2016 SUSTAINABILITY REPORT Sherritt International Corporation is committed to providing a safe and rewarding workplace, operating ethically, demonstrating environmental responsibility, engaging stakeholders and benefitting communities. We will meet or exceed the standards where we operate and continuously improve performance. The company is celebrating its 90th anniversary in 2017. TABLE OF CONTENTS CEO MESSAGE 3 ENGAGING STAKEHOLDERS AND BENEFITTING COMMUNITIES 78 OUR APPROACH 5 Stakeholder Engagement 79 Our Commitment to Sustainability 6 Community Development 88 Governance 7 Sustainability Framework 8 PERFORMANCE 98 Materiality 11 2016 Targets 99 Sustainable Development Goals 14 GRI Index 100 UNGC 112 PROVIDING A SAFE AND REWARDING WORKPLACE 25 OECD 118 Health and Safety 26 GRI Index Data Tables 123 Public Safety 33 Site Security 40 ABOUT SHERRITT 135 Employee Relations 43 Map/Description 136 Divisions/Products 137 OPERATING ETHICALLY 47 2016 Key Indicators 138 Economic Performance 48 Our Supply Chain 139 Business Conduct 49 Human Rights 53 ABOUT THIS REPORT 140 DEMONSTRATING ENVIRONMENTAL RESPONSIBILITY 56 Tailings Management 57 Biodiversity and Land 59 Water 67 Energy and Climate Change 70 Environmental Liabilities, Closure and Reclamation 76 SHERRITT 2016 SUSTAINABILITY REPORT 2 “Our Purpose – to be a low-cost nickel producer that creates sustainable prosperity for our employees, investors and communities – guides all of our actions. Our focus for the year is to carry out our Strategic Priorities, which will strengthen our footing in this challenging market and position us well to create long-term value for all of our stakeholders.” – David Pathe, President and Chief Executive Officer CEO MESSAGE This year marks an important milestone for Sherritt: 90 years in business, making us one of the oldest Canadian natural resource developers operating today. This longevity and resilience provide the theme for our 2016 sustainability report: 90 years of “doing the right thing” – from our start in Northern Manitoba in 1927 to our current mining and energy businesses in Alberta, Cuba and Madagascar. The past 90 years have seen many changes in our sector, especially in sustainability. Safety has become, without question, the top priority. Addressing climate change Our President and CEO shares some and biodiversity impacts are now major industry issues. Companies can no longer of his thoughts on sustainability in expect to operate without their social license. Sherritt has adapted well to society’s this video. evolving expectations, and we will work hard to continually improve and contribute to responsible development well into the future. Our 2016 Sustainability Report – which covers the The world in which we operate today experienced many changes last year, bringing period between January 1 us into a period of increasing volatility. We saw the presidential election unfold in and December 31, 2016 – the U.S., and the death of Fidel Castro in Cuba. The Brexit vote took place, the Paris describes Sherritt’s Agreement on climate change was reached, and commodity prices remained weak sustainability approach and and volatile. Over the course of the year, we maintained a strong focus on carrying performance for the year. out our Strategic Priorities and staying true to “Our Purpose and Our Promises”. This This report was prepared in focus positions the company well to address near-term challenges in an unpredictable accordance with the Global environment, and pursue future growth opportunities. Reporting Initiative’s G4 2016 SUSTAINABILITY PERFORMANCE Sustainability Reporting Guideline (Core Option), Our sustainability results in 2016 were overshadowed by the collapse of a bridge at Moa which is widely considered that claimed the lives of four Cuban workers: Ulises Caballero Velázquez, Osvaldo Sollet industry best practice. Argüelles, Ernesto Suárez García, and Yunior Palencia Bientz. We were saddened by this tragic and unacceptable event, and the impacts it had on the families, our workforce and our company. We are working with our joint venture partner and the Cuban authorities to understand the root cause and identify what must be done to prevent any such future tragedies. Learnings are being applied throughout the company to complement our program to drive continuous improvement in safety culture and behaviours. In 2016, our overall annual injury rates beat internal targets and compared favourably with those of our peers. During the year, both Ambatovy and Fort Saskatchewan achieved milestones of 12 consecutive months without a lost time injury. SHERRITT 2016 SUSTAINABILITY REPORT 3 CEO MESSAGE In October, Hurricane Matthew swept through Cuba. Thanks to the exemplary emergency preparedness of the Cuban authorities, our joint