2 0 0 7 K E N N E C OT T L A N DS U S TA I N A B L E D E V E L O P M E N T R E P O RT

Table of Contents

Kennecott Land exists to build enduring communities on Salt Lake Valley’s West Bench.

We do this in a way that protects and strengthens what matters most to our community: quality

education, a healthy and renewable environment, and a vibrant local economy. By doing this well,

we honor our commitment to the community and our corporate shareholders.

Kennecott Land Mission Statement

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S U S TA I N A B L E D E V E L O P M E N T

AT K E N N E C OT T L A N D

E N V I R O N M E N TA L

S T E WA R D S H I P

S O C I A L W E L L B E I N G

E C O N O M I C P RO S P E R I T Y

G O V E R N A N C E

2 0 0 7 S U S TA I N A B I L I T Y S C O R E C A R D 21

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On the cover: Jacob Lawrence, a lifelong resident of Daybreak, plays with his new truck in one of the many playgrounds and parks in the community.

As this company’s new president –– and a new homeowner at

Kennecott Land’s Daybreak community –– I care very much about what

goes on here. And I’m sure you do too, if you’re taking the time to

read our Sustainable Development Report.That’s why I’m pleased

to share with fellow stakeholders all the changes, accomplishments and

challenges that made up 2007. One change, of course, was Peter McMahon’s return to our parent company,

Rio Tinto, after six years as president of Kennecott Land. I promise to build on Peter’s forward-thinking

leadership as we move into the next phase of our work here.

It was leadership, actually, that drew me to Kennecott Land. For years I’ve kept my eye on this company ––

the way it not only embraces sustainable practices but takes them to a new level. Since I came here in July

2007, I’ve seen firsthand the passion Kennecott Land employees bring to their work. Even more impressive,

though, is how this drive to go above and beyond creates a profound ripple effect in the community. It

challenges builders and developers to improve their own sustainable practices. It inspires individuals to act,

too, from buying wind power to recycling more consistently. Everyone gets involved, and our community

and environment are better for it.

Last year’s report was the story of how Kennecott Land and its first

development, Daybreak, came to be. This year, it’s the story of how

we’re working to make Daybreak and future communities even better,

including the times we’ve succeeded and the times we’ve headed

back to the drawing board. The downturn in the housing market did

make 2007 a challenge, but as you’ll see, our commitment to

sustainability has not wavered, but actually strengthened.

Please tell us what you think of this report by filling out a brief survey

at kennecottland.com. As always, we welcome your thoughts on how

we’re doing, because we know that this is your community too.

Don Whyte

President, Kennecott Land

President’s Message

Defining Sustainable

Development

For us, sustainable development means

taking the long view. It’s about meeting

the needs of today’s generation without

compromising the needs of tomorrow’s.

At Kennecott Land, every major business

decision must pass a three-part litmus

test: Is it sustainable environmentally,

socially and economically? These “three

pillars” of sustainable development,

guided by strong governance, form the

basis of everything we do.

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Just a few years ago, it was hard to imagine the now-ordinary sights and

sounds of Daybreak. Couples paddling across Oquirrh Lake at sunset.

Neighbors trading squash for eggplant in the community garden. The bursts

of happy shouts and laughter that signal recess at Daybreak Elementary.

But thinking about the future is what sustainable development is all about.

Daybreak has been carefully planned, not just to enrich people’s lives now

with beautiful land, plentiful water and clean air, but also to ensure that

future generations may do the same. At completion, Daybreak will include

approximately 20,000 residential units, making it the largest master-planned

community in the history of Utah. With a project of this magnitude comes

responsibility to our fellow Utahns, and ultimately, the planet. It also

comes with the opportunity to inspire others to take the long view and

look forward to a more sustainable future.

Daybreak at a glance

The past year brought steady growth to Daybreak, increasing the number

of home closings from 980 to 1,479. Those numbers earned Daybreak

its rank as 2007’s fastest growing community in the Salt Lake Valley, while

underscoring the rise in public appreciation for sustainable communities.

Here’s a quick look at Daybreak’s most notable planned features:

• Homes with the variety and character of Salt Lake City’s original neighborhoods, but built to Energy Star® guidelines

• More than 1,000 acres designated for water-wise parks and open spaces• Oquirrh Lake, a 60-acre source of innovative water conservation and

recreation opportunities• Neighborhood schools and ongoing educational programs to promote

lifelong learning• Retail areas and commercial parks within the neighborhood to reduce

automobile usage and build a sense of community• Light rail transit scheduled to start providing service in 2010

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Kennecott Utah Copper

and Kennecott Land

Although the focus varies from above ground

to below, responsible land stewardship is what

connects the Kennecott companies.

