SUSTAINABILITY REPORT OUR PURPOSE REFLECTS OUR COMMITMENT TO RESPONSIBILITY Hochschild is defined by its approach to responsible and innovative mining committed to a better world. 40% REDUCTION IN ACCIDENT FREQUENCY INDEX (OR LTIFR) (2019: 1.05 – 2018: 1.74) $9.3m AMOUNT SPENT OR DONATED TO BENEFIT LOCAL COMMUNITIES (2018: $8.3m) OUR AREAS OF FOCUS Safety PAGE 42 Health & Hygiene PAGE 44 Our people PAGE 45 Our communities PAGE 47 Environmental management PAGE 48 40 Hochschild Mining PLC / Annual Report & Accounts 2019 STRATEGIC REPORT STRATEGIC DEAR SHAREHOLDER programmes and initiatives during 2019 Our people has brought about impressive year-on- Hochschild would not be able to achieve year reductions in the accident frequency its current successes without its people index and accident severity rates of 40% and, in this report, we have set out how and 94% respectively. These results are the Group’s Human Resources (“HR”) testament to the efforts of all involved, team have contributed to strengthening and I can assure you of our commitment employee relations. I would like to to continue on this path as we proceed to highlight two aspects in particular. Firstly, roll out the action plan for the current year, the Attributes’ Weeks where employees GOVERNANCE known as “Safety 2.0”. across the Group participated in a week-long series of events that were Our communities thematically designed around a key value Our Community Relations team has which underlines our corporate purpose. had an equally active year. As part of our Secondly, the Gender Diversity project strategy of supporting projects targeting which was launched with the aim of education, health and socio-economic redressing the imbalance in the make-up development, we launched a new of our workforce, which is regrettably scholarship programme for young people representative of the sector. living close to the Inmaculada mine and our Travelling Doctor programme has extended This year, in addition to actively reviewing I am pleased to report on the its reach following our collaboration with the opportunities we have to improving FINANCIAL STATEMENTS Company’s activities during 2019 local authorities. our energy efficiency across the which acknowledge our social licence to organisation, we are also looking to Our environment operate and demonstrate the collective enhance our sustainability reporting and From an environmental perspective, the sense of responsibility which is a key will be engaging with our stakeholders in Group performed well as reflected by the tenet of Hochschild’s corporate purpose. this regard. ECO Score for the year which is explained Safety further on page 49. This initiative, which has I hope you will find this report informative. It is with immense pride that we are able undeniably raised the level of awareness If you should have any questions or to report on the impact of the Safety across the organisation, has also been the comments, please do not hesitate to Culture Transformation Plan which was subject of several external commendations contact me at [email protected] launched in 2017. As discussed later in including the Mines & Money 2019 Graham Birch this report, the range of training Innovation in Sustainability award. Chairman Sustainability Committee Governance of sustainability Management of sustainability – received a detailed presentation on the The Board has ultimate responsibility for The Board has ultimate responsibility Group’s Tailing Storage Facilities (“TSFs”) establishing Group policies relating to for establishing Group policies relating and approved the implementation of sustainability and the Sustainability to sustainability and ensuring that enhanced systems of monitoring and Committee has been established with the appropriate standards are met. The a programme of third-party reviews; responsibility of focusing on compliance Sustainability Committee has been – undertook periodic reviews of the and ensuring that appropriate systems established as a formal committee of the Group’s exposure to sustainability risks and practices are in place. Board with delegated responsibility for and the controls and action plan to various issues, focusing on compliance What is Hochschild Mining’s approach mitigate them; and and ensuring that appropriate systems to sustainability? – considered and recommended to the and practices are in place Group-wide The Company has adopted a number of Board, for adoption, revised Terms of to ensure the effective management of policies demonstrating our commitment to: Reference which formalised the sustainability-related risks. – a safe and healthy workplace; Committee’s role in overseeing methods As Chairman of the Committee, Graham of engagement with the Group’s – managing and minimising