quellaveco: asustainable project

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QUELLAVECO: A SUSTAINABLE PROJECTTom McCulley, CEOPDAC – Toronto, March 2019

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CONTENTS1. Generating trust for a long-term commitment

2. Peru: An attractive mining jurisdiction

3. Long-term relationship with Peru

4. Project location

5. Contribution to Peru

6. Our Global Sustainability Pillars

7. Committed to working with local communities

8. Dialogue Table commitment progress

9. Major permits in place

10.Local employment and local procurement

11.Social development aligned with Sustainable Development Goals

12.Delivering improved quality and volume of water

13.Quellaveco on track

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GENERATING TRUST FOR A LONG-TERM COMMITMENT

We

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Innovative and sustainable water strategy for Quellaveco to provide benefit to communities

Closely aligned to United Nations Sustainable Development Goals and Global Compact and Voluntary Principles

A collaborative and transparent relationship with regional and national Government

Safety: Our first priority

Established history of respectful and responsible behaviour to communities

A strategic partner for the development vision of Moquegua

Committed to an impactful and sustainable operation, contributing to a better future for Moquegua and Peru

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PERU – AN ATTRACTIVE MINING JURISDICTION

Quellaveco

The world’s second largest producer of copper, with mining accounting for ~10% of GDP

Peru has become increasingly stable over the past two decades

• Strong and sustained economic growth• Until 2015, gross domestic product

increased on average by 5.3%• In 2018 gross domestic product is

expected to grow ~4%• Robust fiscal policy and improved

security• The mining industry in Peru is well-

established, with a clear policy andregulatory framework

• Peru ranked 14th in Frasier Institute2018 Investment Attractiveness Index(19th in 2017)

• Major global players have large-scaleinvestments in Peru, many spanningdecades

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PERU – AN ATTRACTIVE MINING JURISDICTION

• Fastest growing copper producing region in Peru• Hosts many of the world’s foremost mining

companies• Established infrastructure and skilled workforce• Clear policy and regulatory framework

Professionalism of Peru’s mining and promotion institutions facilitate investment

The south of Peru is an established mining location

Central government

• Government supports project execution, acknowledging importance to national economy

• Legislation supports mining

Regional / Local

government

• Expectant with the project

• Continuous engagement

Quellaveco Project supported by Central, Regional and Local government

Global mining

industry

• Government institutions clearly understand how volatile the mining industry can be

Building trust

• Government institutions participate actively in dialogue processes with local communities

• Follow-up on commitment fulfilment

Investmentpromotion

• Investment Tracking Group reactivated at the Ministry of Finance.

• Key to unlock bottlenecks

Ease of doing

business

• Early identification of potential obstacles to move forward with permits and authorisations

• Better planning to improve deadlines, with the same level of requirements

Social issues

• New Mining Management and Information Committees track commitment fulfilment and help prevent social unrest (due to non-compliance or unattended claims)

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1992Anglo American

purchase of Quellaveco

2012Mitsubishi acquires 18.1% stake of project from IFCDialogue Table completed

following 18 month processMain permits approved

2015FS for 127.5ktpd completed.All major permits approved.Independent Project Review

completed

2018FS updated. Investment

Assurance review successfulMitsubishi acquires

additional 21.9% stake of Quellaveco from AA plc

AA plc approves execution of project

LONG-TERM RELATIONSHIP WITH PERU

2010Pre-FS completed. 1st & 2nd

EIA amendments approved. Early-works initiated

Quellaveco: working in Peru for >25 years

2000First Feasibility Study (FS) for

64ktpd, and Environmental Impact Assessment (EIA) approved

2008FS revised for 91ktpd. New plant location / water source

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PROJECT LOCATION

Peru

Quellaveco

Lima

Quellaveco – Key statistics

Ove

rvie

w

Ownership:60%40%

Commodities: Copper (molybdenum by-product)

Mine: Open-pit, 1.3Bt Reserves, 0.57% TCu1

Workforce:~9,000 at peak construction~2,500 steady state operations

Con

stru

ctio

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Construction time: < 4 years from August 2018

Commissioning: First production 2022Ramp-up during 2023

Permitting: Key construction permits obtained

Capex: US$5.0-5.3bn

Ope

ratio

n

Throughput rate: 127.5ktpd

Production:~330ktpa average first five years~300ktpa average first 10 years

Reserve life: ~30 years

Located at ~3,500m above sea level in south of Peru, 34km from the city of Moquegua

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Quellaveco

Significant investment in water

infrastructure

CONTRIBUTION TO PERUAt national and local level

25,000 people to benefit from

Development Fund

US$0.3bn invested since project

approval (Aug-18)

Will deliver average ~300ktpa copper eq.