The story of both companies begins with

the creation of the Utah Copper Company in

1903. Daniel Jackling formed the large-scale

mining company that was the birth of Utah’s

rich mining history and the beginning of

what is now known as the Bingham Canyon

Mine.Today, Kennecott Utah Copper (KUC)

is a mining, smelting and refining company

committed to integrating sustainable

development into every facet of its business.

KUC is the second largest copper producer

in the U.S. and employs 1,800 people.

Rio Tinto, a world leader in the responsible

discovery, mining and processing of the

earth’s minerals, acquired Kennecott Utah

Copper in 1989. Aligned with Rio Tinto’s

long-term approach to conducting business,

KUC began exploring the idea of using the

company’s extensive land holdings to

develop communities. In 2001, Kennecott

Land was established with the goal of creating

enduring and sustainable communities on

Salt Lake Valley’s West Bench. Kennecott Land

is currently based in Murray, Utah, and

employs 55 people.

The West Bench Master Plan,which spans 50-75 years, featurestransit centers near homes, jobsfor local residents, nearby schools,and neighborhoods with openspace connected by miles andmiles of trails and parks.

Kennecott Land and Daybreak: Overview

Beyond Daybreak: The West Bench Master Plan

Partnership with the community is at the heart of the West Bench Master

Plan. Prior to 2007, Kennecott Land collaborated with Salt Lake County and

more than 100 community leaders to craft this common vision for the West

Bench. The Plan provides for a series of master planned communities ––

similar to Daybreak in terms of sustainable development practices, but varying

in character, size and style.

In 2007, the focus of the collaborative team grew more specific, establishing

clear processes to guide the implementation of the vision. Working together

with our colleagues at the Salt Lake County Planning and Development

Services Division, we continued drafting ordinances to ensure that practices

align with agreed-upon principles.

Strong partnerships led to solid progress in the arena of transportation, too.

In 2007, the Utah Transit Authority (UTA) received a record of decision from

the Federal Transportation Administration to provide federal funding for light

rail to Daybreak. UTA selected a contractor, and

construction is slated to begin in Spring 2008.

In 2010, trains will run daily between

Daybreak and Salt Lake City.

The West Bench Master Plan is now included in

regional infrastructure plans with groups like Envision

Utah,The Wasatch Front Regional Council and UTA.

Although the approach to seek full entitlement with

the county has changed, the vision for the land is

intact. The change in approach puts the remaining

feasibility studies before entitlement so that our sister

companies, Kennecott Utah Copper and Kennecott

Exploration, can complete mining-related studies

in the Oquirrh Mountains.These results will

provide important detail on the protection of

mining zones and eventual creation

of residential zones.

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Six Core Concepts of the West Bench Master Plan

Economic Growth – Provide for a balanced mix of jobs and housing in andaround mixed-use centers.

Hierarchy of Centers – Create a richmix of land uses that will provide a wide variety of housing choices and commercial andemployment opportunities. These will includeurban, town, village and neighborhood centers.

Parks Network – Provide regional,community and neighborhood parks linked by a network of trails, paths and roads.

Natural Resources – Provide a balancebetween land development, conservation andopen space. Natural areas will be managed tomaintain greenways, habitats, wildlife corridorsand biodiversity.

Quality Neighborhoods – Create neighborhoods around schools, parks and community centers and design these neighborhoods for healthy living, safety and beauty.

Transit Boulevard – Provide a “commonthread” to link communities through highcapacity bus transit, light rail or proper roadcapacity that will serve the needs of the community.

2008 MASTER PLAN GOALS

• Conduct feasibility studies in the OquirrhMountains in partnership with KennecottUtah Copper and Kennecott Exploration.

• Continue exploring near-term projects for the land.

• Begin a joint study with UTA and Salt LakeCounty regarding transportation projectsfor future communities and the west sideof the Salt Lake Valley as a whole

“Kennecott Land is very progressive.Their actions in sustainable developmentreflect the heart and soul of the company, and the values of Salt LakeCounty’s government and citizens.”

Peter CorroonMayor of Salt Lake County

In 2010, TRAX trains will run every15 minutes between Salt Lake Cityand two Daybreak stations.