the Birch has Board level responsibility for workforce to understand their views and environmental impact of our sustainability issues to whom the Vice to communicate them to the Board. operations; and Presidents of Operations, Legal & Corporate Reporting of targets and indicators – encouraging sustainability by Affairs, and Human Resources report. respecting the communities of the As part of the Company’s ongoing strategy localities in which we operate. The Sustainability Committee’s work in 2019 to make more information available online, During the year, the Sustainability detailed sustainability related performance We look to achieve all of the above in Committee: indicators as well as targets for 2020 are compliance with applicable laws, regulations – approved the 2018 Sustainability Report available on the Company’s website. and the Company’s own standards. for inclusion in the 2018 Annual Report; For further information on how we – monitored the execution of the yearly prioritise our resources and the plan in each of the five key areas of focus Committee’s terms of reference, please (Health, Safety, Community Relations, visit www.hochschildmining.com/en/ Environmental Management and sustainability. Employee Engagement); Hochschild Mining PLC / Annual Report & Accounts 2019 41 SUSTAINABILITY REPORT CONTINUED SAFETY The safety of our people is our number one priority. High Potential Events Review 2019 HIGHLIGHTS Committee Since 2017, the Company has monitored the occurrence of “High Continued implementation of the Potential Events” (“HPEs”). HPEs are Safety Culture Transformation Plan events which could have caused (See opposite for further details) serious injury and encompass near misses as well as lost time All safety management systems at events. Each time an HPE occurs, operating units achieved Level 6 the CEO convenes a meeting of the re-certification by Det Norske Vice Presidents of Operations and Veritas GL (“DNV”). As a sign of the Human Resources, the country Group’s commitment to achieve managers as well as site managers Level 7, eight new safety and the corporate safety team. The sub-processes have been certified site leader where the HPE occurred presents his investigation and the Committee feeds into the root The Hochschild approach to safety cause analysis and proposed action Given the inherently high risk profile of plan. The lessons learnt are then mining, safety is always our highest priority. conveyed by site managers at other Ensuring the safety of our employees is a operations to their respective units. key measure of our corporate success. Our achievements in 2019 – 40% reduction in LTIFR and rate of High Potential Events vs 2018 (see right for an explanation of this internal measurement) – 94% reduction in the Accident Severity Index vs 2018 – Technological enhancements to personnel transportation to regulate speed and detect driver fatigue (see opposite) Behaviour Based Safety Checklists As reported in the 2018 Annual Report, the Group’s Behaviour Based Safety Checklists were incorporated into a mobile app, known as “the OTO app”. The app, which has been designed in-house, enables users to log safety- related observations (an “OTO”) during a 10-15 minute audit. By submitting an OTO, users earn points to transfer between levels of the programme and prizes are awarded based on the nature and number of OTOs submitted. 42 Hochschild Mining PLC / Annual Report & Accounts 2019 STRATEGIC REPORT STRATEGIC THE SAFETY CULTURE TRANSFORMATION PLAN The Group’s safety performance in 2019 was industry-leading and is the result of the collective efforts of not only our safety team but also those tasked with ensuring that we embed a safety-first culture at Hochschild. This has been achieved primarily through the Safety Culture Transformation Plan – an initiative that was launched in 2017 and comprises the following aspects: LEADERSHIP COMMUNICATION GOVERNANCE Leadership Programme Safety Plan communications support Coaching programme for site A campaign was run during the managers delivered through year promoting the new Company third-party specialist providers. purpose and corporate values. In addition, internal sessions Safety achievements and risks were delivered by Hochschild’s were communicated to all in-house safety professionals individuals through a corporate and senior management. communication plan. FINANCIAL STATEMENTS TRAINING SYSTEM Mines’ Annual Training Programme Risk Management System (RMS) Redesign of induction programme Internal audits carried out across (both general and individual) and all mine sites, with results of over the continuation of a two-year 75% indicating a strong level of training course for rescue brigades. safety awareness. In addition, the implementation of eight