Our approach to social impact assessment is to identify potential impacts early and conduct monitoring on an ongoing basis through formal impact assessments, consultation, engagement and surveys.

Formal environmental and social impact assessments (ESIAs) are undertaken in the initial stages of any new project or significant expansion of an existing project. ESIAs identify potential impacts of our activities on the local community, including loss of assets (individual or communal), whether or not involuntary resettlement is likely to be required, the presence of minority or vulnerable groups and key community organisations. Through these ESIAs we establish local contexts, key stakeholders, development priorities and processes, consultation mechanisms and incorporate local and traditional knowledge into assessment of potential impacts.

During the reporting period ESIAs were undertaken for a potential project in the Nunavut region of Canada and an expansion of the Sepon operation in Laos.

Potential socio-economic impacts of the Izok and High Lake mines on the Inuit communities of the Kitikmeot region of Nunavut were researched as part of the Canadaian ESIA. A key requirement of the ESIA was the incorporation of Traditional Knowledge in the assessment of the potential impacts of the project. Traditional Knowledge is accumulated knowledge of natural ecosystems, based in the spiritual, health, culture and language of the Inuit people that is passed between successive generations. Elders were recruited to contribute to the ESIA from communities most immediately impacted by the proposed project.

There were two levels of community engagement during the ESIA process. The first, an introduction to the project where OZ Minerals and community elders share information regarding the project during a visit to the proposed mine site. The process of gathering traditional knowledge began after this visit. To ensure traditional knowledge studies are carried out consistently across the Nunavut region, an agreement outlining the terms of the study was signed with the Kitikmoet Inuit Association (KIA). A questionnaire was then used to gather the information from selected elders.

The next level of engagement was with individuals within the communities, through community visits, open houses and attendance of trade shows put on by the communities. This information was to be provided in the final EIS, but the project is currently deferred.

The Sepon ESIA assessed the potential impacts of the Thengkham expansion project, which will significantly increase the operations footprint and the number of villages immediately impacted. As part of this process, consultation was undertaken with local communities to in establish their past experiences of the mine’s impact and likely future impacts. Baseline studies of health and nutrition were also undertaken. Given the widespread nature of mineral deposits in the Sepon area, ESIA extension surveys occur every eighteen months on average. The Thengkham ESIA was finalised in early 2009.

During 2008 OZ Minerals developed a new social impact assessment process for exploration activities and began trialling it in Cambodia. The process involves conducting a baseline Initial Assessment of Social Risks (IASR) prior to any physical activity or land disturbance in a new exploration area (i.e., any area not previously the site of exploration). It applies whether the new area is a greenfield site, an extension of existing exploration sites or OZ Minerals operations. The IASR includes consideration of all social variables relevant to an exploration site including, but not limited to:

• Local government
• Population, including estimates of population numbers and ethnicity • General land use and tenure
• The presence of other mining activities including small-scale mining in or adjacent to the exploration area
• Local environmental sensitivities
• General issues and concerns in the local communities, including communities outside the immediate exploration area but immediately downstream (in the case of activities that might impact on watercourses) or down road thereof (in the case of activities with restricted road access)
• Any special characteristics of the prospective mineral body (such as near surface visible gold) that might be reasonably expected to pose community issues at a later stage

Some of the potential impacts of our activities, as identified through impact assessments, include:

Positive

• Employment and training opportunities
• Local and Indigenous business creation
• Improved infrastructure and access to essential services
• Increased income
• Increased housing values
• UXO clearance (Sepon only)

Negative

• Increased wealth gap between employees and other community members
• Increased traffic
• Population influx
• Skilled community members drawn from community to mine or opportunities elsewhere
• Loss of agricultural land and food insecurity
• Builds resentment and envy in communities outside influence of mine
• Opens up previously undisturbed areas with exploration tracks.

Ongoing monitoring of social impacts, including socio-economic contributions, assists us understand evolving community needs and expectations. An important aspect of managing community expectations is the recognition that social perceptions do not remain fixed, but change as society’s views and opinions evolve. Community needs change over time. Young people have different perceptions of their needs from those of their elders who may have been intimately involved in the initial establishment of a mining operation. Hence the need for annual social risk analysis. Moreover, no plan can hope to accurately and completely forecast what needs might be in the future or what unexpected changes might occur.

Currently OZ Minerals community satisfaction measures are largely informal, with the exception of surveys at Sepon (bi-annual Household Survey), Rosebery (Stakeholder Perception Survey), Century (Stakeholder Perception Survey) and Martabe (Community Perception Survey).

Sepon monitors community health, in-migration and a variety of other measures through a bi-annual household survey. In 2008 additional monitoring was undertaken in the form of a census of the GPDA, for recruitment purposes. every two years an external and independent consultant undertakes a household survey of thirty four villages (total population 8,500). The survey gathers not only quantitative information concerning population growth, food sources, household possessions and income but also opinions relating to change in the area and the operations of the mine.

In future, Perception Surveys will increasingly become a significant component of OZ Minerals’ community engagement program and will be conducted across the business on a regular basis, at least once in every two years.

Other research and monitoring of our socio-economic impacts during the reporting period has included the following activities:

• The Centre for Economic Research in Canberra has undertaken its third (since 2001) economic assessment of the project's impact on Laos
• During 2008 Sepon undertook an internal review of educational facilities in the Savannakhet District, with a view to developing educational investment in the next Sepon Development Trust Fund five year plan
• Daily contact with the community by CR and other staff gives detailed, if informal insights into community concerns
• In 2008 additional monitoring was undertaken in the form of a census of the GPDA, for recruitment purposes
• In addition there were also some parameters on community perception about the company within the questionnaires of the University of North Sumatra's Socio-Economic Baseline Survey conducted in mid 2008

Information collected though social impact assessment activities feeds into ongoing community engagement and investment initiatives/programs.