U of UDowntown

900 South

Ball Park1300 South

Central Point2100 South

Millcreek3300 South

Meadowbrook3800 South

Murray North4400 South

Murray Central5200 South

Fashion Place6400 South

Midvale Fort Union7200 South

Midvale Center7800 South

Historic Sandy8000 South

Sandy Civic Center10000 South

DaybreakDaybreak South

Mid Jordan Light Rail Line

Daybreak North

5600 West

4800 West

Bangerter

2700 West

GardnerVillage

BinghamJunction

Redwood

Environmental Stewardship

At Kennecott Land, our goal is not to skate by, meeting only minimum environmental requirements. Our goal is to raise the bar

each year for ourselves and, by example, those with whom we come into contact. It is our hope that we not only challenge

ourselves to become better environmental stewards, but our contractors, builders, vendors and homeowners too.

ENERGY

Our approach to energy addresses both the present and the future.We work diligently to conserve energy within the

company and by influencing our builders and residents as well. At the same time, we’re actively addressing the future by

pursuing renewable energy solutions.

Alternative energy sources

In June, Kennecott Land became a Rocky Mountain Power Blue

Sky Visionary Partner by committing to buy enough renewable

energy to cover all of our corporate electricity use. Kennecott

Land then challenged Daybreak residents to join us, offering to

match for one year the renewable energy purchases of the first

400 households to sign up. By the end of 2007, 115 residents

had joined, reducing carbon dioxide output by 2,730 tons per

year, the equivalent of taking 468 passenger cars off the road.

Energy Star…the sequel

Daybreak was the first Utah community to require every home to be built to the Environmental Protection Agency’s (EPA)

Energy Star guidelines, which require higher home energy efficiency than typical building codes. Because all of our builders

We prevent, or otherwise minimize

or mitigate the potential harmful

environmental impacts of our

operations. This includes preventing

pollution, conserving natural

resources and preserving open spaces.

Don Whyte, flanked by former SLC Mayor RockyAnderson, announces Kennecott Land’s participation in the Solar America Cities partnership. KL is the onlydeveloper participating in all 13 designated U.S. cities.

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ELECTRICITY0.55

0.50

.045

.040

.035

.030Daybreak Comparison

Average monthly electricity useper household, by communityin kilowatts

Comparison communitiesare located in South Jordan.

adhere to these guidelines, our homes use 12% less energy on average than

a typical new home in the same area. Even so, Kennecott Land has made the

requirement more rigorous. Starting in 2008 with our third village, every

home will go through a full Energy Star inspection, instead of one out of

every seven homes as required by the national Energy Star program. For the

villages to follow, we plan to establish an even more comprehensive home

Sustainable Development Assurance Program.

Energy-smart partnerships

Another area where Kennecott Land is striving to go above and beyond is

in partnerships. Salt Lake is one of 13 cities nationwide to receive funding as

part of Solar America Cities –– a program that promotes increased use of

solar-powered technologies. Kennecott Land is the only developer participating

in any of the 13 city projects. The Solar Salt Lake City project is a partnership

between Salt Lake City, Salt Lake County, Rocky Mountain Power, Utah Clean

Energy and Kennecott Land. The project aims to increase the use of solar

energy throughout the valley, through the use of photovoltaic panels,

concentrating solar power, and solar water/air heating. Daybreak’s new

Corporate Center will use solar panels to supply part of its energy needs.

Kennecott Land is also actively exploring ways to use solar power in the

residential and commercial sectors of our future communities.

Another new partnership is with The Climate Registry, an organization that

addresses climate change by measuring, tracking and verifying greenhouse

gas emissions. Kennecott Land joined the Registry at the end of 2007. As a

founding member, we will start reporting emissions for 2008 in 2009.

WATER15,000

14,500

14,000

13,500

13,000

12,500Daybreak Comparison

Average monthly water use per household, by communityin gallons.

Pavilion host Janie Okuno and Daybreakresident Keila Mower encourged otherresidents to sign up for Blue Sky Power.It didn’t take much coaxing.

“It’s easy to feel overwhelmed, like ‘what can I do?’

when it comes to a big issue like global warming.

Living here is a really simple way to help.”

Keila MowerResident

Resorce Consumption

NATURAL GAS1.2

1.1

1.0

.9

.8

.7Daybreak Comparison

Average monthly natural gas useper square foot, by community

WATER MANAGEMENT AND OPEN SPACE

One of the most progressive features of Daybreak’s design is its ability to

retain all storm water on-site up to and including a 100-year storm (2.8 inches

in 24 hours) –– thanks to collection areas like the wetlands adjacent to Oquirrh

Lake, park basins and other open spaces.This system reduces runoff-related

pollution, prevents flooding from occurring downstream, and helps to

recharge the local aquifer.

