve on and help us monitor progress.

Independent specialists KazEcoProject carried out environmental audits at 48 copper facilities between November 2008 and May 2009. Whilst they made some recommendations for improvement, the auditors concluded that our Copper Division complies with Kazakhstan’s environmental regulations, such as permitted emissions and effluent levels. In addition, our environmental protection teams performed 340 internal inspections in 2009. These resulted in a plan to install more water meters at our copper operations to improve usage measurement.

We make mandatory payments for the industrial effluent we create, such as waste water discharge, tailings, ash and slag, and report emissions to the relevant authorities quarterly. These payments amounted to $36 million in 2009 for the Copper Division. Environmental regulators carried out 96 inspections at our copper operations during the year to assess compliance with regulatory requirements.

We have commissioned London-based Golder Associates to perform a comprehensive audit in 2010, which will evaluate the Copper Division’s social and environmental performance in detail, and assess our compliance with the requirements of the World Bank and European Bank for Reconstruction and Development. We will use the resulting recommendations to develop a medium-term environmental action plan.

Energy use and greenhouse gas emissions

At Kazakhmys we produce significant greenhouse gas emissions through electricity use and heat production at our mines and production facilities, coal combustion in our four power stations and fuel use in our vehicles. Increasing legislation relating to greenhouse gas (GHG) emissions from the use of fossil fuels may pose long-term risks to our coal mining, power generation and petroleum exploration businesses.

We are committed to reducing GHG emissions from our operations through energy efficiency and the use of technology. In 2009, total energy use in our Copper and Power Divisions was 15.9 petajoules.

Total GHG emissions were 21.6 million tonnes of carbon dioxide equivalent (CO ₂e) for the two businesses combined – 10.7 million tonnes for copper and 10.9 million tonnes for power. This increase in CO₂e from the copper business is because, in 2009, the Kazakhstan Ministry of Environment changed the method it provides for calculating methane and nitrous oxide emissions. Our purchase of the Ekibastuz GRES-1 power plant has clearly caused a large increase in companywide emissions.

Water use and emissions

Water supplies are coming under increasing pressure in many parts of the world as populations grow and industrialise. Mining uses large volumes of water, posing the risk of competition with local communities in regions where water is scarce.

In Kazakhstan, water availability varies significantly by season and geography. In some areas where we operate, water is scarce, especially during dry seasons. This makes efficient water use critical to the long-term viability of a number of operations. In addition, all sites need to carefully control the effluent they discharge into local waterways, to avoid pollution and maintain local water quality.

Total water use decreased by around 46% to 129,183 megalitres in 2009 (2008: 240,624 megalitres). There are three reasons for this large reduction. Firstly, the 2008 figure includes some water used by local communities, as well as our operations. This will be excluded in all future water data. Secondly, we suspended zinc operations at Balkhash. Finally, in Zhezkazgan, which suffers droughts in the dry season, our copper operations have introduced a water recycling system to reduce usage, as well as discharges into the Kara Kengir river. Over five million cubic metres of treated operational and municipal wastewater are now provided to underground mining operations at the South and Stepnoy mines.

Increasing economic pressures and inefficient water use are endangering ecosystems in the Ili-Balkhash basin. In October 2009, we signed a water use agreement as part of an integrated water management plan for the area being developed by the Regional Environmental Centre for Central Asia. This commits us to a series of measures to reduce water use and effluent over time. Examples include improving the pipeline feeding the local settlement, and the installation of a water recycling system that will reduce annual water withdrawal from Lake Balkhash by 87 million cubic metres.

Land management

We recognise the need to minimise land disturbance and protect biodiversity throughout the life of our operations. Local legislation requires us to rehabilitate sites that have closed down. The Copper Division sets aside provisions for this purpose as a condition of its contracts and licences for subsoil use, and this amounted to $37 million as of 31 December 2009 (2008: $48 million). The reduction is due to the 25% devaluation of the tenge early in 2009.

Our operations carried out various land management activities in 2009, such as using overburden, ash and slag to backfill mines and restore landscapes, and planting greenery on and around our sites. For example, in 2009 the Copper Division hired a local contractor to restore a 3,500m² former stone quarry at its Belousovsky mine, previously used to store ash and slag. The first phase of the restoration comprised levelling the area and laying subsoil and topsoil. The second phase of reinstatement will focus on promoting biodiversity, although the area is fertile and we expect many plants to grow back naturally.

Waste

Mining, metallurgical operations and power generation create large amounts of waste, which can cause environmental pollution if not properly disposed of and is visually unappealing.

Our mining operations produce waste rock and overburden, which we store in dumps and often use to backfill mines and when rehabilitating sites after closure. Copper smelting produces tailings and slag, which is classed as hazardous waste and must be securely contained in dams to prevent leaching into the soil and water sources. Our power plants create solid wastes such as fly ash and slag. Other wastes created include sludge from our wastewater treatment facilities, slime from our sulphuric acid plant and general waste.

In 2009, our Copper and Power Divisions generated 70 MT of waste, down from 120 MT in 2008. We continue to seek additional ways to beneficially reuse our wastes, for example in brick production. The Copper Division has also opened a tyre-recycling plant in January 2010, see the case study Fostering enterprise development.

Environmental awareness

Increasing awareness of the causes and effects of environmental damage is essential for changing behaviour and improving performance. In 2009, we took part in a variety of events to this end.

These include:

• The Kazakhstan Environmental Protection Ministry’s exhibition of natural resource companies;
• Public hearings in Ust-Kamenogorsk, Eastern Region, also attended by Kazakhstan’s Environmental Protection minister;
• Meetings with the Environmental Protection Ministry at Nura-Sarysu;
• A workshop on climate change and ratification of the Kyoto Protocol held by the Climate Change Coordination Centre, a Kazakhstan-based non-governmental organisation;
• A workshop on environmental problems in the Karaganda region;
• We also wrote and published various environment-related articles and editorials in the local and national media.

2010 commitment

• Develop a medium-term environmental action plan based on the results of the audit carried out by Golder Associates.