Australia, September 2013

Australian Extractive Companies in AsiaLoic Dujardin

Director, Research Products, Singapore

Sustainalytics in Asia

Australian Extractive Companies in Asia

Discussion points

Covering Asia

July 2013

October 2012

What does China’s Leadership Transition Mean for ESG?

Businesses in Asia | Asian businesses

Exposure | Preparedness | Investment Risk

Regulatory gaps | Information channels

Australian Extractive Companies in Asia

Company Name Sector Sub-Industry Market cap. (mln. USD)

BHP Billiton Ltd. Materials Diversified Metals & Mining 168,180

Rio Tinto Ltd. Materials Diversified Metals & Mining 95,764

Origin Energy Ltd. Energy Integrated Oil & Gas 13,659

Newcrest Mining Ltd. Materials Gold 8,510

PanAust Limited Materials Diversified Metals & Mining 1,309

Linc Energy Ltd. Energy Oil & Gas Exploration & Production 575

OceanaGold Corporation Materials Gold 455

Medusa Mining Limited Materials Gold 352

ST Barbara Ltd. Materials Gold 313

Kingsgate Consolidated Ltd Materials Gold 239

Intrepid Mines Limited Materials Gold 149

Companies reviewed

Four ESG Risk Factors – One Investment Risk Indicator

Water

Health & Safety

Corruption

Investment Risk

Community Relations

Production disruption, Regulatory & Reputation

Impacts

Strikes, Government investigations, Reputation

Reputation, Legal, Regulatory Impacts

Reputation and Regulatory Impact

Water: one example

Exposure Preparedness Track recordExposure Preparedness Investment Risk

Score: 0

Exp.

100

75

50

25

25 50 75 100 Prep.

Sustainalytics Indicator:Programs & Targets

to Reduce Water Use

Source: WRI Aqueduct

Investment Risk: Very HighScore: 100

 

WATER

 

EXPOSURE SCORE

PREPAREDNESS SCORE

WATER SPECIFIC INVESTMENT RISK LEVEL

WATER SPECIFIC INVESTMENT RISK SCORE

BHP Billiton Ltd. 100 75 HIGH 3

Rio Tinto Ltd. 67 75 MODERATE 2

Origin Energy Ltd. 50 0 HIGH 3

Newcrest Mining Ltd. 56 50 HIGH 3

PanAust Limited 57 75 MODERATE 2

Linc Energy Ltd. 80 25 HIGH 3

OceanaGold Corporation 80 25 VERY HIGH 4

Medusa Mining Limited 40 0 HIGH 3

ST Barbara Ltd. 80 50 VERY HIGH 4

Kingsgate Consolidated 40 25 HIGH 3

Intrepid Mines Limited 100 0 VERY HIGH 4

Water: Results

Corruption: one example

Exposure Preparedness Track recordExposure Preparedness Investment Risk

Score: 67

Exp.

100

75

50

25

25 50 75 100 Prep.

Sustainalytics Indicators:• Whistleblower

Programs• Business Ethics Related

Controversies or Incidents

• Transparency on Payments to Host Governments

Source: Transparency International

Investment Risk: ModerateScore: 68

Corruption: Results

 CORRUPTION

 

EXPOSURE SCORE

PREPAREDNESS SCORE

CORRUPTION INVESTMENT RISK LEVEL

CORRUPTION INVESTMENT RISK SCORE

BHP Billiton Ltd. 73 93 MODERATE 2

Rio Tinto Ltd. 66 93 MODERATE 2

Origin Energy Ltd. 66 42 HIGH 3

Newcrest Mining Ltd. 68 50 MODERATE 2

PanAust Limited 79 42 VERY HIGH 4

Linc Energy Ltd. 76 42 VERY HIGH 4

OceanaGold Corporation 66 50 HIGH 3

Medusa Mining Limited 66 42 HIGH 3

ST Barbara Ltd. 75 42 HIGH 3

Kingsgate Consolidated 67 42 HIGH 3

Intrepid Mines Limited 68 67 MODERATE 2

Main Findings

• Overall investment risks are fairly consistent across the companies.

Company Name Sub-Industry Market cap. (year end, mln. USD)

Overall Investment Risk Score

Overall Investment Risk Level

Rio Tinto Ltd. Diversified Metals & Mining 95,764 1.8 Low to Moderate

BHP Billiton Ltd. Diversified Metals & Mining 168,180 2.0 Moderate

PanAust Limited Diversified Metals & Mining 1,309 2.0 Moderate

Medusa Mining Limited Gold 352 2.0 Moderate

OceanaGold Corporation

Gold 455 2.3 Moderate to High

Kingsgate Consolidated Limited

Gold 239 2.3 Moderate to High

Newcrest Mining Ltd. Gold 8,510 2.3 Moderate to High

Intrepid Mines Limited Gold 149 2.3 Moderate to High

ST Barbara Ltd. Gold 313 2.5 Moderate to High

Origin Energy Ltd. Integrated Oil & Gas 13,659 2.5 Moderate to High

Linc Energy Ltd. Oil & Gas Exploration & Production

575 2.5 Moderate to High

• Risk Factor contributions vary significantly

• Water, Corruption, H&S contributions are high. Community relations is low.

Investment Risk

0%10%

20%30%

40%50%

60%70%

80%90%

100%

15.4 19.8 30.8 34Community RelationsHealth & SafetyCorruption Water

Main Findings

Recommendations to Investors

• Disclose operations located in water-stressed areas and where local populations lack access to clean water

• Disclose an assessment of the impact of water withdrawal and wastewater discharges on local communities and ecosystems

• Disclose site-specific water management plan

• Request companies to publicly support the EITI

Water

• Exposure scores are systematically above the Preparedness scores, except for Rio and PanAust

• Companies need to improve their water management plans

• Exposure scores are systematically above the Preparedness scores, except for Rio and BHP

• Companies should engage with governments on corruption

Corruption

Thank You!For more information please contact:

Loic DujardinDirector, Research Products

Phone: +65 3158 5049Email: loic.dujardin@sustainalytics.comWebsite: www.sustainalytics.com

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