clarence smp 2010 - ravensworth operations€¦ · the aim of the smp risk assessment was to assess...

AP

PEN

DIX

1: R

isk Assessm

ent

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Ravensworth Underground Mine

December 2011

XCN 13-027

Subsidence Management Plan Application

Risk Assessment for Longwalls 1 to 7 of the Upper Liddell Seam


FINAL

Subsidence Management Plan Risk Assessment

Xstrata Coal NSW - Ravensworth Underground Mine Table of Contents

GSS Environmental December 2011 i

TABLE OF CONTENTS 1.0 INTRODUCTION .............................................................................................................................. 1

1.1 BACKGROUND AND SCOPE ....................................................................................................................................... 1

2.0 AIMS AND OBJECTIVES ................................................................................................................ 4

3.0 METHODOLOGY ............................................................................................................................. 5

3.1 OUTLINE OF GENERAL APPROACH ............................................................................................................................ 5

3.1.1 Xstrata Coal Risk and Change Management Standard, XC RI STD 0001 ............................................... 5

3.1.2 AS/NZS ISO 31000:2009 – Risk management – Principles and guidelines ............................................. 5

3.1.3 DTIRIS NSW Guideline for Applications for Subsidence Management Approvals ................................... 6

3.2 THE WORKING GROUP ............................................................................................................................................. 6

3.3 WORKSHOP SESSION ............................................................................................................................................... 6

3.4 DETERMINATION AND ASSIGNING THE RISK RATING ................................................................................................... 7

3.4.1 Consequence ............................................................................................................................................ 7

3.4.2 Likelihood or probability of an incident occurring ...................................................................................... 7

3.4.3 Risk Rating ................................................................................................................................................ 7

3.4.4 Assumptions ............................................................................................................................................. 7

4.0 RISK REGISTER .............................................................................................................................. 8

5.0 REFERENCE MATERIAL ................................................................................................................ 8

TABLES

Table 1: Key stakeholders involved in the SMP Risk Assessment workshop ....................................... 7

Table 2: Reference Material used for the Risk Assessment ...................................................................... 8

FIGURES

Figure 1: SMP Risk Assessment Study Area .............................................................................................. 2

Figure 2: Proposed Disturbance Within SMP Area .................................................................................... 3

APPENDICES

Appendix 1: Ravensworth Underground Mine SMP Risk Register

Appendix 2: Xstrata Coal Risk and Change Management Standard


Xstrata Coal NSW - Ravensworth Underground Mine Introduction

GSS Environmental December 2011 1

1.0 INTRODUCTION

GSS Environmental (GSSE) was engaged by Ravensworth Underground Mine (RUM) to facilitate a Risk

Assessment to be included as part of a Subsidence Management Plan (SMP) Application to allow the

commencement of underground mining of the Upper Liddell Seam, utilising longwall mining methods.

A qualitative risk assessment methodology was developed by GSSE specifically for undertaking Risk

Assessments associated with mining operations. It has been developed in accordance with the

requirements of the Australian Standard AS/NZS ISO 3100:2009 – Risk Management – Principles and

guidelines to provide a consistent approach. In addition, the NSW Department of Trade and Investment,

Regional Infrastructure and Services (DTIRIS) (formerly NSW I&I) Guideline for Applications for

Subsidence Management Approvals (2003) were also utilised to guide the Risk Assessment, in particular

section 6.10.2, which relates specifically to Risk Assessments associated with Subsidence impacts.

The Risk Assessment was undertaken by assembling key stakeholders and conducting a workshop to

identify the activities, aspects and possible impacts associated with the mine induced subsidence.

This report summarises the scope, aims and objectives of this SMP risk assessment, describes the

methodology used, and details the outcomes of this process.

1.1 Background and Scope

RUM is situated in the Hunter Valley Coalfields of New South Wales, approximately 25 kilometres

northwest of Singleton. The Ravensworth Coal Handling Preparation Plant (RCHPP) and the Ravensworth

Coal Terminal (RCT) operate at the site, and are utilised by RUM for coal preparation and loading

purposes. Coal is extracted using longwall mining methods which commenced in 2007.

Since longwall mining commenced, RUM has collected data regarding the performance of its mining

activities through the careful design and subsequent collection of data from its underground, subsidence

and environmental monitoring programs. Monitoring requirements of the current Subsidence Management

Plan for Pikes Gully longwalls one to nine include regular subsidence surveys being undertaken along with

weekly visual inspections and reports.

RUM plans to prepare a SMP application to allow extraction of longwalls 1 to 7 of the Upper Liddell Seam.

The SMP area lies within Mining Leases (ML) 1495 and 1477, Sub-surface ML 1349, and Surface lease ML

1485. Longwalls 1 to 7 lie to the north of the current approved Project Area, as shown in Figure 1. A large

section of the SMP Area will be disturbed during the next five years (2012 – 2016) by Ravensworth Surface

Operations (see Figure 2) through active mining and the emplacement of overburden.

Submission of the SMP is scheduled for April 2012, with approval required by September 2012 to ensure

continuity of mining.

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LEGEND

Version Date: Author: Checked: Approved:

FIGURE 1

Longwalls 1 - 7

Liddell Seam

Project:

Client:

File:

Projection:

Liddell Seam Longwall Layout


Fg1_2_XCN13-027_LiddellSeamLW1-7_111116

MGA94 Zone 56

1 31/10/11 ZJ CJ CJ

Base Plan Data Source:

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V:\XCN13-027\Figures\Final\CAD\Fg1_2_XCN13-027_LiddellSeamLW1-7_111116.dwg

To be printed A3

Scale 1:30000

Approved Workings

Project Area

Longwalls 1 - 7

UL - Upper Liddell Seam2 04/11/11 LH CJ CJ

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LEGEND

Version Date: Author: Checked: Approved:

FIGURE 2

Upper Lidell Seam SMP

Emplacement / Active Mining Area

Project:

Client:

File:

Projection:

Liddell Seam Longwall Layout


Fg5_XCN13-027_UpperLiddellSeamSMPEmplacementActiveMiningArea_111116

MGA94 Zone 56

1 14/11/11 KC CJ CJ

Base Plan Data Source:

0 500m250

V:\XCN13-027\Figures\Final\CAD\Fg5_XCN13-027_UpperLiddellSeamSMPEmplacementActiveMiningArea_111116.dwg

To be printed A3

Scale 1:30000

Approved Workings

Project Area

Longwalls 1 - 7

UL - Upper Liddell Seam

Emplacement / Active Mining Area(Ravensworth Surface Operations 2012 - 2016)


Xstrata Coal NSW - Ravensworth Underground Mine Aims and Objectives


2.0 AIMS AND OBJECTIVES

The aim of the SMP Risk Assessment was to assess the risks/hazards from subsidence caused by RUM’s

proposed mining operations. It also provides a forum for identifying issues requiring consideration as part

of the SMP application. The proposed underground mining system at RUM involves longwall mining

methods.

The following specific aims were established for the risk assessment:

To assemble key project stakeholders with appropriately varied and relevant experience to identify

the activities, aspects and possible subsidence related impacts of the mining operation;

Determine a risk rating for the above using a recognised qualitative risk assessment procedure and

assigning a priority for consideration by the project team and inclusion in the SMP; and

To provide the basis for applying management controls to minimise the impacts associated with mine

induced subsidence.

The key objectives of the risk assessment for the Liddell Seam Longwalls 1 to 7 SMP are:

To establish an appropriate risk assessment team of suitably qualified and experienced RUM staff,

Ravensworth Surface Operations staff and specialist consultants;

Discuss and review existing information known for the Liddell Seam Longwalls 1 to 7 SMP and

experience in previous mining areas;

Identify, assess & evaluate potential subsidence impacts to the surface and subsurface features

(natural & man-made) for the aspects typically required by government regulators for subsidence

impact assessment and management (i.e. the DTIRIS Guideline for Subsidence Management

Applications (2003)), and in accordance with the Xstrata Coal Risk and Change Management

Standard (XC RI STD 0001) using the Xstrata Coal Risk Matrix (probability matrix of consequence

and likelihood);

To focus on identifying and addressing potentially high risks or potentially severe consequences

(including where a lack of current information which may present potential risk);

To establish a Draft Risk Register and Risk Report for the Liddell Seam Longwalls 1 to 7 SMP for

review and comment by the risk team;

The identification of additional controls required (including with respect to updating RUM

Management Plans); and

To produce a Final Risk Assessment Report (including the Risk Register) for the Liddell Seam

Longwalls 1 to 7 SMP suitable to accompany the SMP Application addressing requirements

stipulated in the Guideline for Applications for Subsidence Management Approvals (2003).


Xstrata Coal NSW - Ravensworth Underground Mine Methodology


3.0 METHODOLOGY

3.1 Outline of General Approach

Risk is the chance of something happening that will have either a positive or negative impact. It involves

consideration of the sources of the risk assessing the consequences and considering the likelihood that

those consequences might occur. The impact may vary in consequence from Catastrophic -a major event

which could cause severe impact through to Insignificant -no detrimental impact is measured or envisaged.

The Risk Rating assigned to the activity during this process is measured in terms of both consequence

(severity) and likelihood (probability) of the event occurring.

Risk assessment is the formalised means by which the subsidence related impacts are systematically

identified, assessed, ranked according to perceived risk and addressed by means of appropriate and

effective controls or management outcomes.

The qualitative risk assessment methodology applied by GSSE for this risk assessment has been

developed in accordance with the following requirements:

Xstrata Coal Risk and Change Management Standard, XC RI STD 0001;

The Australian and New Zealand Standard AS/NZS ISO 31000:2009 – Risk management –

Principles and guidelines; and

DTIRIS Guideline for Applications for Subsidence Management Approvals (2003).

3.1.1 Xstrata Coal Risk and Change Management Standard, XC RI STD 0001

Xstrata Coal has developed a risk and change management standard relating to the application of risk

management at all Xstrata Coal operations and projects. The intent of this standard is to ensure that risks

associated with Xstrata Coal’s business, including risks arising from planned and unplanned changes, will

be identified, analysed and evaluated, treated as appropriate, and then monitored and reviewed.

This standard describes the risk management process, including consequence and likelihood descriptions,

and a risk matrix which was used for this risk assessment. This standard also appends the Xstrata Coal

Guideline for Application of Mandatory Risk Assessments – Broad Brush/Baseline, Life of Mine Planning

and Business Planning Processes. The Xstrata Coal Risk and Change Management Standard XC RI STD

0001 is provided as Appendix 2.

3.1.2 AS/NZS ISO 31000:2009 – Risk management – Principles and guidelines

A qualitative risk assessment methodology was developed by GSSE in accordance with the requirements

of the Australian Standard AS/NZS ISO 3100:2009 – Risk management – Principles and guidelines.

