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FALCONBRIDGE LIMITED ENERGY INTENSITY IMPROVEMENT AND GREEN HOUSE GAS REDUCTION ACTION PLAN 2000 FOR SUBMISSION TO THE VOLUNTARY CHALLENGE REGISTRY 1999 RESULTS TABLE OF CONTENTS 1. Executive Summary 2. Organization Profile 3. Senior Management Support 3.1 Statement of Endorsement And Policies 3.2 Internal Practices and Management Systems 4. Base Year Quantification 4.1. Methodology 4.2. Quantification 5. Projection 5.1. Methodology 5.2. Quantification 6. Target Setting 6.1. Targets 6.2. Process for Target Review and Update 7. Measures to Achieve Targets 7.1 List of Key Activities / Projects 7.2 Estimated Impact of Activities / Projects 8. Results Achieved 8.1 Current Reporting Year 8.2 Interim Reporting Years 8.3 Verification 8.4 Offsets 9. Education, Training and Awareness 9.1 Our Corporate Response to Climate Change Issue 9.2 Climate Change and Our Employees 9.3 Climate Change and Our External Contacts 9.4 Our Public Education on Climate Change 2 p:\source files\2000\f\falconbridge\30oct00pl.doc 1. Executive Summary Falconbridge Limited is pleased to submit the Climate Change Action Plan for 20000 with 1999 Results. What follows is a summary of the highlights from this year’s report: ♦ Falconbridge Limited established an new corporation – wide energy intensity improvement target of 1% per year for the period from 1990 to 2005, as well as a Carbon Intensity improvement target of 0.5% per annum for the same period . These targets have been published in the 1999 Report on Sustainable Development which can accessed through the Falconbridge web-site at www.Falconbridge.com ♦ For the Canadian Divisions, the difference in the Energy Intensity ( MWH / Tonnes Production ) between 1990 and 1999, indicates an absolute improvement of 9.9 %. Over the period from 1990 to 1999, the energy intensity improvement rate was .26 %. per annum. At this rate, the projected absolute difference in energy intensity between 1990 and 2005 is a decrease of -11.46%. The updated target for the Canadian Operations is a 1% per year improvement in physical energy intensity for the period of 1990 to 2005. This translates to an absolute improvement of 15% by 2005 relative to 1990. ♦ The difference in the Carbon Intensity ( Tonnes Equivalent CO2 / Tonnes Production ) between 1990 and 1999, indicates an absolute improvement of 2.7 %. However, the rate of change in Carbon Intensity indicated by the trend line for the period from 1990 to 1999 indicates an increase of + .36% per annum. Therefore the projected Carbon Intensity in 2005 for the Canadian Divisions is expected to be - .56% relative to 1990. ♦ The absolute difference in CO2 Equivalent Emissions for the Canadian Divisions between 1990 and 1999 is + 16.4 %. Over the period from 1990 to 1999 the trend in CO2 Equivalent Emissions is a rate of increase of + 1.9% per annum. Therefore the CO2 Equivalent Emissions of the Canadian Divisions in 2005 is projected to be + 27.0 % above 1990 levels. ♦ In 1999 the Canadian Divisions implemented Energy Conservation projects that reduced energy consumption by 21 GigaWattHours. Warren Holmes, the Senior Vice-President of Canadian Mining became a director on the VCR Board of Directors and the Chairman of the CIPEC Executive Board. Lauri Gregg represented Canadian Mining in the Kyoto Issues Tables Process. Falconbridge Ltd. became a signatory to the Regional Municipality of Sudbury’s GHG Reduction Program. Falconbridge also participated in an Energy Efficiency Benchmarking Study and a GHG Cost Curve Analysis sponsored by NRCan. 3 p:\source files\2000\f\falconbridge\30oct00pl.doc Organization Profile Falconbridge Limited is an international, integrated base metals company committed to producing quality products for its customers. We are engaged in the exploration, development, mining, processing, and marketing of metals and minerals. Our primary Canadian products are nickel, copper, zinc, and cobalt. Other products include silver, gold, cadmium, indium, and sulphuric acid. The company also processes and recycles materials from other companies. Falconbridge has Canadian mining and mineral processing facilities in Sudbury (Sudbury Mining and Smelting Divisions), Timmins (Kidd Creek Divisions), and the Nunavik Region of Northern Quebec (Raglan). We are headquartered in Toronto and employ approximately 4000 people in Canada. Our Kidd Creek Divisions in Timmins produce approximately 120,000 tonnes of copper and 130,000 tonnes of zinc per year. Meanwhile, Sudbury/Raglan Divisions produce approximately 60,000 tonnes of nickel and 25,000 tonnes of copper per year. Falconbridge is committed to the Climate Change Voluntary Challenge program which allows industry to voluntarily participate in and contribute to Canada’s Climate Change Business Plan and Response to Kyoto. Our contributions include the following: improvements in energy efficiency, and process efficiency, as well as fuel switching and Emissions Trading. Results are reported directly to the Voluntary Challenge Registry and CIPEC (Canadian Industry Program for Energy Conservation). Falconbridge is committed to a 1% per annum energy intensity ( energy per unit output ) improvement target for the period of 1990 to 2005. Falconbridge achieved Gold Champion Level Reporter status from the VCR in 1999. . 