Now we know for certain that the system

works: In August, two back-to-back 80-year

storms drenched the south end of Salt

Lake Valley. Despite the double hit,

Daybreak’s system absorbed the water

exactly as planned. Unfortunately, a handful

of homes experienced water damage from

the runoff that came from undeveloped

fields outside the community. In the spirit

of neighborliness, we assisted with cleanup

and took steps to avoid future runoff

issues by adding berms, retention ponds

and trenches in several areas.

Irrigation education

At Daybreak’s Community Association presentations, residents learned about

a variety of water-wise practices.We encouraged homeowners to visit

and learn from the nine sod test plots we created on the eastern edge

of the property. As a part of our ongoing research in sustainable

development, these 4 feet x 25 feet plots of grass were each watered,

mowed and fertilized at different rates.Their response to the varying

treatment is a tangible and memorable way to demonstrate best practices

for residents. (Notably, the plots watered a mere 22 inches per year

were as green as those watered at the state average of 51 inches.)

We’re also testing a state-of-the-art, zero-runoff irrigation

system for parking strips. In addition, we implemented a new

policy in which home sites bigger than 5,000 square feet

must have an evapotranspiration controller –– an electronic device that

irrigates according to current weather conditions, preventing unnecessary

watering in resident’s yards.

Environmental Stewardship - continued

Jeff Burnett gets ready togo fishing at Oquirrh Lake.

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Lessons from the Lake

We’ve seen Oquirrh Lake become a

beautiful gathering place for the

community. We’ve also seen the need

for some adjustments. Vegetation

beside the lake was getting trampled

from overuse, so we added fishing

beaches and places to row boats up

to shore. New plants requiring less

maintenance are now being used,

additional trees will provide a much-

needed canopy on hot summer days,

and the bumper crop of weeds within

the lake was mitigated by the natural

–– and surprisingly simple –– method

of dropping hay bales

into the water.

Jeff Haws demonstratesthe use of an evapo-transpiration controller.

Water-wise planting

Landscaping at Daybreak is water-wise to begin with, but we’re looking for

ways to take it further. We’re testing new, less thirsty grasses for parks and

lawns. We’re transitioning to easier-to-maintain native flowers and grasses

in open spaces. And we’re exploring the idea of growing our own sod

and trees. Having our own sod farm would help control dust, and growing

our own trees would save the energy used in transporting them from

distant locations.

What’s new in open space

Seven new parks; 51 more acres of open space; four more miles of trails,

pathways and sidewalks; 250,000 fish; and 5,400 trees.That puts us at 8,600

of the 100,000 trees we’ve committed to plant at Daybreak. Additionally,

residents continue to plant even more.

Out of Daybreak’s 1,000 acres of planned parks and open spaces, 200 acres

will be gradually transferred to South Jordan City. In 2007, we modified our

agreements with the city to address the transfer process and management

practices. Collaborating with the city, we crafted an agreement that will

provide continued, sustainable management of these spaces.

LEADERSHIP IN ENERGY AND ENVIRONMENTAL

DESIGN (LEED)

Created by the United States Green Building Council (USGBC), the LEED

Green Building Rating System uses independent, third-party verification

to certify that a building project meets the highest green building design

and construction measures.There are many advantages to building to these

standards. LEED-certified buildings conserve energy and water, reduce

greenhouse gas emissions, and are healthier and safer for occupants.They

also have lower operating costs and increased asset value.

Remediation Closure

Due to impact from previous mining

activities, some sections of the

Daybreak site required soil remediation

to allow for residential development.

Remediation began in the 1990s under

the oversight of the EPA and Utah

State Department of Environmental

Quality, and was completed at the

beginning of 2007. Final approval of the

remediation work was obtained in

December of 2007. These cleanup

efforts were profiled in an EPA case

study, citing Kennecott’s “innovative

thinking…combined with a cooperative

approach to create a safe environment

for redevelopment.” Daybreak’s

Environmental History is posted on

the Kennecott Land website.

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“It’s rare to see a community step up the

way Daybreak has.They’re influencing

the way construction happens in the rest

of the market, too.”

Sam RashkinNational Director of the EPA’s Energy Star for Homes Program

Kennecott Land and Brigham YoungUniversity are working together to analyze test plots of grass.Each plot is watered and mowed atdifferent frequencies and levels todetermine the most drought-tolerantseed mixture for our climate.