The following five basic steps were used during the Risk Assessment process:

(a) Establishing the internal and external context for the risk assessment process, including developing

consequence criteria and defining the structure of the risk assessment process;

(b) Identifying the related risks, including what could happen, when and where;

(c) Analysing the risks using a qualitative risk approach (i.e. identifying existing controls, determining

specific consequences / likelihoods table and then determining the level of risk);

(d) Evaluating the risks to determine the significant issues. The purpose of risk evaluation is to make

decisions, based on the outcomes of the risk assessment, defining which risks need controls or

mitigation strategies and to assign priorities; and

(e) Identifying management controls to be incorporated into the SMP and other site management

plans.


Xstrata Coal NSW - Ravensworth Underground Mine Methodology


3.1.3 DTIRIS NSW Guideline for Applications for Subsidence Management Approvals

The Risks were assessed for the following 15 key areas as defined by the section 6.10.2 of the Guideline

for Applications for Subsidence Management Approvals (2003). These include:

1) Public Safety;

2) Areas of high environmental, heritage or archaeological significance;

3) Wetlands, swamps and water related ecosystems;

4) Catchment areas causing exacerbating erosion and drainage pattern changes;

5) Significant water courses including surface flows, water quantity and quality and ecological

integrity;

6) Significant groundwater resources including groundwater levels and quality;

7) Threatened and protected species under the Threatened Species Conservation Act (1995);

8) The stability of escarpments and significant cliff lines, pagodas or steep slopes;

9) The serviceability of major public utilities and/or amenities;

10) Surface improvements causing damage beyond, serviceability and repairability;

11) Agricultural suitability or productivity;

12) Industrial, commercial and business establishments;

13) Foreshores and land prone to flooding or inundation;

14) Prescribed dams (including stored waters and reservoirs) and/or structures referred to by the Dams

Safety Act 1978; and

15) Any other areas or features within the Application area causing significant concern to the

community, local and state government agencies.

3.2 The Working Group

A working group was assembled and a risk assessment workshop was held to define the risk assessment

context, identify the risks/hazards associated with the planned activities, and assess the possible impacts

of these risks/hazards. The risks/hazards identified were recorded in a risk register which was reviewed by

key technical people within the RUM SMP team.

3.3 Workshop Session

RUM staff, Ravensworth Surface Operations staff, and select consultants were invited to form a working

group to assist in the preparation of this SMP Risk Assessment. This was to enable the risks to be

assessed by individuals who have experience within relevant areas associated with mine operations, with a

particular emphasis on experience with subsidence related issues.

A risk assessment workshop was held at the Singleton RSC, on Thursday 10 November, 2011. The

workshop was facilitated by Andrew Hutton, Principal Environmental Consultant from GSSE. A list of

stakeholders who attended the risk assessment workshop is provided in Table 1.


Xstrata Coal NSW - Ravensworth Underground Mine Risk Register/Reference Material


Table 1: Key stakeholders involved in the SMP Risk Assessment workshop

3.4 Determination and Assigning the Risk Rating

The following section outlines the approach used to assign a specific risk rating to each aspect of the SMP

risk assessment.

3.4.1 Consequence

Determination of the risk rating was based on the potential consequence descriptions outlined in the

Xstrata Coal Risk and Change Management Standard XC RI STD 0001 (see Appendix 2). These

descriptions have been designed such that the project team could make a subjective assessment of the

likely consequence using a series of assumptions or descriptors. The magnitude of the consequence of an

event was assessed using these descriptors and assigned a rating of one to five.

3.4.2 Likelihood or probability of an incident occurring

The likelihood of an event occurring was considered by the working group. The likelihood (or probability) of

an impact occurring was assessed using the descriptions outlined in the Xstrata Coal Risk and Change

Management Standard XC RI STD 0001 (see Appendix 2). The likelihood of an event occurring was

assigned a rating of A to E.

3.4.3 Risk Rating

The risk rating was assigned by combining the consequence with the likelihood that the consequence

would occur. A numerical risk ranking between one and 25 was allocated for each aspect using the Xstrata

Coal Risk Matrix.

A rating of one to five is considered a low risk, six to 16 a medium risk, and 17 to 25 a high risk. The goal is

to apply management controls or mitigation strategies to reduce the risk to as low as possible.

3.4.4 Assumptions

The key assumptions in assigning the risk ratings were as follows:

That longwall mining techniques will be used; and

That approval is being sought for mining within the SMP risk assessment study area outlined in

Figure 1.

Name Title Company

Scott Hobden Technical Services Manager RUM

Nick Slater Technical Services Manager Ravensworth Surface Operations

Andrew Kelly Approvals Coordinator RUM

James Barben Environment and Community Coordinator RUM

Duncan MacDougal Surveyor RUM

Calvin Sciani Surveyor RUM

Gareth Swarbrick Principal Geotechnical Engineer PSM

Kevin Price Contractor Brunskill

Andrew Hutton Principal GSS Environmental

Chris Jones Senior Environmental Scientist GSS Environmental

Jess Elmes Environmental Scientist GSS Environmental


Xstrata Coal NSW - Ravensworth Underground Mine Risk Register/Reference Material


4.0 RISK REGISTER

The Risk Register (see Appendix 1) has been prepared to document the SMP Risk Assessment outcomes

for inclusion in the preparation of the SMP Application for Ravensworth Underground Mine.

The Risk Assessment identified 19 potential risks associated with subsidence caused by mining Longwalls

1 to 7 of the Upper Liddell Seam. 11 of these risks were identified as a low risk, and eight were identified as

medium risk. No risks associated with mining the SMP area were identified as a high risk.

5.0 REFERENCE MATERIAL

The documents outlined in Table 2 below were used as references for completion of the SMP risk

assessment process.

Table 2: Reference Material used for the Risk Assessment

Document Type Title Version Document Date

Presentation

Subsidence Management Plan- Pikes Gully

Seam – LW 8-9 and Upper Liddell Seam LW’s1-

7.

1 10 November

2011

Subsidence Management

Plan Application Longwalls 1-9 SMP Application 1 August 2005

Xstrata Coal Standard Risk and Change Management Standard XC RI

STD 0001 1.0 30 August 2010

Ravensworth Underground Mine Liddell Seam Longwalls 1-7

SMP Risk Register

APPEN

DIX 1

Environmental Risk Assessment: Ravensworth UG - LW 1-7 SMPStep 5:

Determine RCEStep 10: PMC

Key Element

(CURA Context/Category)

Sub

Key

Elemen

Risk Description - Something

happens……

Consequence -

resulting in:Causes - Caused by Risk Owner Existing Control Description

Nature of

Control

(Optional)

Control Owner

(Contact)

Fatal Hazard Protocol

(as applicable)

Risk Control

Effectiveness

Consequence

Category

Expected Risk

Consequence

Risk

Likelihood

Current

Risk

Rating

Authority for

Continued Toleration

Timing

Authority for Continued

Toleration Authority

Potential

Maximum

Consequence

Treatment plans/tasks (Description) Task Owner Due Date

Stage of

Completion

Percentage%

Comments

01. Public Safety1

No XCN personnel accessing

the site above the LWsInjury / accident

Interactions with

surface crackingMarc Kirsten As previous Preventative

Dave

HuthnanceSatisfactory Health & Safety 1 A 1 Mgt System Not Applicable 1 Nil

Dennis

Mitchell

Brunker Lane will become Lemington

Road and care will be need to ensure

adequate security

Other stakeholders

(construction activities)1a

Construction activities

occurring above the LW

(Ravensworth North, Ashton,

Macquarie Generation and

RUM)

Injury / accidentInteractions with

surface crackingMarc Kirsten

Consultation with Macquarie

Generation/Ashton

Weekly inspections

Regular Monitoring

Signage

Fencing and locked gates

security

Access agreements

Road maintenance

Speed limits

Preventative Varied Satisfactory Health & Safety 3 B 9 Within 1 monthSuperintendent/Manager/P

roject Team3

Include reference to subsidence in the

inductions for the relevant stakeholders

Send out a consultation letter and

facilitate meeting where required

Andrew Kelly

Macquarie Generation

Land1b

People accessing site above

the LW panels on Macquarie

Generation owned land

Injury/accidentInteractions with

surface crackingMarc Kirsten

Consultation with Macquarie

Generation

Weekly Inspections

Regular monitoring

Signage (subsidence

warnings)

Access agreement with


PreventativeMacquarie

GenerationSatisfactory Health & Safety 1 B 2 Mgt System Not Applicable 1

Advise Macquarie Generation that there

may be cracking and that they should

include that in any of their inductions

James Barben

New England Highway 1cNew England Highway runs

adjacent to the SMP area

Damage to or

deformation of the

New England

Highway resulting if

the need to spend

substantial dollars on

remediation, etc

Subsidence Scott Hobden

Mine Planning has heading

under/adjacent to the highway

200m separation from the

longwall.

Preventative Scott Hobden Satisfactory Financial 4 A 10 Within 1 monthGM/Ops Mgr/Project

Manager4

GPS control survey will be considered

where required - following consultation

with the DITRIS

Steve Smith

North South Railway Line 1d

The Main North South

Railway is adjacent to the

SMP Area

Damage to or

deformation of the

railway line resulting

in the need to spend

substantial dollars on

remediation or pay for

losses.

Subsidence Scott HobdenRailway line is 600m from the

longwallPreventative --- Satisfactory Financial 4 A 10 Within 1 month

GM/Ops Mgr/Project

Manager4 No further consideration required ---

02. Areas of high

environmental, heritage, or

archaeological

significance.

2 Aboriginal sites Damage to or loss of

Aboriginal sites

Cracking as a result

of mine induced

subsidence

Scott Hobden

Aboriginal Heritage

Management Plan

A number of studies have

been undertaken on the site

Preventative James Barben SatisfactoryLegal &

Compliance3 C 13 Within 1 month

GM/Ops Mgr/Project

Manager3

Review the current Aboriginal studies to

ensure that the areas have been

assessed

Complete the Archaeological due

diligence

Andrew Kelly

03. Wetlands, swamps

and water related

ecosystems3

The working group confirmed

that this was not applicable to

the site

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

04. Catchment areas

causing or exacerbating

erosion and drainage

pattern changes

4

Surface water management

drainage systems (man-made

in mine rehabilitation)

Environmental

incident (water not

being managed as

required)

Subsidence Scott Hobden

Interactions with Ravensworth

Surface Operations and


Inspections

Surface water management

plan for Ravensworth Surface

Operations/Macquarie

Generation

Mitigating James Barben Satisfactory Environment 2 B 5 Mgt System Not Applicable 2

Implement monitoring across the SMP

area

Implement inspection regime to ensure

water management systems are

working as designed

Steve Smith

05. Significant water

courses including surface

flows, water quantity and

quality and ecological

integrity

5



the site

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

06. Significant

groundwater resources

including groundwater

levels and quality

6



LW 1-7

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

07. Threatened and

protected species under

the Threatened Species

Conservation Act 1995

7

There is some potential that

threatened species could be

present

Impact on the species

(bat and warbler)Subsidence

Assessment

Biodiversity Rehabilitation and

Land Management PlanPreventative Satisfactory Environment 1 A 1 Mgt System Not Applicable 1 Ecology to be assessed for SMP

08. The stability of

escarpments and

significant clifflines,

pagodas or steep slopes.