4 p:\source files\2000\f\falconbridge\30oct00pl.doc 3. Senior Management Support Senior management support for the Climate Change Voluntary Challenge Program has existed since the late Frank Pickard, former Falconbridge Limited CEO participated as one of the business leaders and founding fathers of the voluntary initiative toward Climate Change. Each year Falconbridge has included a letter of commitment from either the CEO or the Senior Vice-President responsible for Environment . A Corporate Energy Management Policy has been developed, and in 1998 Energy was incorporated within the Corporate Sustainable Development Policy. 3.1 Signed Statement of Endorsement and Policies A letter of commitment signed by the Senior Vice President for Canadian Mine Operations and the Vice President Environment, as well as the Energy Management Policy, and the Sustainable Development Policy are included within this section of the 2000 Falconbridge Submission to the Voluntary Challenge Registry. 5 p:\source files\2000\f\falconbridge\30oct00pl.doc Mr. Robert A. Flemington President, Canada’s Climate Change Voluntary Challenge & Registry Inc. 116 Lisgar Street, Suite 500 Ottawa, Ontario K2P 0C2 Dear Mr. Flemington: Falconbridge Limited supports the Climate Change Voluntary Challenge and Registry Program as a mechanism with which we in industry can work voluntarily towards reductions in greenhouse gas emissions. Within the Issues Tables and Kyoto Response Process, Enhanced Voluntary Measures have been identified as a key contribution that Canadian industry can make to the national Climate Change Business Plan. Consequently, we are pleased to participate on the VCR Board of Directors, the MAC Energy Task Force, the CIPEC Executive Board, and the CIPEC Council as mining industry leaders. Falconbridge is continuing its efforts to engage its operations in the improvement of energy efficiency and the reduction of Green House Gas ( GHG ) emissions, as well as encouraging other companies in the mining industry to do the same. In 1999, we initiated a study to determine the feasibility of displacing a portion of the diesel-powered generation of electricity at our Raglan operations with wind power. Along with several members of the mining community we participated in an energy efficiency benchmarking process and a GHG Reduction Cost Curve Analysis. New targets for energy intensity and carbon intensity have been established for the 1990 to 2000 period. Annual results versus these targets, as well as absolute emission data are made public each year in our Report on Sustainable Development. All in all, activities related to energy efficiency improvement and GHG emissions reductions reached their highest level ever in 1999. Falconbridge is submitting its third VCR Action Plan Update containing 1999 results. . Again this year Falconbridge is striving to achieve Gold Champion Level Reporter status. In the 2000 Falconbridge Limited Action Plan with 1999 Results, the energy intensity 9 energy per unit output ) data, trend graphs and energy consumption reduction results have been updated with information from 1999. Action plans, and consumption reduction targets for 2000 have been included as well. The updated sections have been italicised for 6 p:\source files\2000\f\falconbridge\30oct00pl.doc easier identification. The trend analysis of estimated CO2 Equivalent emissions per unit of output for the period from 1990 to 1999 has also been included. Even though our focus is on specific energy intensity improvement as the most effective means to reduce GHG emissions, we feel it is important to quantify and track Carbon Intensity ( emissions per unit output ) as well as absolute GHG emissions in order to better describe our contributions to the Voluntary Challenge Program. As a result, we have established a rigorous GHG emissions inventory for each of our divisions. For the period from 1990 to 1999, the actions taken by the employees in the Canadian Divisions have resulted in a difference in the Energy Intensity between 1990 and 1999, that indicates an absolute improvement of 9.9 %. Over the period from 1990 to 1999, the energy intensity improvement rate was - .26 %. per annum. At this rate, the projected absolute difference in energy intensity between 1990 and 2005 is a decrease of - 11.46%. The updated target for the Canadian Operations is a 1% per year improvement in physical energy intensity for the period of 1990 to 2005. This translates to an absolute improvement of 15% by 2005 relative to 1990. We at Falconbridge are committed to participation in the Voluntary Challenge Program, as well as the national Climate Change Business Plan. Please feel free to contact our Director of Energy and Technical Services, Mr. Lauri Gregg, if you require more detailed information about the 2000 VCR Action Plan. Very truly yours, W. Warren Holmes Senior Vice President Canadian Mine Operations Robert Telewiak Vice President Environment 7 p:\source files\2000\f\falconbridge\30oct00pl.doc FALCONBRIDGE ENERGY MANAGEMENT POLICY Falconbridge Limited is committed to developing and implementing Energy Management Systems in order to continually improve operational energy efficiency, optimize energy procurement processes, and minimize environmental impacts. To meet these responsibilities, Falconbridge will: • Implement energy monitoring technology, energy