venture partners and workforce, and nearby communities, the Category 4 storm did not result in any injuries or fatalities, and our business did not experience significant production losses. Throughout the year, we did not experience any high-severity environmental incidents. Our greenhouse gas emissions dropped by 4% over the previous year, and our emissions profile is poised for further improvement with investments we are making in sustainable equipment and infrastructure, including a new acid plant in Moa and electric vehicles at Ambatovy. During the year, we made progress on developing enduring and equitable relationships with all of our stakeholders, building on our history of being a partner of choice. We contributed more than $750 million in economic benefits to host communities and countries in 2016. We also experienced a 45% drop in the number of community grievances in 2016 over the previous year, due in large part to successfully addressing the residual impacts of Ambatovy’s construction activities. I am proud that Sherritt was recently selected as one of Corporate Knights’ Future 40 Responsible Corporations in Canada, based on our sustainability performance and disclosure. To build on our leadership in this area, I joined the 30% Club Canada in 2016, pledging to achieve better gender balance at the board and senior management levels of our company. LOOKING AHEAD 2017 sustainability priorities for Sherritt include: • Continuing our journey to zero harm through building a strong safety culture and implementing best-practice standards; • Developing five-year enterprise-wide sustainability objectives and targets; • Initiating implementation of our diversity and inclusion plan; • Conducting our bi-annual employee engagement survey and addressing improvement opportunities; • Collaborating with our Cuban partners on opportunities to align further with internationally recognized sustainability practices; and • Implementing our corporate sustainability standards in accordance with our multi-year plan. Our achievements in sustainability are the result of the hard work and dedication of For commentary from our employees. They, more than anyone, have defined Sherritt’s business over the last David Pathe on Sherritt’s 90 years. As we look to the next 90 years, it is our values, innovation and commitment 2016 financial and to “doing the right thing” that will continue to shape and drive our success. I look operational performance, forward to reporting on our 2017 sustainability performance next year. please read his annual letter to shareholders. Sincerely, David Pathe President and Chief Executive Officer Sherritt International Corporation SHERRITT 2016 SUSTAINABILITY REPORT 4 OUR APPROACH Our approach to running a sustainable mining and energy business is grounded in a deep commitment to our guiding principles, as outlined in Our Purpose and Our Promises: IN THIS SECTION PAGE 6 Our Purpose OUR COMMITMENT TO To be a low-cost nickel producer that creates sustainable prosperity for employees, SUSTAINABILITY investors and communities. PAGE 7 Our Promises GOVERNANCE The principles that we incorporate into our everyday decision-making at both the PAGE 8 corporate and operational levels include: integrity, agility, safety and sustainability, SUSTAINABILITY continuous learning and innovation, and shared prosperity. FRAMEWORK PAGE 11 MATERIALITY PAGE 14 SUSTAINABLE DEVELOPMENT GOALS SHERRITT 2016 SUSTAINABILITY REPORT 5 OUR APPROACH OUR COMMITMENT TO SUSTAINABILITY Mining and energy companies use a range of terms to describe their approaches to: • Ensuring the safety and health of their employees and communities • Protecting the environment • Interacting with a wide range of stakeholders • Providing benefits to local communities • Respecting human rights • Establishing respectful and productive relationships with all levels of government • Ensuring the survival of a viable business At Sherritt, “sustainability” covers these interrelated and increasingly important aspects of our business. We are committed to providing a safe and rewarding workplace, operating ethically, demonstrating environmental responsibility, engaging stakeholders and benefitting communities. We will meet or exceed the standards where we operate and continuously improve performance. This commitment underpins our aspiration to be a recognized industry leader in sustainability management and performance. SHERRITT 2016 SUSTAINABILITY REPORT 6 OUR APPROACH GOVERNANCE “I had the opportunity to attend a large-scale Our Board of Directors and management team are critical to carrying out our crisis training exercise at commitment to sustainability. the Fort Saskatchewan site in 2016. The team did BOARD OF DIRECTORS a good job responding Our Board of Directors has delegated