8



LW 1-7

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

Narama active dumps

tipping face (may be

finished)

8aFailure of the active tip face

(Dump 7)Injury / accident Subsidence Nick Slater

Communication with

Ravensworth Surface

Operations

Daily Inspections (OCE -

Ravensworth Surface

Operations)

TARP systems

Geotechnical Assessment

Preventative Nick Slater 1. Strata FailureRequire

ImprovementHealth & Safety 3 B 9 Within 1 month

Superintendent/Manager/P

roject Team3

Independent Geo tech assessment of

the subsidence / tip face - report to

Ravensworth Surface Operations

Consider alternate dumping during the

mining period

Notification / Communication from RUM

(link to mine plan)

Andrew Kelly

Ashton Tailings Dam Wall 8b

Failure of the Ashton Tailings

Dams Wall (eastern wall

prescibed, western wall is

not)

injury / accident Subsidence Scott Hobden

Inspections (Ashton)

Designed to withstand

subsidence

Ashton Eastern Saddle Dam

Management Plan

Monitoring

Dam safety Committee Wall

Preventative Steve Smith Satisfactory Health & Safety 2 B 5 Mgt System Not Applicable 2

Update the Management Plan

Consultation with Ashton

Consultation with the DSC

Andrew Kelly

Ravensworth South

Tailings Dam Wall8c

Failure of the Ravensworth

South Tailings Dam Wallinjury / accident Subsidence

Dave

Huthnance

Will not be utilised when

mining occurs (2017) -

anticipated that it will be

capped

PreventativeDave

HuthnanceSatisfactory Health & Safety 2 B 5 Mgt System Not Applicable 2 ---

Macquarie Generation Ash

Dam Wall8d

Failure of the Macquarie

Generation Ash Dam Wallinjury / accident Subsidence Scott Hobden

Subsidence Monitoring

Communications

Inspections

Preventative Scott HobdenRequire

ImprovementHealth & Safety 2 C 8 Within 1 month


roject Team2

Ensure that the subsidence impact

assessment specifically includes

impacts on the Macquarie Generation

Ash Dam Wall and review the mine

layout in relation to the outcomes

Andrew Kelly

09. The serviceability of

major public utilities

and/or amenities

933KV(?) Powerlines cross

through the SMP area.

Damage to or loss of

the utility Subsidence Dave Morley

Monitoring of powerlines

Inspections

Installation of rollers

Remedial works

PreventativeDave

DrinkwaterSatisfactory Financial 2 B 5 Mgt System Not Applicable 2

Complete a report (powerserve) to

confirm the impacts from subsidence

once the assessment has been

completed (rollers, etc).

Confrim the location, what they service

and the size of the powerline to be

confirmed as part of the assessment

Steve Smith

Information regarding the powerline

type/ alignment/ ownership to be

reviewed as part of SMP

Roads and access tracks 9aNumerous roads and access

tracks cross the SMP areainjury / accident Subsidence Scott Hobden

Inpsections

Maintenance

Speed Limits

Communications

Preventative Steve Smith Satisfactory Health & Safety 2 B 5 Mgt System Not Applicable 3 Repair as required. Steve Smith

Considered preparing mgt plans for

Ashton and Macquarie Generation

infrastructure seperately

Step 11: Treat the RisksStep 2: Assess Type; Key Elements-

These change depending on TYPE of Step 3: Identify the risks, causes and potential consequences Step 4: Identify the existing controls to manage the identified risks

Steps 6, 7 & 8: Determine the Expected Consequence /

Likelihood applicable to the Expected Consequence / Current

Step 9: Determine the Authority for Continued

Toleration of risk

12/12/2011,1:32 PM 1 of 2 C:\Users\JessicaElmes\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\4QO09E43\XCN13-027_1111_Liddell Seam LW 1-7 SMP Risk Assessment - V1 1

Environmental Risk Assessment: Ravensworth UG - LW 1-7 SMPStep 5:

Determine RCEStep 10: PMC

Key Element

(CURA Context/Category)

Sub

Key

Elemen

Risk Description - Something

happens……

Consequence -

resulting in:Causes - Caused by Risk Owner Existing Control Description

Nature of

Control

(Optional)

Control Owner

(Contact)

Fatal Hazard Protocol

(as applicable)

Risk Control

Effectiveness

Consequence

Category

Expected Risk

Consequence

Risk

Likelihood

Current

Risk

Rating

Authority for

Continued Toleration

Timing

Authority for Continued

Toleration Authority

Potential

Maximum

Consequence

Treatment plans/tasks (Description) Task Owner Due Date

Stage of

Completion

Percentage%

Comments

Step 11: Treat the RisksStep 2: Assess Type; Key Elements-

These change depending on TYPE of Step 3: Identify the risks, causes and potential consequences Step 4: Identify the existing controls to manage the identified risks

Steps 6, 7 & 8: Determine the Expected Consequence /

Likelihood applicable to the Expected Consequence / Current

Step 9: Determine the Authority for Continued

Toleration of risk

XCN utilities, services and

infrastructure9b

XCN operates an open cut

mine with related services

and infrastructure:

- Crushing Plant/dumping

station/transfer station

- out of pit dump

- water management

infrastructure

- ROM stockpile

- Rejects conveyor (just

outside SMP area)


the utility /

infrastructre

Subsidence Nick Slater

Planning for subsidence

Communication with

Ravensworth Surface

Operations

PreventativeRequire

ImprovementFinancial 2 C 8 Within 1 month


roject Team3

Specifically assess the impact of

subsidence on the Ravensworth

Surface Operationsinfrastructure and

determine appropriate mitigation

actions

Andrew Kelly

Need to confirm the location of the

proposed rejects conveyor to enusre

it is outside the SMP area


Utilities, services and

amenities (infrastructure)

9c

Macquarie Generation owned

lands within the SMP area

(includes return water

pipelines [proposed] ash dam

extension of pipeline

[proposed], powerlines


the utility /

infrastructre

Subsidence Scott Hobden Same as previous Steve Smith Andrew Kelly

Ashton utilities, services

and amenities

(infrastructure)

9d

Ashton has a tailings dam,

pipeline return water, pump

stations, powerlines, are

contained within the SMP

area


the utility /

infrastructre

Subsidence Scott Hobden Same as previous Steve Smith Andrew Kelly

Leachate Dam 9e

Macquarie Generation has a

leachate dam below the Ash

Dam

Water entering the

undereground

workings

Subsidence Scott HobdenInspections

MonitoringPreventative Steve Smith

5. Inrush and

Outburst

Require

ImprovementFinancial 4 B 14 Within 1 month

GM/Ops Mgr/Project

Manager4

Ensure that the subsidence impact

assessment specifically includes

impacts on the Leachate dam and the

likely connectivity to the Underground

workings.

Review as part of Geotechnical

assessment

Andrew Kelly

Has been mined under it previously

Confer with Ken Mills (SCT) on this

issue

RUM - PED line

(underground

communications)

9f

The RUM PED line

(underground

communications) runs

through the SMP area


the utility /

infrastructre

Subsidence Scott HobdenInspections and testing

Preventative Steve Smith Satisfactory Health & Safety 1 A 1 Mgt System Not Applicable 1 Nil ---

10. Surface improvements

causing damage beyond

safety, serviceability and

repairability

10Impact to powerlines in SMP

area


the utility /

infrastructre

Subsidence

Monitoring of powerlines

Inspections

Installation of rollers

Remedial works

Preventative Satisfactory Financial 2 B 5 Mgt System Not Applicable 2 ---

11. Agricultural suitability

or productivity 11



LW 1-7

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

12. Industrial, commercial

and business

establishments

12



LW 1-7

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

13. Foreshores and land

prone to flooding or

inundation

13



LW 1-7

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

14. Prescribed dams

(including stored waters

and reservoirs) and/or

structures referred to by

the Dams Safety Act 1978

14

Failure of the Ashton Tailings

Dams Wall (only eastern wall

is prescibed)

injury / accident Subsidence Scott Hobden

Inspections (Ashton)

Designed to withstand

subsidence

Ashton Eastern Saddle Dam

Management Plan

Monitoring

Dam safety Committee Wall

Preventative Steve Smith Satisfactory Health & Safety 2 B 5 Mgt System Not Applicable 2

Update the Ashton Eastern Saddle

Management Plan

Consultation with Ashton

Consultation with the DSC

Andrew Kelly

15. Any other areas or

features within the

Application Area causing

significant concern to the

community, local and

state government

agencies.

15



LW 1-7

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

12/12/2011,1:32 PM 2 of 2 C:\Users\JessicaElmes\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\4QO09E43\XCN13-027_1111_Liddell Seam LW 1-7 SMP Risk Assessment - V1 1

Xstrata Coal Risk and Change Management Standard

APPEN

DIX 2

Xstrata Coal

Risk & Insurance Standard

XC RI STD 0001

XC RI STD 0001

Risk & Change Management Standard

Status:

Approved

Version: 1.0

Effective: 30/08/2010

Review: 30/08/2013

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THIS DOCUMENT IS UNCONTROLLED UNLESS VIEWED ON THE INTRANET

RISK & CHANGE MANAGEMENT STANDARD

1. PURPOSE

Utilising a common methodology and in accordance with ISO 31000:2009 and the requirements under local health and safety legislation, this Standard ensures that risks

associated with Xstrata Coal‟s business, including risks arising from planned and unplanned changes, will be identified, analysed and evaluated, treated as appropriate, and then monitored and reviewed.

2. SCOPE

This Standard applies to all areas of the Xstrata Coal Business Unit, to all Divisions,

Projects, Operations and new or acquired Divisions and/or sites (“Xstrata Coal”).

Typical applications include:

Whole of Mine Broad Brush / Baseline Risk Assessments;

Operational activities, including planned and unplanned changes;

Application for Expenditure (AFE);

Request for Major Operating Expenditure;

Major Projects;

Major Contracts;

Business Planning Reviews;

Life of Mine Risk Assessments; and

Mine Closure.

3. STANDARD

3.1 Risk Management Process

Management shall systematically assess, monitor and review risks. An appropriate risk

assessment shall be performed for relevant business activities and shall identify controls critical to the achievement of the overall objectives of the relevant activity. This risk assessment shall be monitored and reviewed on a regular basis to ensure it continually reflects the existing situation with respect to the specific business activity, ie the risk profile has been updated if necessary and the existing controls are adequate and effective.