information systems, energy awareness training, and operational assessment processes. • Identify and quantify the use of various forms of energy, analyze consumption patterns, establish reduction targets, and take action to improve energy intensity through continuous improvements, for all design projects and for all system modifications at existing operations. • Ensure the continuity of our business and preserve shareholder value by establishing strategic energy consumption improvement targets and by implementing energy procurement risk management strategies. • Inform and motivate employees at all levels of the organization to participate in energy consumption reducing actions and to communicate results to internal as well as external stakeholders. March 8 p:\source files\2000\f\falconbridge\30oct00pl.doc 1998 SUSTAINABLE DEVELOPMENT POLICY FALCONBRIDGE LIMITED Sustainable Development is the implementation of practices and policies that contribute to the well-being of the environment, economy and society to address the needs of customers, suppliers, shareholders, employees, government, the general public and the communities in which we operate, without compromising the ability of future generations to meet their own needs. Falconbridge is committed to sustainable development and will provide the resources necessary to: • design, construct, operate, decommission and re-assess its operations while promoting continual improvement in order to meet or surpass applicable environmental, health, hygiene, energy and safety regulations, laws and company standards; • implement risk management, pollution prevention and energy efficiency systems and conduct regular environmental, health, hygiene, safety and emergency response audits; • ensure that its activities are conducted in a responsible and ethical manner which will help maintain the long-term sustainability and aesthetic quality of its surroundings; • acquire scientific knowledge and technologies that can assist in continually improving the safe, efficient use of Falconbridge's processes and products; • promote the establishment of responsible standards through active participation with employees, governments and other stakeholders; • promote the safe use, reuse, recovery, recycling, transportation and disposal of Falconbridge products by informing and working with customers, suppliers, industry associations and government agencies; • facilitate dialogue with stakeholders in order to anticipate and address issues of regional and global sustainability that are relevant to its business; • foster the environmental, economic and social well-being of the communities in which it operates; • promote employee awareness of this policy and enhance their capabilities to implement its objectives; and • regularly communicate progress on this policy to interested stakeholders. These principles will guide Falconbridge’s actions as responsible business stewards, while serving the best interests of the natural environment upon which we are all dependent. Øyvind Hushovd President & CEO Robert Telewiak Vice President Environment March 1999 9 p:\source files\2000\f\falconbridge\30oct00pl.doc 3.2 Internal Practices and Management Systems Dealing with Energy Efficiency and Climate Change Falconbridge engages in energy management activities in order to improve productivity, to reduce the environmental impact of the by products from energy use, to reduce the cash flow out of the organization related to energy purchases, and to ensure that energy efficient technologies are installed in our mining and metallurgical process areas. Energy Management is a key focus in the efforts of Falconbridge to maintain a competitive position in the global market place. What follows is a summary of the components of the Energy Management System that have been implemented in the Canadian Divisions. • • • • • • • A corporate Energy Management Policy has been established and endorsed by the President and CEO, and Vice President, Environment. The need for improved energy efficiency is identified within the Corporate Sustainable Development Policy. Within the Sustainable Development Program targets are established for Energy Intensity Improvement, and Carbon Intensity Improvement. Energy is identified as a key element within the implementation of the ISO 14001 Environmental Management System and is established as a Significant Aspect at Falconbridge Dominicana and the Kidd Creek Metallurgical Operations. Energy consumption/cost reduction targets are set as part of the yearly business strategy for each division, and endorsed by the divisional Vice Presidents. The position of Director of Energy and Technical Services has been established as a full time position with the mandate to champion energy consumption/cost reduction activities, and to represent the company within CIPEC, as well as participate in the Mining Association of Canada ( MAC ) Energy Conservation Task Force and the Ontario Mining Association Energy Conservation Committee. A full time Senior Energy Management Engineer’s position has been created within the Ontario Divisions and Falconbridge Dominicana. An Energy Management Champion has been selected within each division. This person has the part time responsibility of coordinating the activities of the operational energy management teams, and to develop strategy