(first 10 years)

Canon & royalty income for Moquegua

will increase >50%

0.4% GDP growth during 2018 – 2019

InvestmentUS$5.0-5.3bn

>3,800 Moqueguan employees currently

working on the project

US$11m invested in education, health and

productive projects (2017 – 2018)

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OUR GLOBAL SUSTAINABILITY PILLARS

SOCIAL ENVIRONMENTAL

GOVERNANCE

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COMMITTED TO WORKING WITH LOCAL COMMUNITIES

31 Bodies from 3 different municipalities

26Agreements directly from the Dialogue Table

WaterSupply and optimal use of water resources

Environment Compliance and monitoring of environmental commitments

Local stakeholders Sustainable development projects

Dialogue Table focussed on three key areas… …with firm commitments

~$300mCommunity investment commitment over next 30 years, besides taxes and royalties

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GOOD PROGRESS BEING MADE AGAINST COMMITMENTS

WaterSupply and optimal use of water resources

Environment Compliance and monitoring of environmental commitments

Local stakeholders Sustainable development projects

No. of Commitments Fulfilled

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On Track

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-

Commitments During

Operation

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1

1

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Major Permits Water Licences

Permits Status

Environmental Impact Study

Beneficiation Concession

Mining Plan

Mining Closure Plan

Licences Status

Construction Water Authorisation

Operations Water Licence (grant on start of operations)

ALL MAJOR CONSTRUCTION PERMITS IN PLACE

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LOCAL EMPLOYMENT

95%

3,8645,371

Recruitment of Moqueguan candidates is prioritised, with all applications channelled through a dedicated regional labour office in Moquegua.

5,371

3,864

Local Non-local

95%

5%

Local employment Unskilled labour

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LOCAL PROCUREMENT

1,085Local businesses

have been identified as potential future

suppliers

721Local businesses benefitted from

our training programmes “Progresa

Moquegua” and “Emerge Perú”

303Local businesses supplied goods and services to the project in

2018

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• Economic productive development projects

• Projects to improve agricultural production

• Projects and programmes to prevent and reduce anaemia and malnutrition / Food safety

• Projects to improve education quality

• Projects on technology and innovation

• EMERGE Perú – Business Development Programme

SOCIAL DEVELOPMENT ALIGNED WITH UN’S SUSTAINABLE DEVELOPMENT GOALS

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DELIVERING IMPROVED QUALITY AND VOLUME OF WATER TO LOCAL COMMUNITIES

Water for operational phase to come from two sources in High Mountain region:

• 80% (18Mm3) from Titire River: unfit for human, livestock or agricultural use

• 20% (4Mm3) from Vizcachasreservoir:

• 60Mm3 capacity dam and reservoir under construction

• Operation will use only 4Mm3

p.a.• Will provide better quality and

volume of water to Moquegua and Tambo regions

• Water for the operation to be transported to site via 95km water pipeline.

Responsibly sourced water for operations

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QUELLAVECO ON-TRACK2018 achievements 2019 priorities

• Asana and Vizcachas river diversions complete

• Asana dam and tunnel complete• Main access road complete• Contracts and procurement significantly

progressed• Earthwork contracts awarded and

progressing on-site

• Substantially complete engineering• Complete earthworks in concentrator• First concrete at concentrator • Progress HME contracts and awards• Vizcachas dam• 95km water pipeline construction

Committed to working together to make Peru’s vision for mining a reality by 2030

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PHOTO GALLERY1.Anglo American - Safety Day

2.Asana Barrier

3.Asana River Tunnel

4.Aerial View - Quellaveco Site

5.Salveani Camp

6.Aerial View - Papajune Plant

7.Aerial View - Vizcachas Dam

8.Water Pond for Construction

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ANGLO AMERICAN - SAFETY DAY

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ASANA BARRIER

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ASANA RIVER TUNNEL

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AERIAL VIEW – QUELLAVECO SITE

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SALVEANI CAMP

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AREAL VIEW – PAPUJUNE PLANT

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AERIAL VIEW – VIZCACHAS DAM

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VIZCACHAS DAM SITE

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WATER POND FOR CONSTRUCTION

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THANK YOU