Figure 1 below shows the overall Risk Management Process outlined by ISO 31000:2009 Risk Management – Principles and guidelines.

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Figure 1: Risk Management Process (Adapted from ISO 31000:2009)

Xstrata Coal has adapted the ISO 31000:2009 process for use throughout the Business Unit, Divisions, Operations and Projects. Following is a description of the way in which the Xstrata Coal methodology will be applied and the criteria against which risks will be assessed. It provides step details of the Risk Management Process which encompasses identification, analysis and evaluation of risks including rating and ranking systems, requirements for risk treatment and levels of authority for continued toleration of an existing risk.

Communication and Consultation

It is vital to communicate and consult with internal and external stakeholders as appropriate at each stage of the risk management process and concerning the process as a whole. It should involve dialogue with stakeholders with efforts focused on consultation, rather than a one-way flow of information from the decision maker to other stakeholders.

Effective internal and external communications are important to ensure that those responsible for implementing risk management, and those with a relevant interest,

understand the basis on which decisions are made and why particular actions are required. It is therefore important to develop a Communications and Consultation Plan early in the process.

A participative approach is useful:

to help ensure risks are identified effectively;

for bringing different areas of expertise together in analysing risks;

for ensuring different views are appropriately considered in evaluating risks;

to gain „ownership‟ of the risk, the controls and any further treatment by certain stakeholders.

Consultation also facilitates the engagement of stakeholders and the „ownership‟ of risk issues by managers. It allows those parties to appreciate the benefits of particular controls and the need to endorse and support a risk treatment plan.

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Stakeholders are likely to make judgments about risk issues based on their perception of the risk. Since the views of stakeholders can have a significant impact on the decisions made, it is important that their perceptions of risk are identified, recorded and integrated into the decision making process.

A suitable template for the Stakeholder Analysis is given in Appendix 1, Template #1.

Xstrata Coal Risk Management Procedure

The Risk Management Procedure for Xstrata Coal is set out in the following steps:

Step 1 - Establishing the Context

Establishing the context defines the parameters within which risks will be managed and sets the scope for the balance of the risk management process. The context includes the financial, operational, health, safety, environmental, community, competitive, political (public perceptions and image), social, client, cultural and legal aspects.

Criteria against which risk will be evaluated should also be established and the structure of the analysis defined. The starting point for establishing the context is to clearly define the

project and its objectives. It should also document the following:

Exclusions – any areas that are not being considered in the risk assessment; and

Assumptions – baseline conditions, existing parameters that are known and not stated within the controls for the risk assessment.

A template for this is given in Appendix 1, Template #2 Risk Assessment Description and Objectives.

There are three elements to establishing the context as described below.

4. Identify the

existing

controls to

manage the

identified risk

2. Select the

Risk

Assessment

type and

structure the

assessment

3. Identify the

risks, causes

and potential

consequences

1. Establish the

Context

5. Determine

the Risk

Control

Effectiveness

(RCE)

6. Determine

the Expected

Consequence

taking into

account

existing

controls and

their

effectiveness

12. Monitor &

Review

11. Treat the

Risks

10. Determine

Potential

Maximum

Consequence

9. Determine

Authority for

Continued

Toleration of

Risk

8. Determine

the current

level of risk

with existing

controls

7. Determine

the Likelihood

applicable to

the Expected

Consequence

taking into

account

existing

controls and

their

effectiveness

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External Context

This defines the environment in which the Xstrata Coal Business Unit, its Divisions and Operations operate. The relevant, external stakeholders should be identified, their objectives considered, and their perceptions, values and potential actions taken into account when developing the risk criteria.

The template in Appendix 1, Template #3 can be used for this purpose.

Internal Context

Before the risk assessment commences it is necessary to understand the internal environment.

Key considerations include:

the Xstrata culture;

relevant plans, goals and objectives;

governance, organisational structure, roles and accountabilities;

capabilities in terms of available or required resources, e.g. people, systems, processes, financial; and

who is involved and affected;

The template in Appendix 1 Template #4 can be used for this purpose.

Context for the Risk Management Process

This defines the goals, objectives, responsibilities, scope, methodology and other parameters of the risk management activity. The methods to be used, the resources required and the manner in which the results will be recorded should also be specified.

Setting the scope and boundaries of a risk assessment involves:

defining the organisational part, project, activity or change and its goals and objectives;

specifying the nature of the decisions that have to be made based on the risk assessment results;

defining the extent of the change or activity or function in terms of time and location;

identifying any scoping studies needed and their scope, objectives and the resources required; and

defining the depth, breadth and rigour of the risk assessment, including specific inclusions and exclusions.

Key Elements

To ensure it is comprehensive and effective, the risk assessment should be structured according to „key elements‟. These are a set of topics to be considered one by one during risk identification. Each topic is somewhat narrower than the project or activity as a whole, allowing those performing the identification to focus their attention and go into more depth than they would if they tried to deal with broader issues. A well-designed set of key elements will stimulate creativity, and ensure that all the important issues are put before those responsible for identifying risks.

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The key element structure depends on the objectives and the key issues of concern to Xstrata plc, Xstrata Coal and its stakeholders. Using an inappropriate structure can lead to significant items being omitted inadvertently, with potentially serious consequences, as well as making the process inefficient.

The following table provides bases for selection and examples of key elements. A Template is supplied in Appendix 1, Template #5:

Table 1: Examples for selection of Key Elements

Area of Risk Assessment Basis for selecting the

elements

Examples of Key Elements

Business planning and strategic

direction

Business activities Communications, Financial & Taxation,

HSEC, IT, Legal & Compliance, Marketing and Selling, Operational, People &

Strategic

Major Operating and Capital

Expenditure approvals

Budget items, cost items Financial & Taxation, Legal &

Compliance, Marketing and Selling, Operational, People, Strategic, HSEC

Major Contracts including Long

Term Supply and Sales Contracts

Budget items, cost items,

business activities, work process, functions of the

supplied product or service, credit worthiness, strategic

direction

Financial & Taxation, Legal &

Compliance, Marketing and Selling, Operational, People, Strategic, HSEC;

Geographical/Location

Operating issues; fitness for

purpose;

Work process, functions of

the supplied product or service,

HSEC, Operational & Maintenance

Processes, Geographical/Location, People, Geology , Geotechnical, Financial

& Taxation

Life of Mine Planning Business activities, strategic

direction

Geology, Geotechnical, Coal Quality,

Mine Planning & Scheduling, Mining Constraints & Known Hazards, Water

Management, Ventilation & Gas Management, Equipment Procurement,

Availability and Productivities, Infrastructure, Supporting Services,

Environmental Conditions, Community Impacts, Regulatory Approvals, Land

Access, Adjoining Leases and Other Projects, Employment Agreements,

Contractor Relations, Mine Closure

General project risks, undertaken early in the planning stage; stop/go

decisions; commercial structuring; overall procurement approach and

strategy

Project phases Geology, Geotechnical, Coal Quality, Mine Planning, Water Management, Gas

Management, Equipment Procurement, Availability, Productivities,

Infrastructure, Supporting Services, Environmental Conditions, Community

Impacts, Regulatory Approvals, Land Access, CPRS impacts

Environmental and community issues; approval processes;

Stakeholders Environmental Conditions, Community Impacts, Regulatory Approvals,

Economic Impacts

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Defining Risk Criteria

Risk criteria define the terms of reference against which the significance of a risk is evaluated, based on the Xstrata Coal Business Unit, its Divisions‟ and Operations‟ objectives and internal and external contexts. These criteria are identified in the various Tables utilised throughout this Standard.

Step 2 - Selecting the Risk Assessment Type

Risk assessment types can be classified as Levels 1 to 5 depending upon such factors as the potential consequence on the business, the level of expenditure, the familiarity with, or complexity of, the operation and reputational issues.

The type of the risk assessment shall be determined in accordance with Table 2 as follows:

Table 2: Guideline for Selecting Risk Assessment Type and Type of Facilitation

Level Application Type of risk assessment

Conducted by

5

Major Projects and Expenditure requiring Xplc Board approval; or as mandated by CE/COO

Formal risk assessment often involving both quantitative and qualitative analysis

XC approved third party facilitator with stakeholder participants including risk specialists: eg. Financial, Mining, Health & Safety, Geology, Legal.

4

Major Projects and Expenditure requiring Coal Board approval; Business Plan (Budget), Life of Mine, Broad Brush/Baseline, Material Impacts (Financial,

Human, Reputation etc) on XC and/or Divisions or as mandated by CE/COO

Formal risk assessment often involving both quantitative and qualitative analysis

XC approved second party facilitator with stakeholder participants including Risk specialist: eg. Financial, Mining, Health & Safety, Geology, Legal.

3

New or change to equipment, process or operation, Material Impacts

(Financial, Human, Reputation etc) on Operations, development of hazard management plans

Formal risk assessment using a systematic method and qualitative

risk analysis

Competent facilitator with stakeholder participants.

2

Unfamiliar environment and/or process, change in

work conditions

Risk assessment using a documented process.

eg: Job Safety Analysis, Safe Work Method Statement, Formal SLAM.

Competent facilitator with internal stakeholder

participants.

1 Prior to any task Simple risk assessment.

eg: Pre-Task Risk Assessment (eg SLAM).

All employees

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The following diagram can also be used as a guide to distinguish between the need to undertake a Levels 3-5 Risk Assessment as distinct from a Level 1 to 2 Risk Assessment:

Step 3 – Risk Identification

The aim of this step is to generate a comprehensive list of events or circumstances that might have an impact on the achievement of the objectives identified in the Risk Management Context. It involves the identification of what, where and when events that might create, enhance, prevent, degrade, accelerate or delay the Xstrata Coal Business Unit, its Divisions or Operations achieving their objectives. Having identified what might happen, it is necessary to consider possible causes and understand the consequences if the

event happens. Identification should also consider knock-on/indirect effects of particular consequences. All significant causes and consequences should be considered.

Suitably competent and experienced people must be utilised to systematically identify all the risks. Techniques for the identification process include Brainstorming, SWIFT, WRAC, HAZOP, FMEA, Fault tree analysis, and the like.

Comprehensive identification using a well-structured systematic process is critical, because

risks not identified at this stage are excluded from further analysis and treatment. Identification should include risks whether or not they are under the control of Xstrata Coal.

Step 4 – Identify the Existing Controls

Having considered the range of potential causes and consequences of a risk event in Step 3, identify the existing controls and their perceived adequacy and effectiveness in modifying consequences and the probability of those events.

Controls should be aligned to causes and/or consequences in order to identify potential gaps in controls. Refer to Step 11 – Hierarchy of Controls for more information.