as part of an internal Energy Management Strategic Planning Group, as well as participate in the Ontario Mining Association Energy Conservation Committee. Ontario Hydro Energy Conservation Advisors are utilized on a continuous basis within each division to analyze operational activities, and identify 10 p:\source files\2000\f\falconbridge\30oct00pl.doc • • • • • opportunities. From time to time additional consultants are employed to enhance this activity. The Ontario Hydro Energy Advisor also provides third party verification of electricity consumption reductions. Additionally, an independent consultant has been contracted to fully verify the source data associated with energy consumption, direct emissions and indirect emissions, as well as the published annual results. Procurement practices have been established to ensure that energy efficient equipment is purchased where possible. Capital and Maintenance Engineering practices are governed by guidelines which require energy efficient designs or modifications. Energy Consumption Monitoring and Control Systems are installed within the process areas at each division to measure, record and report on the use of energy. Energy Management Information and Decision Support Systems are being developed within each operation. 11 p:\source files\2000\f\falconbridge\30oct00pl.doc 4. Base Year Quantification 4.1 Methodology • • • • • • • 4.2 A comprehensive energy survey is conducted annually within the three Canadian divisions in order to collect data about production levels and the consumption of energy in all forms. The 1990 Baseline was derived from the database developed using the energy surveys. Energy use represents approximately 98% of GHG emissions at Falconbridge. The remaining 2% of GHG emissions are a result of the carbonate reagents used in mineral processing which emit CO2. Consequently, the GHG’s emitted by the operations are predominantly CO2 and small quantities of CH4 and N2O. Of the energy consumed 47% results in indirect CO2 emissions from electricity use, while 53 % results in direct emissions from fossil fuel and reagent consumption. Energy Intensity and Carbon Intensity have been selected as the performance factors best suited to measure energy utilisation improvements, and to stimulate energy consumption as well as GHG emission reducing actions. Energy intensity reductions, process efficiency gains, fuel switching and use of the Kyoto Flexibility Mechanisms represent the means by which GHG emission reductions can be achieved. Energy-related emission factors for determining GHG type and quantity were drawn from the Environment Canada publication ‘Canada’s GHG Inventory – 1997’. The Environment Canada conversion factor for electricity generation in Ontario was used to convert electricity use into indirect GHG emissions. CH4 and N2O have been converted to equivalent CO2 using Global Warming Potentials based on a 100 year period i.e. multiplication factors of 21 and 310 respectively. In order to identify the trend in GHG emissions relative to 1990, a comprehensive GHG Emissions Inventory has been carried out. Absolute emissions for the base year have been quantified and the trend in Carbon Intensity has been established for the 1990 to 1998 period. The baseline will be defined in terms of the integrated data from the Sudbury, and Kidd Creek Divisions. Raglan did not exist in 1990 and therefore is not part of the 1990 baseline. Integrated operations include mining, concentrating, smelting, and refining. Quantification 12 p:\source files\2000\f\falconbridge\30oct00pl.doc 1990 Baseline - Sudbury Division Facility: Location: Reporting Period: Product Category: Sudbury Division Sudbury, Ontario 1990 Nickel - Copper Activity Production Units Integrated Nickel Operations Resulting in Smelter Product Tonnes of Nickel Equivalent Energy Intensity MWH/Tonne Carbon Intensity Tonnes C02E per Tonne CO2 Equivalent Emissions KiloTonnes 24.84 4.65 232.93 TABLE 1: Base Year Data for Sudbury Divisions 1990 Baseline - Kidd Creek Mining and Metallurgical Divisions Facility: Location: Reporting Period: Product Category: Kidd Creek Mining and Metallurgical Divisions Timmins, Ontario 1990 Copper and Zinc Activity Production Units Integrated Nickel Operations Resulting in Smelter Product Tonnes of Nickel Equivalent Energy Intensity MWH/Tonne Carbon Intensity Tonnes C02 per Tonne CO2 Equivalent Emissions KiloTonnes 9.3 1.69 382.3 TABLE 2: Base Year Data for Kidd Divisions 1990 Baseline - Falconbridge Limited Canadian Divisions 13 p:\source files\2000\f\falconbridge\30oct00pl.doc Facility: Location: Reporting Period: Product Category: Falconbridge Limited Canadian Divisions Sudbury and Timmins, Ontario 1990 Nickel, Copper and Zinc Year Energy Intensity MWH/Tonne Carbon Intensity Tonnes C02 per Tonne CO2 Equivalent Emissions Kilo-Tonnes 1990 12.12 2.23 613.25 TABLE 3: Aggregated Base Year Energy Intensity, Carbon Intensity, and Equivalent CO2 Emissions for Canadian Divisions 14 p:\source files\2000\f\falconbridge\30oct00pl.doc GHG Emissions Distribution 1990 CO2 Equivalent Kilo-Tonnes CO2 – Direct 255.15 CO2 – Indirect 356.28 CH4 – Direct .14 N2O – Direct 1.68 TOTAL 613.25 TABLE 4: Aggregated Base Year GHG Emissions Distribution for Canadian Divisions 15 p:\source files\2000\f\falconbridge\30oct00pl.doc 5. Projections 5.1 Methodology Projections of Energy Intensity, Carbon Intensity and Absolute GHG Emissions are derived from the extrapolation from the current year’s level at the rate determined from the trend lines calculated by linear regression for each of the performance indicators. This approach is consistent with the treatment of variable process systems in accordance with the principles of Statistical Process Control. 5.2 Quantification The GHG’s emitted by the operations are predominantly CO2 and small quantities of CH4 and NO2. Of the energy consumed, 47 % results in indirect CO2 emissions from electricity use, while 53 % results in direct GHG emissions from fossil fuel and reagent consumption. On average the mining, mineral processing, smelting and refining processes and auxiliaries of the Ontario Divisions consume approximately 2000 GWH of electricity per annum. The sources of direct emissions within the operations include: ♦ the consumption of natural gas for mine air heating, building heating, boilers, concentrate drying and smelting processes ♦ the consumption of light fuel oil for mine haulage, and power generation for the Raglan operation in Northern Quebec, where natural gas and electricity supply infrastructures do not exist CANADIAN DIVISIONS Energy Intensity MWH/Prod. Tonne Carbon Intensity CO2Eq Tonne / Prod. Tonne TABLE 5: 1990 1999 2005 % Variance 1990 vs. 2000 12.12 10.919 10.75 - 11.46% 2.2 2.14 2.18 - .56% Energy Intensity and Carbon Intensity Projections for the Canadian Divisions 16 p:\source files\2000\f\falconbridge\30oct00pl.doc GHG Emissions Distribution 1990 1999 2005 CO2 Equivalent Kilo-Tonnes CO2 Equivalent Kilo-Tonnes CO2 Equivalent Kilo-Tonnes % Variance 1990 vs.2005 CO2 – Direct 255.15 372.8 447.26 + 75 % CO2 – Indirect 356.28 334.1 323.8 -9% CH4 – Direct .14 .4 .53 + 279 % N2O – Direct 1.68 6.39 8.93 + 432 % TOTAL 613.25 713.69 780.52 + 27 % TABLE 6: Projection of Specific GHG Emissions for the Period 1990 to 2005 17 p:\source files\2000\f\falconbridge\30oct00pl.doc 6. Target Setting 6.1 Targets Falconbridge has updated its physical energy intensity ( energy consumed per unit of production ) target to a rate of 1% per year from 1990 to the year 2005 or an absolute improvement of 15%. Both the Sudbury Divisions and the Timmins Divisions have included an energy cost improvement target within their business plans which supports the overall energy intensity improvement target. Results versus target are reviewed at the divisions on a quarterly basis. Energy and carbon intensity targets are made public annually, within the Report on Sustainable Development. The results included in the VCR action plan are provided on an annual basis in terms of energy intensity and carbon intensity beginning in 1990, the baseline year. Performance versus the improvement target is determined by the trend line which spans the years from 1990 to the current year, as well as the absolute difference between 1990 and the current year. The rationale for using a trend to measure performance is rooted in the principles of Statistical Process Control, and the belief that process systems vary naturally around a mean trend line. For these systems, the use of absolute improvement targets on a year by year basis can lead to distorted measures of performance, and unrealistic goals. Integrated mining and metallurgical operations fit into the category of variable process systems primarily because of the cyclical nature of mine production. Committed Aggregate Target for the Canadian Divisions: • - 1% per Annum decrease in Energy Intensity for the period from 1990 to 2005 ~ 10.3 MWH per Tonne Aggregate Targets for Falconbridge Limited: • 6.2 - 1% per Annum reduction in Energy Intensity for the period from 1990 to 2005 or ~ 3.75 MWH per Tonne • -.5% per Annum decrease in Carbon Intensity for the period from 1990 to 2005 ~ 2.05 Equivalent CO2 Tonnes per Tonne • Equivalent CO2 Emissions 6 % Below the 1990 Level by 2010 ~ 574 Kilo-Tonnes Process for Target Review and Update 18 p:\source files\2000\f\falconbridge\30oct00pl.doc The following steps are taken to review progress toward and to update targets: • • • • • • A comprehensive Annual Survey of All Forms of Energy Use is carried out in order to determine the consumption patterns and performance versus targets of each Canadian Division individually and the Canadian Divisions in aggregate. The published survey is reviewed by all senior management. The survey is the source document for the analysis of performance and the updating of targets. Beginning in 1999 a comprehensive GHG Inventory is being carried out in conjunction with the Energy Survey. GHG Emission Reduction Targets will be established and reviewed using the Inventory. Energy Intensity Improvement, Carbon Intensity Improvement, and GHG Reduction Targets are reviewed and updated annually as part of the Sustainable Development Process. Annual Progress Reports versus targets are made to the VCR and placed in the Public Domain on the VCR web-site. The performance of every division versus the previous year’s targets as well as the Energy/GHG Reduction Action Plans for the upcoming year are reviewed by the CEO and a Senior Management Team at a special meeting annually. Divisional Management Teams review their performance with respect to energy cost reduction targets at either monthly or quarterly reporting periods. 