Step 5 – Determine the Risk Control Effectiveness

Risk Control Effectiveness (“RCE”) is a relative assessment of the actual level of control that is currently present and effective compared with that reasonably achievable for that particular risk. It is a measure of the completeness, relevance and efficiency of those

current risk controls to prevent the risk occurring or mitigate the consequences. RCE is an

Level 2 - Consult

or undertake Job Safety Analysis

Level 3–5 - Carry

out a formal risk assessment

Level 1- Pre-task

risk assessment

Level 2 -Consult

or undertake Job Safety Analysis

Task

Environment

Routine task in

a normal

environment

Non-routine task in a

normal environment

Routine task in

an abnormal

environment

Non-routine task in an

abnormal environment or complex issue

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indicator as to whether the existing controls are doing all that they could or should to manage the risk issue.

Where the RCE is less than “Satisfactory” there shall be a risk treatment plan that addresses the control deficiency.

An assessment shall be made of the relative effectiveness of the controls as per Table 3 below.

Table 3: Risk Control Effectiveness (―RCE‖)

RCE Guide

Satisfactory

- Controls are well designed and appropriate for the risk; - Controls are largely “preventative” and address the root causes; - Management believes that they are effective and reliable at all times; - Nothing more to be done except review and monitor the existing

controls.

Require Improvement

- Most controls are designed correctly and are in place and effective; - Controls may only treat some of the root causes of the risk, and/or are

not currently effective and/or there may be an over-reliance on “reactive” controls;

- Management has doubts about operational effectiveness and reliability; - More work is required to improve operating effectiveness.

Poor or No Existing Controls

- Significant control gaps or no credible control; - Either controls do not treat root causes, are non-existent or, if they

exist, they are ineffective; - Management has no confidence that any degree of control is being

achieved due to poor control design; - Very limited or no operational effectiveness.

It is important that control monitoring by management review and assurance is focussed on those risks which, if the controls are absent or have failed, the Business Unit and/or Division and/or Operation and/or Project would be exposed to high and unacceptable consequences. In those cases assurance activity, such as audit or independent specialist review, provides “assurance” that key controls are both adequate and effective.

Step 6 - Determine the Expected Consequence

Having identified the risks, their causes and potential consequences, the existing controls and their adequacy and effectiveness in controlling the risk, determine the Expected Consequence by referring to Table 4 – Consequence Criteria.

Where the Expected Consequence is a Financial or an Investment Return impact, consideration should be given to the total financial cost, ie: EBIT or NPV lost, legal liability or compensation payments made and any opportunity costs.

The range of Expected Consequences for a particular risk should be considered and, in each case, the Consequence rating for the expected level should be selected. The risk rating should be based on the worst of these Expected Consequences.

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Table 4: Consequence Criteria

Rating Financial impact

US$ EBIT

Property Damage

US$

Investment Return

US$ NPV

Health and Safety Environment Community / Reputation Legal and

Compliance

5

$100m+

loss or gain

$20m+ $600m +

loss or gain

Multiple fatalities

and/or

Significant

irreversible effects to 10‟s of people

Category 5 – an incident

that has caused disastrous

environmental impact with

long term effect requiring major remediation

Prominent negative

International media

coverage over several

days. Significant negative

impact on share price for months.

Major litigation or

prosecution with damages

of $50m+ plus significant

costs. Custodial sentence for

company Executive Prolonged closure of

operations by authorities.

4

$20m -

$99.9m loss or

gain

$2m -

$19.9m

$60m -

$599.9m loss or gain

Single fatality and/or

Severe irreversible disability (Permanent

Disabling Injury) or illness to one or

more persons

Category 4 – an incident

that has caused serious environmental impact with

medium term effect requiring significant

remediation

National media coverage

over several days. Significant negative

impact on share price for weeks

Community / NGO legal actions.

Impact on local economy

Major litigation costing

$10m+ and Investigation by

regulatory body resulting in long term interruption

to operations. Possibility of custodial

sentence.

3

$2m – $19.9m

loss or gain

$200k - $2m

$6m – $59.9m loss

or gain

Serious bodily injury or illness (eg

fractures) and/or Lost Time Injury > 2

weeks

Category 3 – an incident that has caused moderate

reversible environmental impact with short term

effect requiring moderate remediation

Local media coverage over several days

Negative impact on local economy.

Persistent community complaints.

Major breach of legislation with punitive fine.

Significant litigation involving many weeks of

senior management time.

2

$200k – $1.9m loss

or gain

$10k - $199.9k

$600k – $5.9m loss

or gain

Medium term largely reversible injury or

illness to one or more persons

Restricted Work Injury

Lost Time Injury < 2 weeks

Category 2 – an incident that has caused minor

reversible environmental impact requiring minor

remediation

Local media coverage. Complaint to site and/or

regulator.

Breach of legislation with investigation or report to

authority with prosecution and/or moderate fine

possible.

1

<$200k loss or

gain

<$10k <$599.9k loss or gain

First aid treatment or medical treatment

Category 1 – an incident that has caused negligible

reversible environmental impact requiring very minor

No media coverage. No community complaints.

Minor legal issues, non-compliances and breaches

of legislation.

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or no remediation

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Step 7 - Determine the Likelihood

A likelihood category should be determined on the basis of the probability of the occurrence of the Expected Consequence.

Table 5: Likelihood Criteria

Category Criteria

E

99% probability, or

impact is occurring now, or could occur within months

D >50% and <99% probability, or balance of probability will occur, or

could occur annually

C

>20% and <50% probability, or

may occur shortly but a distinct probability it won‟t, or could occur in 2 to 5 years

B >1% and <20% probability, or may occur but not anticipated, or

could occur within 5 to 20 years

A

<1% probability occurrence requires exceptional circumstances

exceptionally unlikely, even in the long term future occurs less than once every 20 years

The risk rating, ie: determining the Expected Consequence and its Likelihood, will normally take place in the workshop used for risk identification. In some circumstances, risks may be rated at another time using specialists and then the original workshop team reconvened to agree and verify the ratings.

The basis on which these ratings were obtained will also be recorded.

Quantitative Analysis

For the most significant and important risks it is normally appropriate to conduct quantitative analysis where each risk is represented as a distribution. Further guidance on quantitative risk analysis is given in the Xstrata Coal Project Management System. Generally this process should be performed utilising external consultants.

Step 8 – Determine the Current Level of Risk

The risk matrix in Table 6 below shall be used to determine the relative magnitude of the risk by taking the combination of Expected Consequence and its likelihood of occurrence.

Table 6: Risk Matrix

Lik

elih

oo

d R

ati

ng

E 11 16 20 23 25 Classification

D 7 12 17 21 24 High Risk

C 4 8 13 18 22 Medium Risk

B 2 5 9 14 19 Low Risk

A 1 3 6 10 15

1 2 3 4 5

Consequence Rating

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Step 9 - Determine the Priority for Risk Treatment and the Authority for Continued Toleration of Risk

For Risk Assessment Levels 1 and 2 only, Table 7 is not required to be applied.

Utilising the results from Step 8 determine where the priority for treatment and authority

for continued toleration of this level of current risk lies. Once this is understood, and where necessary, take action to implement the required Risk Treatment Plans (Step 11) according to the Timing in Table 7.

Table 7: Priority for Risk Treatment and Authority for Continued Toleration of Risks (Applicable for Risk Assessment Level 3 to 5 only)

Current risk level

Action Timing for Authority Authority for continued toleration of

current level of risk

23 to 25

The activity must be stopped

immediately until action to reduce the level of Risk to less than 23 is

under taken or authority to continue is received.

Immediately to within 24

hours.

XC CE

17 to 22

The activity must be stopped

immediately until action to reduce the level of Risk to less than 17 is

under taken or authority to continue is received.

Immediately to within 24

hours

XC COO/ CFO/ CDO/ CMO

10 to 16

Take action to reduce the level of

Risk to less than 10 or authority to continue is received.

Within 1 month General Managers /

Operations Managers / Project Managers

6 to 9 Take action to reduce the level of Risk to less than 6 or authority to

continue is received.

Within 1 month Superintendents/ Managers / Project Team

1 to 5 Tolerable risk unless circumstances change

Ongoing control as part of a management system.

N/A

Step 10 - Potential Maximum Consequence

Having identified a risk, its causes and potential range of consequences in Step 3, an individual risk should be assessed for its Potential Maximum Consequence. Potential Maximum Consequence is the plausible worst case impact to the Xstrata Coal Business Unit, Division, Operation or Project arising from a risk where all active risk controls, including insurance and hedging contracts, are assumed to be ineffective. It does not consider the likelihood of the event occurring. Potential Maximum Consequence may not be the absolute worst case conceivable.

Potential Maximum Consequence will be identified as the consequence level in the risk being considered taken from the Consequence Criteria given in Table 4.

Potential Maximum Consequence will be used as the primary measure on which to focus and plan assurance activities including Internal Audit and independent specialist reviews.

Step 11 – Treat the Risks

The primary consideration here is whether the risk can be further treated in a way that is

reasonable and cost effective. In general this involves considering:

whether the risk is already at a level that is reasonably achievable or practicable;

whether it would be cost-effective to further treat the risk;

Xstrata Coal's willingness to tolerate risks of that type.

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It will usually not be cost-effective or even desirable to implement all possible risk treatments. It is, however, necessary to prioritise and implement the most appropriate combination of risk treatments. A Treatment Plan is, or more usually a combination of Treatment Plans are, selected by considering factors such as costs and benefits, timeframes for implementation, effectiveness, available technology and other criteria of relevance to Xstrata Coal. Factors such as legal, social, political and economic considerations may need to be taken into account.

Development of effective risk treatment requires consideration of three pieces of information that came from the risk identification and analysis steps:

the causes – particularly the „root causes‟;

the existing controls and the assessment of their effectiveness; and

the relative importance of consequences or likelihood to the risk rating.

Risk treatment options shall be resolved into a number of tasks and these will be allocated to named individuals (task owners) who shall be accountable for their completion. These tasks shall be recorded in Risk Treatment Plans which will contain:

The tasks to be completed and the risks they address;

Who has responsibility for implementation of certain tasks;

The timetable for implementation; and

Details of the mechanism for and frequency of review of the status of the treatment plan.

Appendix 1, Template #8 can be utilised for developing a Risk Treatment Plan.

Treatment Plan Options

The starting point for identifying options is often a review of existing guides for treating that particular type of risk. For example, for many safety, environmental and community risks there are requirements prescribed in relevant legislation, standards, codes and other external requirements.

For many risks, such guides don‟t exist and treatment options will need to be developed from first principles in order to be effective.

One treatment option available is to avoid the risk entirely i.e. to eliminate it by deciding not to proceed with an activity. This will remove possibilities of harm but will also often eliminate the opportunity. More usually risk treatment involves changing either the likelihood or the consequences of the risk, or both.

Selecting the most appropriate treatment option will involve comparing the cost of implementing each option against the benefits derived from it. Generally the cost of

managing risk needs to be commensurate with the benefits obtained. Appendix 1, Template 9 can be used to assist with Risk Treatment Option Analysis.