19 p:\source files\2000\f\falconbridge\30oct00pl.doc 7. Measures to Achieve Targets 7.1 List and Estimated Impact of Key Activities / Projects Sudbury Nickel Divisions The indirect ( electricity ) energy consumption reduction target for 2000 is 18 gigawatt-hours (GWH) or a reduction of 4.3 Kilo-Tonnes of Equivalent CO2 . The direct energy reduction target is 6.2 GWH of natural gas or a reduction of 1 Kilo-Tonne of Equivalent CO2 . The measures to be taken to reduce energy consumption include the following: • • • • • • • Further Development of an Aggregated Electricity and Natural Gas Demand Management System Rationalization of compressed air and water supply systems at the Sudbury Smelter Division Further Installations of Automated Natural Gas Metering Rationalization of Mine Ventilation and Compressed Air Systems Further Reduction of Natural Gas Consumption for Mine Air Heating Rationalization of Faser and Strathcona Mine Operations Including Hoisting and Ventilation. Reviewing proposals for wind power, and baseline energy audit at Raglan. Kidd Creek Copper/Zinc Divisions The energy consumption reduction target for 2000 is 12 GWH or 2 Kilo-Tonnes of Equivalent CO2 Emissions. The measures to be taken to reduce energy consumption include the following: • • • • • • • 8. Mine Energy Management System and Control Center Increased Heat Recovery from Roasters Oxygen Plant Filtration Improvements Mine Auxiliary Ventilation Automation Concentrator Grinding and Crushing Rationalization Compressed Air Leak Elimination in the Mine, as well as Mine Compressor Controls Upgrade. Increased Current Density in Copper Refinery Results Achieved 20 p:\source files\2000\f\falconbridge\30oct00pl.doc 8.1 Current Reporting Year Sudbury Nickel Divisions Energy consumption increased by + .96% in 1999 while production increased by + 10.3% relative to 1998 primarily as a result of increasing production from the Raglan Operations. The Energy Intensity has decreased by - 4.8 % relative to 1998. The difference in the Energy Intensity between 1990 and 1999, indicates an absolute reduction of -16 %. Over the period from 1990 to 1999, the energy intensity improvement rate was .97 %. per annum. At this rate, the projected absolute difference in energy intensity between 1990 and 2005 is a decrease of –21.8%. In 1999 the Sudbury Divisions of Falconbridge Limited completed energy conservation projects which addressed system and process technology modifications, as well as changes to operating practices. The result is 12.3 Gwh’s of annualized electricity consumption reductions, or 2.1 Kilo-tonne’s of indirect GHG emissions reductions. The reductions in electricity use were verified independently by an Ontario Hydro Energy Specialist. Natural Gas consumption reductions totalling 3.2 GWH resulted in a .6 Kilo-Tonnes decrease of direct GHG emissions. The Mine Ventilation Automation Project was completed in 1999. This undertaking makes use of sophisticated underground communications and control technologies to control main and auxiliary ventilation fans, as well as to monitor air quality and vehicle location. The first phase of the project has reduced electricity consumption in 1999 by approximately 7 GWH. The potential total reduction in energy consumption is 25 Gwh’s p. a. This equates to a 4.7 Kilo-tonne reduction of indirect GHG emissions, and an annualized saving of $1.4 million. There will also be a .72 Kilo-tonne reduction in direct GHG emissions as result of diminished natural gas use for mine air heating. The remaining 5 GWH of reductions in electricity consumption were a result of blower rationalization and process equipment efficiency improvements resulting in less compressed air consumption, as well as potable and waste water system improvements. Societe Miniere Raglan Du Quebec Ltee. 21 p:\source files\2000\f\falconbridge\30oct00pl.doc Societe Miniere Raglan ( Raglan ) completed its first full year of production in 1999. In 2000 Raglan expects to reach full production. Once production stabilizes, in either 2000 or 2001 a baseline for energy intensity, carbon intensity and absolute CO2 Equivalent emissions will be established. Until that time, and because Raglan’s production is processed in Sudbury, the energy consumption and emissions will be aggregated with Sudbury’s results. S U D B U R Y + R A G L A N E N E R G Y IN T E N S IT Y MWH PER TONNE 30 25 20 15 y = -0. 214 9x + 22 .183 10 5 0 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 YEA R E n ergy Int ens ity Lin ear (E n ergy Inte ns ity ) FIGURE 1: Energy Intensity Sudbury/Raglan Divisions Kidd Creek Mining and Metallurgical Divisions 22 p:\source files\2000\f\falconbridge\30oct00pl.doc 19 99 The Kidd Creek results continue to reflect the aggregation of both the Mining and Metallurgical divisions. Energy consumption decreased by - 3.4% in 1999 while production decreased by - 5.6% relative to 1998. Consequently, the Energy Intensity increased by + 2.4 % relative to 1998. The difference in the Energy Intensity between 1990 and 1999 indicates an absolute improvement of 16.2 %. Over the period from 1990 to 1999, the energy intensity improvement rate was .9 %. per annum. At this rate, the projected absolute difference in energy intensity between 1990 and 2005 is a decrease of – 21.6%. Energy conservation actions addressing mine ventilation, compressed