Decisions shall take into account the need to consider carefully rare but severe risks that may warrant risk treatment actions that are not justifiable on strictly economic grounds. Legal, reputation and community requirements may override simple financial cost benefit analysis and in these cases a qualitative Cost Benefit Analysis should be used.

Hierarchy of Treatments

Risk treatment options are not necessarily mutually exclusive or appropriate in all circumstances. The options can include the following:

1. Avoid the risk by deciding not to start or continue with the activity that gives rise to the risk;

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2. Taking or increasing the risk in order to pursue an opportunity;

3. Removing the risk source;

4. Changing the likelihood;

5. Changing the consequences;

4. Sharing the risk with another party or parties; and

5. Retaining the risk by informed decision.

Treatment Plans should aim to create controls that prevent or eliminate the cause and/or mitigate the consequences. Controls that eliminate the risk are the most effective. When performing this part of the analysis, certain controls should be identified utilizing

the hierarchy of controls listed in Table 8 – Hierarchy of Controls. For recording purposes a control may be identified as per this Hierarchy and its criticality to assist with determining effectiveness of controls.

Table 8: Hierarchy of Controls

The Control Design Effectiveness Method (“CDEM”) in Appendix 2 should be considered or may be mandated by individual Divisions to further analyse risk treatment plans and resulting controls for certain control types.

Step 12 – Monitor and Review

Assurance and Monitoring

To ensure an effective risk management process, it is essential that ongoing monitoring and review of the risk management plan occurs. Changing global and market conditions and significant changes to processes can affect the likelihood and consequence of risks resulting in regular reviews of existing controls and updates to risks. In addition lessons

learnt from the risk management process need to be incorporated into existing risk management plans.

For Xstrata Coal this happens in a variety of ways:

Monitoring & reviewing risks;

Personal

ProtectiveEquipment

Administration

Engineering

Isolation

Substitution

EliminationMost effective at eliminating / controlling

risks

Least effective at eliminating /

controlling risks

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Assuring controls; and

Learning lessons and communicating relevant information.

Comprehensive annual risk reviews are part of the Budget and Planning process, Life of Mine Planning and individual Project phases. They are required in response to any

significant planned or unplanned change. As a result, risk management becomes dynamic and changes as the organisation changes. Systems to monitor and review risks require careful selection, targeting and planning. They should target high risks and credible failure of treatment strategies that would result in high or frequent consequences

Monitoring and review practices will be of three types:

Continuous monitoring through routinely measuring or checking particular parameters to provide ongoing assurance that risk treatments are effective;

Control self assessment involving regular review of risks and their treatments to ensure that new risks have not arisen and treatment strategies are effective and appropriate;

Auditing utilising both internal and external audit staff. Audits should, as much as practical, test systems rather than conditions, be selective in scope and lower in frequency than the first two measures. Generally the audit process will provide assurance that the systems and processes are working however findings of audits may indicate systemic weakness and therefore the response should focus on remedying the systemic issues, not just the symptoms.

Performance Indicators

Performance indicators are a measure of the level of performance of a given item or

activity. They need to be measurable and appropriate to Xstrata Coal and hold individuals accountable while forming the basis for continuous improvement. They should reflect a range of key objectives defined when the context is established at the start of the risk management process and apply greatest effort and focus to:

The highest risks;

The most critical treatments or other processes; and

Those treatments or processes with the greatest potential for improvements in efficiency.

Some examples of useful risk management performance indicators are:

Progress towards a specific objective;

The extent to which recommendations for risk treatment are implemented.

Post-event Analysis

Reviews of causes of successes, failures and near misses are important for every area of the Business Unit to gain insight into the risk management process and how it can be improved. The lessons learnt from these reviews should be recorded and actions taken to ensure that the causes are treated such that subsequent failures are prevented and successes are repeated.

When analysing successes and failures the following questions need answers:

Was the risk involved previously identified and analysed?

Were the actual causes identified in risk identification process?

Were the risks and controls rated and assessed correctly?

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Did the controls operate as intended?

Were the treatment plans effective? If not, where could improvements be made?

Were the monitoring and review processes effective?

How could the risk management process in general be improved?

Who needs to know about these learnings and should they be disseminated to ensure learnings are most effective?

What should be done to ensure that failure events are not repeated but that successes are?

Recording and Reporting

The outputs of the Risk Management Process should be recorded to:

preserve the results of the discussions, agreements analyses and conclusions;

provide the basis for the allocation and tracking of further risk treatment;

provide the basis for control assurance; and

satisfy corporate governance requirements.

The following information for each risk identified will be kept in a risk register:

a description of the risk;

the name of the risk owner;

the causes;

the nature and extent of the potential consequences associated with the risk,

normally in terms of the objectives affected;

the existing controls;

the name(s) of the control owner(s);

the Risk Control Effectiveness;

the current risk rating taking account of existing controls

the Potential Maximum Consequence;

additional treatment actions required to further control risk to an acceptable level task owner and due date;

To capture the results of the risk assessment workshop facilitators can use either Cura, the Appendix 1 Template #6 and #7, an appropriate MS Excel spreadsheet risk register or MS Word table.

Ultimately, all risk information for Risk Assessment Levels 4 and 5 will be stored in the Xstrata Coal Cura Risk Management Information System. An exception for Broad Brush / Baseline Risk Assessments may be allowed.

Governance reporting of all significant risks to the Xstrata Coal Audit Committee occurs three times a year and comprises reports for Xstrata Coal that contain, but are not limited to, information about the following:

Risk Management Plan and Progress;

Outstanding Risk Treatment Plans;

Performance against specified performance measures;

Risk Assurance Profile; and

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Significant changes to risks and details of tasks completed and outstanding since the last report.

Each quarter, Divisions shall ensure that Risk Registers, Risk Treatment Plans and Risk Management Plans maintained in Cura are up to date so as to permit accurate reporting

to the Xstrata Coal Audit and Sustainable Development Committees.

Xstrata Coal will specify performance measures and targets to be achieved across the Business Unit for risk management and for achieving compliance with the Xstrata Coal Risk & Change Management Policy and Risk & Change Management Standard. Divisions will be required to measure and report progress against these performance measures.

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3.2 Risk Management Plans

Each Division, Operation and Project within Xstrata Coal shall develop, implement and maintain a suitable Risk Management Plan.

A Risk Management Plan shall contain:

Specific actions, tasks and measures to be adopted that will further risk management within the business, operation or project concerned and to comply with the Xstrata Coal Risk & Change Management Policy and Standard.

A timetable for implementation; and

Details of the mechanism for and frequency of review of the status of the Risk Management Plan.

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3.3 Management of Change

The change management process is intended to consider the implication of any significant change in the Xstrata Coal Business Unit including internal and external contexts. A decision, change or event is significant if it could potentially have a material

impact on the achievement of objectives. These can include, but are not limited to:

Reform to relevant legislation, standards, codes and additional external requirements;

Financial and market impacts;

Changes in community expectations;

Changes to the mine plan due to a change in mining conditions;

Introduction of new technology and knowledge about processes;

Restructuring and organisational changes;

Procedure or working method changes;

Shutdowns;

Life cycle changes;

Public opinion;

Culture; and

Results from consultation with stakeholders.

Where change is anticipated, accountabilities will be clearly defined and built into the work process approval levels to manage the change. For unplanned changes which fall outside of an individual‟s accountabilities, the affected area will implement a change management process as detailed in this section:

Divisions shall develop procedures and tools to apply the above process and the Risk Management Process shall follow that designated elsewhere in this Standard.

The person who intends to make a significant decision or detects or initiates the

significant change is responsible for initiating the risk assessment.

3.31 Temporary or emergency changes

In certain circumstances due to unplanned events, changes may be necessary without following the formal Change Management Process in order to protect the business, personnel, the environment and/or the community or facility integrity. In such circumstances a basic risk assessment is still required together with documentation of

changes made during the emergency event. As soon as practicable after the change a full risk assessment following the process outlined in this Standard shall be conducted.

3.32 Monitoring and reviewing the change

The operation will monitor the outcomes of the change and the necessary risk treatment during implementation and after the change is complete. After the change has been put

1

Identify the change

3

Approve the change subject to

risk treatment

2

Assess the risks associated

with the change and develop a

risk treatment plan

4 Communicate

and implement the change

and the risk treatment actions

5 Monitor and

evaluate the change and risk

treatment plan

6 Document

the change

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in place, the operation shall evaluate if original intentions were met and if the change is a safe and effective solution.

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4. DEFINITIONS

TERM/ABBREVIATION DEFINITION

ALARA As Low As Reasonably Achievable. This implies technical achievability within the bounds of reasonableness.

ALARP As Low As Reasonably Practicable. A tolerable risk that implies that the advantages of further risk reduction are outweighed by the disadvantages (eg costs).

Assurance Assurance is a process that provides confidence that objectives will be achieved with a tolerable level of residual risk.

Broad Brush (BBRA) / Baseline Risk Assessment

Generally used to refer to a whole of mine risk assessment (refer to Appendix 3).

Cause Something that gives rise to or creates a risk or an event.

Consequences The outcome of an event affecting objectives.

Control Processes, policies, devices, practices or other devices that act to modify risk.

Control assessment The periodic and systematic review of processes to demonstrate that controls are still effective and appropriate.

Control owner The person nominated as accountable for the assurance of the control to ensure that both the design and the

operation of the control are effective. Control owners names are recorded in risk registers.

Control Self Assessment The planned, periodic review by Management of work processes, procedures and systems to demonstrate that the risk controls are still effective and appropriate. The review should focus on opportunities for improvement with existing work processes; procedures and systems and with the risk controls.

Cost The direct or indirect investment or loss of money, time, labour, disruption, goodwill, political, operational continuity or other intangibles accompanying the management of risk.

Cost Benefit Analysis An objective assessment comparing all the costs of treating a risk against all the benefits from the residual risk.

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CURA The database operated by Xstrata that holds risk management information including risk registers, risk

treatment plans and risk management plans.

Event An occurrence or change of a particular set of circumstances.

Expected Consequence The most likely consequence taking into account existing controls, their adequacy and effectiveness.

Frequency A measure of the number of occurrences per unit time.

Hazard Anything (including work practices or procedures) that has the potential to harm the health and safety of a person. (Occupational Health and Safety Regulation 2001 (NSW);

A thing or situation with potential to cause injury or illness to a person. (Coal Mining Health and Safety Act 1999 (Qld)).

HAZOP Hazard and Operability Study. Now a generally used terms for a guideword based risk identification study of any system including part of an organisation or a procedure.

Likelihood The chance of something happening, whether defined, measured or determined objectively or subjectively, qualitatively or quantitatively, and described using general terms or mathematically.