air, refinery current efficiency and concentrator system rationalization resulted in a 8.5 Gwh reduction in electrical energy consumption. These reductions in electricity use were verified independently by an Ontario Hydro Energy Specialist. ENERGY INTENSITY KIDD CREEK DIVISIONS 12 MWH/TONNE 11 10 9 8 7 y = -0.0774x + 8.7158 6 5 1990 1991 1992 1993 1994 1995 1996 YEAR FIGURE 2: Energy Intensity Kidd Creek Divisions Falconbridge Limited - Canadian Divisions 23 p:\source files\2000\f\falconbridge\30oct00pl.doc 1997 1998 1999 Facility: Location: Reporting Period: Product Category: Falconbridge Limited Canadian Divisions Sudbury Timmins, Ontario and Raglan, Quebec 1990 to 1999 Nickel, Copper and Zinc The Energy Intensity, Carbon Intensity, and Total Equivalent CO2 Emissions are given in Figures 4 to 6. A comparison of Energy Intensity, Carbon Intensity, and Equivalent CO2 Emissions is given in Table 7. A comparison of specific GHG Emissions for the period of 1990 to 1999 is given in Table 8. Year Energy Intensity MWH/Tonne Carbon Intensity Tonnes C02 per Tonne CO2 Equivalent Emissions KiloTonnes 1990 12.12 2.23 613.25 1999 10.92 2.16 713.69 Note: The CO2 emissions are related to energy and carbonate reagent consumption. The results include emissions from electricity use as derived by applying the Environment Canada conversion factor for electricity generation in Ontario. TABLE 7: 1999 vs. 1990 Comparison of Energy Intensity, Carbon Intensity, and Equivalent CO2 Emissions 24 p:\source files\2000\f\falconbridge\30oct00pl.doc GHG Emissions Distribution 1990 1999 CO2 Equivalent Kilo-Tonnes CO2 Equivalent Kilo-Tonnes % Variance 1990 vs.1999 CO2 – Direct 255.15 372.8 + 46 % CO2 – Indirect 356.28 334.1 -6% CH4 – Direct .14 .4 + 186 % N2O – Direct 1.68 6.39 + 280 % TOTAL 613.25 713.69 + 16.4 % TABLE 8: Comparison of 1999 vs. 1990 GHG Emissions by Specific Type Sudbury, Raglan, and Kidd Creek Operations participate in the Voluntary Challenge Program on Climate and contribute GHG emissions reductions by improving combined Energy Intensity Performance. For the Canadian Divisions, the difference in the Energy Intensity ( MWH / Tonnes Production ) between 1990 and 1999, 25 p:\source files\2000\f\falconbridge\30oct00pl.doc indicates an absolute improvement of -9.9 %. Over the period from 1990 to 1999, the energy intensity improvement rate was -.26 %. per annum. At this rate, the projected absolute difference in energy intensity between 1990 and 2005 is a decrease of 11.46%. The updated target for the Canadian Operations is a -1% per year improvement in physical energy intensity for the period of 1990 to 2005. This translates to an absolute improvement of -15% by 2005 relative to 1990. ENERGY INTENSITY - CANADIAN DIVISIONS MWH/TONNE 13 12 11 10 9 y = -0.0282x + 10.825 8 1990 1991 1992 1993 1994 1995 1996 1997 YEAR MWH per Tonne Linear (MWH per Tonne) FIGURE 4: Energy Intensity – Canadian Divisions 26 p:\source files\2000\f\falconbridge\30oct00pl.doc 1998 1999 The difference in the Carbon Intensity ( Tonnes Equivalent CO2 / Tonnes Production ) between 1990 and 1999, indicates an absolute improvement of -2.7 %. However, the rate of change in Carbon intensity indicated by the trend line for the period from 1990 to 1999 indicates an increase of + .36% per annum. Therefore the projected Carbon Intensity in 2005 for the Canadian Divisions is expected to be - .56% relative to 1990. Tonne CO2 / Tonne Prod CANADIAN DIVISIONS - CARBON INTENSITY 2.50 2.25 2.00 1.75 1.50 y = 0.0068x + 1.9049 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 YEAR FIGURE 5: Carbon Intensity Canadian Divisions 27 p:\source files\2000\f\falconbridge\30oct00pl.doc The absolute difference in CO2 Equivalent Emissions for the Canadian Divisions between 1990 and 1999 is + 16.4 %. Over the period from 1990 to 1999 the trend in CO2 Equivalent Emissions is a rate of increase of + 1.9% per annum. Therefore the CO2 Equivalent Emissions of the Canadian Divisions in 2005 is projected to be + 27.0% above 1990 levels. Even though there has been a reduction in indirect emissions related to electricity use, the subsequent shift to natural gas for heating and process applications within the Ontario Divisions has increased the levels of direct CO2, CH4, and N2O emissions. The Raglan Operations in Quebec are solely dependant on diesel fuel for power generation. Thus with the start-up of production in 1998, there has been a stepwise augmentation of direct GHG Emissions. CO2 Eq KTONNES CO2 Equiv KTONNES EMISSIONS - CANADIAN DIVISIONS 750.000 700.000 y = 11.122x + 560.3 650.000 600.000 550.000 500.000 1990 1991 1992 1993 1994 1995 1996 1997 1998 YEAR CO2 Equiv TONNES FIGURE 6: Absolute CO2 Emissions 28 p:\source files\2000\f\falconbridge\30oct00pl.doc Linear (CO2 Equiv TONNES) 1999 9. Education, Training and Awareness 9.1 Our Corporate Response to Climate Change Falconbridge Limited supports the Climate Change Voluntary Challenge and Registry Program as a mechanism with which we in industry, and all sectors can work voluntarily towards reductions in greenhouse gas emissions. Voluntary measures will play an important role in Canada’s response to Climate Change. Consequently, we are pleased to participate on the VCR Board of Directors, the MAC Energy Task Force, the OMA Energy Committee, the CIPEC Executive Board, and the CIPEC Council as mining industry leaders. Senior Managers from Falconbridge Managers are actively involved in engaging other members of the Mining and Manufacturing in Canada in Green House Gas (GHG) emission reducing actions like the specific energy intensity improvement strategy, fuel switching and emissions trading. Falconbridge will also continue to contribute to the national Climate Change Business Plan and response strategy, as well as the development of a domestic emissions trading process. We continue to develop awareness among our employees about Climate Change and Energy Efficiency by involving them in energy efficiency benchmarking studies, energy consumption/GHG reduction analyses and educational activities. In 1999, the Mines and Concentrators at the Sudbury and Timmins Operations participated in an Energy Efficiency benchmarking study along with 10 other national and international mining companies. Our Kidd Creek Divisions also participated in a GHG Reduction Cost Curve analysis along with 2 other mining companies. Both of these projects engaged operations personnel and raised the awareness of impact of climate change at the operational level, as well as identifying opportunities for improvement. Additionally, the Pembina Institute was contracted to provide senior managers with a high level overview of the potential impact of national and international GHG reductions measures on Falconbridge. 9.2 Climate Change and Our Employees 29 p:\source files\2000\f\falconbridge\30oct00pl.doc Falconbridge views the motivation of its employees to take energy conserving actions through education and awareness initiatives as its key response to Climate Change. The following summary lists the energy awareness activities that take place within the corporation. • Annually, the President and CEO, and Vice President, Environment attend an • • • • 9.3 Energy Day involving each Canadian division where they promote energy conservation, listen to success stories from the current period, and review plans for the upcoming year. Success stories are reported on a regular basis in internal newspapers and bulletins, as well as externally in national energy efficiency publications. Campaigns focused on specific energy conserving actions, such as the elimination of compressed air leaks and the optimisation of underground ventilation are carried out on a regular basis. These campaigns are often highlighted by colourful posters advertising the event. Employees from operations are engaged in Energy Conservation Working Groups and make presentations regarding energy efficiency improvements in their respective areas. Employees attend energy management training conducted by the electricity and natural gas utilities, the Canadian Institute for Energy Efficiency Training ( CIEET ), Natural Resources Canada, and other consultants as deemed necessary. Climate Change and Our External Contacts The Falconbridge Report on Sustainable Development and VCR Climate Change Action Plan are our primary means of communicating to all of our external stakeholders and the communities with which we coexist about Climate Change and about the role Falconbridge will play in the national/global reduction of GHG Emissions. The first Sustainable Development Report was published in 1999 and widely distributed. It brought praise from our customers, suppliers, communities and shareholders as well as our employees. The report will be updated every year to contain the most current information regarding Energy Intensity Performance, Carbon Intensity Performance, and Emissions Performance, as well as quantities and types of GHG’s emitted. The Sustainable Development Report is available on the Falconbridge Limited web-site @ www.falconbridge.com 30 p:\source files\2000\f\falconbridge\30oct00pl.doc 9.4 Our Public Education on Climate Change The Falconbridge Report on Sustainable Development Report has become a key vehicle for Public Outreach. The report states our energy efficiency improvement and GHG emission targets, as well as energy consumption and emissions results. It will be published annually and made available on the Falconbridge web-site. Similarly, are Climate Change Action Plan results are described in the VCR Action Plan and made public on the VCR web-site. Both reports have been extremely well received and are being referenced on a frequent basis. Additionally, Falconbridge will continue to participate in committees or processes at the Federal and Provincial Level which have a focus on public education and action regarding Climate Change. For example Falconbridge will continue to contribute to the development of National Business Plan on Climate Change and is currently a member of the Ontario Energy Minister’s Environmental Transition Committee. Falconbridge is using its memberships in MAC, OMA, CIPEC and AREA as vehicles to stimulate the Public Outreach activities of these organizations with respect to Climate Change. Falconbridge is also working with its partner communities to begin the development of community awareness about the Climate Change issue. We have become a signatory of the Regional Municipality of Sudbury’s GHG Reduction Action Plan. Operations personnel in Sudbury are participating in the implementation of the program and the development of public awareness. 31 p:\source files\2000\f\falconbridge\30oct00pl.doc