Material impact Significant change with ≥10% effect on the Financial Impact or Investment Return or a Consequence Rating of 4 or above according to the XC Risk & Change Management Standard Table 4: Consequence Criteria. Where the effect of the Significant Change is between 5% and 10% of the Financial impact or Investment Return, a subjective assessment of the significant change should be made to determine if it is a Material Impact.

Material Risk A risk, when considered in relation to the objectives of the organisation, represents a significant Potential Maximum Consequence. A risk where the residual ranking has been determined to be ≥ 10 according to the XC Risk & Change Management Standard Table 5: Risk Matrix.

Monitor To check, supervise, observe critically or measure the progress of an activity, action or system on a regular basis in order to identify change from the performance level required or expected.

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Precautionary Principle Active management of identified risks without necessarily requiring scientific consensus about the potential for the

risk to materialise before the action is taken.

Principal Hazard A hazard with the potential to cause multiple fatalities (Coal Mining Health and Safety Act 1999 (Qld)).

Probability The chance of occurrence per action, operation or opportunity. Expressed as a number between 0 and 1,

with no units and not time related.

Potential Maximum Consequence

The total plausible maximum impact on Xstrata Coal Business Unit, its Divisions, its Operations or its Projects arising from a risk without regard to Controls.

Residual risk The level of risk remaining after risk treatment.

Risk The effect of uncertainty on objectives:

An effect is a deviation from the expected- positive and/or negative.

Objectives can have different aspects (such as financial, health & safety,, and environmental goals) and can apply at different levels (such as strategic, organisation-wide, project, product and process).

Risk is often characterised by reference to potential events and consequences, or a combination of these.

Risk is often expressed in terms of a combination of the consequences of an event (including changes in circumstances) and the associated likelihood of occurrence.

Uncertainty is the state, even partial, of deficiency of information related to, understanding or knowledge of an event, its consequence, or likelihood.

Risk avoidance An informed decision not to become involved in, or withdraw from, an activity that gives rise to the risk.

Risk analysis the process to comprehend the nature of risk and to determine the level of risk. It provides the basis for risk evaluation and decisions about risk treatment.

Risk assessment The overall process of risk identification, risk analysis and risk evaluation.

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Term/Abbreviation Definition

Risk Control Effectiveness (RCE)

A relative assessment of actual level of control that is currently present and effective compared with that which is reasonably achievable and practicable for a particular risk.

Risk criteria Terms of reference by which the significance of risk is evaluated.

Risk evaluation The process of comparing the results of risk analysis

against given risk criteria to determine whether the risk and/or its magnitude is acceptable or tolerable.

Risk identification The process of finding, recognising and describing risks.

Risk Management Co-ordinated activities to direct and control an organisation with regard to risk.

Risk & Change Management Framework

Set of elements of Xstrata Coal‟s management system that provide the foundations and organisational arrangements for designing, implementing, monitoring, reviewing and continually improving risk management throughout the Xstrata Coal Business Unit.

Risk Management Plan The scheme within the Risk Management Framework adopted by a project, Business Unit or by Xstrata Coal that specifies the approach, the management components and resources to be applied to satisfy the requirements of the Risk Management Policy and the Risk & Change Management Standard.

Risk owner The authorised and accountable person nominated to monitor and review a risk on a periodic basis or as part of the management of change. Risk owners names are recorded in risk registers.

Risk register A collection of risk information that defines a risk profile.

Risk retention Acceptance of the burden of loss or gain for a risk.

Risk sharing Sharing with another party the burden of loss or gain for a risk.

Risk treatment The process of selection and implementation of measures to modify risk.

Risk Treatment Plan Documents the risk treatment actions to be taken. Includes details of separate tasks, task owners and completing dates.

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Term/Abbreviation Definition

Root cause The underlying cause of an event or source of risk that if rectified will prevent the recurrence of not just the event or risk with those exact circumstances, but many others with similar root causes. When applied to successes it can elicit the actions required to emulate and repeat the success.

Root cause analysis Root cause analysis is the systematic process of learning from events or incidents to identify the underlying causes of the event or source of risk.

Significant decision, change or event

Something that can have a material impact on achievement of objectives.

SWIFT Structured what-if. A form of advanced facilitated risk identification study.

Task owner The person nominated as accountable for the completion of a risk treatment action.

WRAC Workplace Risk Assessment and Control.

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5. ACCOUNTABILITIES

Role Accountabilities for this document

Chief Executive Set risk management strategic direction across

the global operations; Monitor and evaluate reports on the

implementation of the Risk & Change Management Policy, Standard, strategy and the risk management performance and governance on the global coal business level; and

Report to EXCO on key global coal risk issues.

Chief Financial Officer Participate in the development and integration

of risk management plan into business planning processes;

Resource corporate Risk Management function and integrate the function with other risk management activities; and

Report to Coal Audit Committee on key global risk issues.

Group Executive – Corporate Affairs & Sustainable Development

Participate in the development and integration of risk management plan into business planning processes, specifically within Sustainable Development;

Report to Sustainable Development committee on key global risk issues with relevance to SD; and

Promote the Risk & Change Management Policy, Standard and strategic direction across the global operations.

Chief Development Officer

Promote the Risk & Change Management Policy, Standard and strategic direction across the global operations;

Implement appropriate Risk Management performance measurement systems;

Lead inter-Divisional activities including benchmarking, workshops and skill interchanges; and

Report to Chief Executive and Chief Financial Officer and Risk Committee on key global coal

risk issues.

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Role Accountabilities

Chief Operating Officers Lead the development of Divisional Risk

Management plans to align with the Xstrata Coal Risk Management Framework and

strategy; Provide strategic leadership and facilitation of

optimal outcomes in achievement of objectives for business planning processes through effective risk management;

Monitor and evaluate risk reporting from various Divisional areas on the implementation of the Risk & Change Management Policy, Standard, strategy performance and governance;

Resource the Division to meet the Divisional Risk Management plan; and

Report to the Chief Executive and the Risk Committee on key strategic divisional risks.

XC General Managers Implement and maintain the Risk & Change

Management Policy, Standard and strategy within their various areas of responsibility;

Monitor the effectiveness of the Risk/Control Management and treatment plans to ensure accurate and effective reporting of risk issues; and

Report to CE, CFO and CDO on key risk issues.

CBU Risk Champion Assist with development, implementation and

maintenance of a risk management system which promotes timely identification, proper understanding and effective management of significant risks and accurate and meaningful reporting of Risk/control Management status within the global coal business;

Co-ordination of risk management related reporting to Boards, Exco and Audit Committee;

Facilitation of risk assessment workshops; Guiding management in driving and embedding

risk management practices; Facilitating relevant training in risk

management processes and the use of related tools;

Engaging in regular, structured communication with the Head of Internal Audit and other CBU risk champions to ensure consistency of approach across all commodity Business Units; and

Engaging with Divisional Risk Champions to ensure continual progress on the Risk Management Plan and advise on issues as and when required.

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Role Accountabilities

XC Project Risk Champion

Assist with development, implementation and maintenance of a project risk management system which promotes timely identification,

proper understanding and effective management of significant risks and accurate and meaningful reporting of Risk/control management status within the global coal business;

Facilitation of risk assessment workshops; Assisting CBU Risk Champion in driving and

embedding project risk management practices; and

Facilitating relevant training in project risk management processes and the use of related tools.

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6. REFERENCES

6.1 With Xstrata plc SD Standards

SD Standard 5 Risk & Change Management

SD Standard 6 Catastrophic Hazards

SD Standard 13 Life Cycle Management – Projects and Operations

SD Standard 14 Product Stewardship

6.2 With International Standards

ISO 31000:2009 Risk Management – Principles and guidelines

IEC Guide 73:2009 Risk Management - Vocabulary

6.3 With Australian/New Zealand Standards

AS/NZS ISO 31000:2009 Risk Management – Principles and guidelines

IEC Guide 73:2009

6.4 With industry documents

International Council on Mining & Metals – “Leadership Matters – The elimination of fatalities”

National Minerals Industry Risk Assessment Guidelines

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7. APPENDICES

7.1 Appendix 1—Risk Management Templates

# Title Used for

1 Stakeholder analysis To determine the stakeholders, their needs and communication needs

2 Risk Assessment Description & Objectives

Defining and recording the risk assessment outcomes and objectives

3 External Context To record the external issues and their implications for the process under review

4 Internal Context To record the internal issues and their implications for the process under review

5 Key element structure To give the breakdown structure of the process that will be followed in the analysis

6 Risk form To record information about one risk per page

7 Risk register To hold information on all risks that are identified and analysed

8 Risk Treatment Plan The detailed plan for risk treatment

9 Risk Treatment Options

Analysis

To allow different options for treatment to be compared

so that the best treatment can be decided upon.

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Template 1 Stakeholder Analysis

Risk Assessment: Created by:

Date:

Reviewed by:

Date:

Stakeholders Their objectives Communication needs

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Template 2 Risk Assessment Description and Objectives


Date:

Reviewed by:

Date:

Risk Assessment Description:

Our Objectives:

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Template 3: External Context


Date:

Reviewed by:

Date:

External Factor Implications

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Template 4 Internal Context


Date:

Reviewed by:

Date:

Internal Factor Implications

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Template 5 Key Element Structure


Date:

Reviewed by:

Date:

Number Name Description Ref

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Template 6 Risk Form

Risk Identification (what, where, when and how)

No. Risk (source of uncertainty)

Consequence (nature and extent) Category

(from cause)

something occurs… leading to…

Risk Owner:

Causes Controls (existing) Further treatment

(actions)

Risk Analysis (with existing controls – Current Risk )

Consequence

rating Likelihood

rating

Current Risk

Rating

PMC

Rating basis

Risk

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Template 7 Risk Register

#

Risk

Something occurs

Risk Owner

Consequences

leading to…

Causes

caused by…

Cons. rating

Like rating

Current Risk

Rating

Controls

controlled by…

RCE

Pot Max Cons ($m)

Treatment actions

1

2

3

4

5

6

7

8

9

Electronic Version located at:

Subject: Facilitated by: Present: Date

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Template 8 Risk Treatment Plan

Risk Assessment:

Risk:

Created by:

Date:

Reviewed by:

Date:

Description of risk:

Tasks:

Resources required:

Responsibility:

Timing:

Reporting:

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Template 9 Risk Treatment Option Analysis

Risk Assessment:

Risk:

Created by:

Date:

Reviewed by:

Date:

Option Benefits Costs Conclusion

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7.2 Appendix 2— Considering the Design of Controls when Evaluating the Effectiveness of Risk Treatment Plans

When implementing the controls as part of Risk Treatment plans either the controls are effective or they can reduce the level of risk to ALARP or ALARA. In addition, a cost benefit analysis is performed as the organisation may be better served by discontinuing the action.

Using the Control Design Effectiveness Method (CDEM) the effectiveness of a proposed control is determined by the following steps:

1. Assess the Quality of the control by estimating the Overall Impact of the control:

(i) A: 80-100% of the time;

(ii) B: 50-80% of the time;

(iii) C: 30-50% of the time; or

(iv) D: less than 30% of the time

Against

(i) Availability;

(i) Reliability; and

(ii) Effectiveness.

The overall impact (average score) represents the overall quality of the safety control as

shown in Table 9 below:

Table 9: Control Design Effectiveness Calculation

2. Identify the type of control based on the hierarchy of controls (shown in Table 8 of the Standard) and plot the overall quality from step 1 against the type of safety control giving a colour based ranking as shown in Table 10 below.

3. The more “Green” controls the better. The absence of green controls means that there is a need to review the controls that are proposed and seek to improve them by changing the type of control or its effectiveness.

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Table 10: Control Design Effectiveness Matrix

Overall Impact

A

80%=>

B

50-80%

C

30-50%

D

<30%

Typ

e o

f co

ntr

ol

1 Elimination N/A N/A N/A

2 Substitution

3 Isolation

4 Engineering

5 Administration

- Procedures

6 Administration - Training

7 PPE

Control design - likely to be appropriate

Control design - may require enhancement

Control design - likely to require enhancement

Quality –

The control will meet requirements:

A - Equal or > 80% of time

B – 50 to 80% of time

C – 30 to 50% of time

D – Less than 30% of time

Legend:

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7.3 Appendix 3 — Guideline for Application of Mandatory Risk Assessments – Broad Brush/Baseline, Life of Mine Planning

and Business Planning Processes

OVERVIEW

This guideline identifies specific requirements for certain risk assessments which are mandatory for operations across the Xstrata Coal Business Unit.

The Xstrata Coal Risk and Change Management Standard specifies a range of risk

assessment types which, depending on the Risk Assessment being performed, determine the way in which the risk assessment should be conducted – Xstrata Coal Risk and Change Management Standard - Table 2.

Data for initial Risk Assessments for Level 3, 4 and 5 Risk Assessment Types should be captured utilising the Xstrata Coal Risk Assessment Template in Appendix 4 which is based on the Workplace Risk Assessment and Control (“WRAC”) process and will record the necessary data fields.

There are other risk assessment tools available for an Operation to use. These include Bow Tie, Failure Modes Effects and Analysis (FMEA), HAZOP and may be used as a precursor to using the Xstrata Coal Template, or for further analysis of risks.

A description of the specified Level 4 risk assessment types and their purpose, scope and timing is listed below:

1. BROAD BRUSH/BASELINE RISK ASSESSMENT

PURPOSE

The purpose of the Broad Brush Risk Assessment (BBRA) or Baseline Risk Assessment is

to identify significant Health and Safety, Environment and Community (HSEC) implications, and the controls necessary to effectively manage them. The BBRA / Baseline Risk Assessment will also be used to: develop, review and improve the adequacy of Health, Safety, Environment and

Community components of an Operation‟s Sustainable Development Management System;

provide a basis to determine how the identified risks are adequately prioritised and managed;

meet the statutory requirements of legislation and regulation, as they relate to Health, Safety, Environment and Community;

identify those processes requiring a more detailed level of risk assessment due to the potential level of risk;

provide input for significant risks forming part of the Business Planning (Budget) process;

create a register of significant risks with HSEC implications at the operation.

SCOPE

a high level review of all activities and potential impacts at the Operation (key processes, not to task level),

identification of risks which have impacts on Health, Safety, the Environment and/or the Community (HSEC) are the principal areas for consideration.

identification of those hazards that represent significant risks to the operation.

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identification of controls, including their adequacy and effectiveness, to manage the risks without delving into substantial detail (eg: existence of a Safety Management Plan without detailing the contents).

conducted by an XC approved second party facilitator with stakeholder participants including risk specialists in accordance with the Xstrata Coal Risk and Change Management Standard Table 2: “Guideline for Selecting Risk Assessment Type and Type of Facilitation".

Note:

To conduct level 3 Risk assessments, Operations will be required to complete a more

detailed analysis down to task level (or a specific location or machine) for significant risks and to meet legislative requirements (e.g. for Principle or Major Hazards).

This assessment supports, but is not considered to be part of the BBRA / Baseline Risk Assessment. The same template as used for a BBRA / Baseline Risk Assessment should be used however the title of the risk assessment shall be a Process or Equipment risk assessment.

TIMING

The BBRA / Baseline Risk Assessment shall be conducted at least once every five (5) years, or when any major change to the Operation‟s Risk Profile occurs.

The BBRA / Baseline Risk Assessment register shall be reviewed annually prior to the completion of the Business Planning Risk Assessment.

KEY ELEMENTS

The BBRA / Baseline Risk Assessment should be structured to follow the work processes of the Operation and will cover at least the following „Key Elements‟:

Open Cut Mines

Principal Process Major Process Key Elements

Mining Mine Planning / Approval Mine Planning / Approval

Site Preparation Clearing Land

Topsoil Removal

Waste Mining Drill and Blast

Waste Removal

Waste Dump Maintenance

Coal Mining Coal Mining

Mine Rehabilitation Mine Rehabilitation

Engineering Engineering Workshop

Field

Other Other Other

Key Geographic Areas Not covered by Process Key Geographic Areas*

*Key Geographic Areas-to cover items such as roads, dams, major structures, adjacent neighbour properties etc that are not covered by the process.

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CHPP


Coal Handling, Processing & Despatch

Coal Handling & Processing

Raw Coal Handling

Coal Processing

Reject Handling (Discard)

Tailings Disposal and Dams

Coal Dispatch Coal Dispatch

Engineering Engineering Engineering/Maintenance

Longwall Underground Mines


Mining (including Engineering) Mine Planning / Approval Mine Planning / Approval

Coal Mining Development **

Extraction **

Outbye **


Surface Activities Surface **

Other



** Both Operations and Engineering to be covered eg: Outbye - Operations & Outbye - Engineering **

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Room (Bord) and Pillar Underground Mines


Mining (including Engineering) Mine Planning / Approval Mine Planning / Approval

Coal Mining Cutting Coal **

Bolting (Roof/Ribs) **

Loading & Hauling coal **

Pillar Extraction **

Outbye **


Surface Activities Surface **

Other



** Both Operations and Engineering to be covered eg: Outbye - Operations & Outbye - Engineering **

2. LIFE OF MINE

PURPOSE

To guide Xstrata Coal Divisions (and contractors engaged by Xstrata Coal Divisions) in undertaking Life of Mine (LOM) Risk Assessments to identify and mitigate the key LOM Risks to maximising the Division‟s net present value (NPV).

SCOPE

The LOM Risk Assessment will examine the LOM Plan as a whole to systematically identify risks, existing controls and/or develop appropriate risk treatment plans related to the LOM Plan.

This includes:

a high level review of all activities and potential impacts at an Operation (key processes, not to task level),

identification of risks, causes and consequences to the LOM Plan. identification of controls, including their adequacy and effectiveness, to manage the

risks without delving into the detail. Risk assessment being conducted by an XC approved second party facilitator with

stakeholder participants including risk specialists in accordance with the Xstrata

Coal Risk and Change Management Standard Table 2: “Guideline for Selecting Risk Assessment Type and Type of Facilitation".

the assigning of a responsible person to be accountable for preparing and reviewing the LOM Risk Assessment.

ensuring that the LOM Risk Assessment forms part of the LOM Plan Documentation that sets out the key details of the LOM Plan.

Xstrata Coal


XC RI STD 0001


Status:

Approved

Version: 1.0


Review: 30/08/2013

Page 48 of

50


TIMING

The LOM Risk Assessment shall be conducted at least once every five (5) years, or

when any major change to the LOM Plan occurs. The LOM Risk Assessment shall be reviewed annually prior to the completion of the

Business Planning Risk Assessment.

KEY ELEMENTS

The first step in undertaking a LOM Risk Assessment is to identify and table the potential threats to the LOM Plan. Because each operation is unique, a prescriptive and exhaustive list of potential risks cannot be provided. However, as a minimum, each operation should ensure that consideration has been given to the following „Key Elements‟:

Key Elements Key Elements

Geology; Capital infrastructure;

Geotechnical; Supporting services;

Coal quality; Environmental conditions;

Mine plan & scheduling; Community impacts;

Mining constraints & known hazards; Regulatory approvals;

Hydrology & water management; Land access;

Ventilation & gas management; Adjoining leases & other projects;

Equipment productivities; Employment agreements (EAs);

Equipment availability & utilisation; Contractor relations; and

Equipment procurement; Mine closure.

3. BUSINESS PLANNING RISK ASSESMENT

PURPOSE

To guide the Xstrata Coal Business Unit (and contractors engaged by Xstrata Coal) in

undertaking Business Planning Risk Assessments to identify the Key Budget Risks to realising the Operation‟s Objectives.

SCOPE

The Business Planning Risk Assessment will examine the Budget Plan as a whole to systematically identify risks to the Budget Plan and to identify existing controls and/or develop appropriate risk treatment plans. It shall include:

a review of activities and potential impacts at the Division or Operation (key processes, not to task level),

identification of risks to the Budget Plan as the principal areas for which consequences and their likelihoods are considered.

identification of existing controls, including their adequacy and effectiveness, to manage the risks without delving into the detail.

being conducted by an XC approved second party facilitator with stakeholder participants including risk specialists in accordance with XC Risk and Change

Xstrata Coal


XC RI STD 0001


Status:

Approved

Version: 1.0


Review: 30/08/2013

Page 49 of

50


Management Standard Table 2: “Guideline for Selecting Risk Assessment Type and Type of Facilitation".

assignment of responsibility for ensuring preparation and review of the Business Planning Risk Assessment.

ensuring that the Business Planning Risk Assessment shall form part of the Budget Plan Documentation that sets out the key details of the Budget Plan.

TIMING

The annual Business Planning Risk Assessment process shall commence with a comprehensive review of the existing Business Planning Risk Assessment.

It shall be subject to regular update throughout the year.

KEY ELEMENTS

Each operation should ensure that consideration has been given to the following „Key Elements‟ as a minimum:

Key Elements Key Elements

Communications Legal & Compliance

Financial & Taxation Marketing & Selling

HSEC Operational

Information Technology People (HR)

Strategic

Xstrata Coal


XC RI STD 0001


Status:

Approved

Version: 1.0


Review: 30/08/2013

Page 50 of

50


8. CONTROL AND REVISION HISTORY

8.1 Document information

Property Value

Approved by Peter Freyberg

Document Owner Rosemary Summers

Effective Date 30/08/2010

Keywords

Risk, Risk & Change Management, Risk Management, Control, Treatment

Plan

For a complete list of document properties, select View Properties from the document‟s context menu on the intranet.

8.2 Revisions

Version Date reviewed

Review team

(consultation) Nature of the amendment

1

2

3