Sights set on new LEED certifications

Earning a Silver LEED certification for the Daybreak Community Center

and Elementary School in 2006 inspired us to aim high again. Several

large projects now under construction are being built to LEED

standards.The Daybreak Village Center will offer retail shops, restaurants,

housing and office space. One of the buildings in the Village Center,

the Daybreak Corporate Center, opening in 2008, will provide office

space for all of Rio Tinto’s Salt Lake Valley business units and space for

other businesses too. The Daybreak Commerce Park will provide

industrial warehousing for Kennecott Utah Copper.

A related and very exciting development is Kennecott Land’s selection

by USGBC to participate in the LEED for Neighborhood Development

pilot program.The goal of this program is to develop environmentally

responsible and sustainable standards for neighborhood design. Our

participation will help us as we plan future villages in Daybreak and on

the West Bench.

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Environmental Indicators Summary

Indicator

Construction recycling rate

Average residential water consumption

Operational greenhouse gas emissions

Noise complaints

Vibration complaints

Regulatory citations

Regulatory fines

Units

% of recycled waste *

gal/home/ month

tons of CO2 equivalent /year **

# of stakeholder complaints

# of stakeholder complaints

#

$

2005

55.38

no data available

39,873

5

32

0

0

2006

76.80

14,800

23,977

0

3

0

0

2007

76.00

13,849

18,554

3

0

0

0

* Approximate values obtained from the recyclable waste collection company and based on total tons.** Approximate values, based on diesel consumption in heavy construction equipment.

Environmental Stewardship - continued

2007 Sustainable

Development Awards

Hats off to this year’s winners!

In the builder and contractor

categories, Rainey Homes, Nolte

Engineering and ValleyCrest

Landscape Development were

honored for outstanding

performance in sustainability.

We rewarded similar efforts

within our company with quarterly

awards. Around 20 employees were

recognized for their contributions,

either at work or at home.

RECYCLING AND REUSE OF MATERIALS

Continuing a practice that began in 2004, our builders and contractors

consistently recycle more than half of all their construction waste.

Whenever possible, we use or reuse materials already on site –– crushing

old road base and rocks to create new road material and gravel or using

rock from the Bingham Canyon Mine to line Oquirrh Lake.These practices

save money and reduce the greenhouse gas emissions that occur from

transport in diesel-burning trucks.

Community Recycling

Although South Jordan City has curbside recycling pickup, we formed a

volunteer committee to encourage greater resident participation at

Daybreak and throughout the entire city. The committee helped educate

residents through Daybreak Homeowners Association presentations,

articles in newsletters, and materials that remind residents which items are

recyclable. At one community event, children created sculptures from

recyclables during an art competition. To celebrate “America Recycles

Day” in November, we hosted a temporary glass recycling drop-off point

at Daybreak, which was greeted very enthusiastically by residents. We

plan to schedule more drop-offs for other materials, in collaboration with

South Jordan City. Plans are also underway to launch a children’s recycling

education program in 2008.

Office Recycling

Under the heading “practice what you preach,” we improved our own

office’s recycling practices this year. A volunteer committee launched

an internal education campaign to help employees improve their

recycling practices. Other 2007 improvements were a switch to recycled

paper; automatic double-sided copying and printing to decrease paper

usage; and an in-office collection point for recycling batteries. Additionally,

each employee received two reusable grocery bags made of recycled pop

bottles, and a mug to replace the use of plastic water bottles at the office.

2008 ENVIRONMENTAL

GOALS

• Obtain renewal of ISO 14001 certification

• Establish new sustainable development guidelines for Daybreak’s Villages 4 through 6

• Double the number of Blue Sky Powerresident participants at Daybreak

• Obtain LEED NeighborhoodDevelopment certification for Daybreak’s Village Center I

• Implement a program for KennecottLand employees that encourages the useof public transportation and carpooling

• Establish Kennecott Land’s carbon footprintand identify reduction strategies

• Explore net zero energy home designs

• Obtain LEED certification for DaybreakCorporate Center

• Start the implementation of a long-termopen space, biological, cultural and recreational resource management planfor the West Bench Master Plan

• Continue testing the feasibility of addingzero-runoff irrigation to all parking grassstrips in Village 3

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The ‘Join In’ logo was developedby Kennecott Land to encourageDaybreak and South Jordan Cityresidents to recycle.

Daybreak residents joined Kennecott Land tomake art sculptures out of recyclable materials.This event helped promote the rollout of thecommunity recycling program.

Social Wellbeing

Whether it’s helping fund a community campout under the stars or strengthening our worker safety program, Kennecott

Land’s focus is on making people’s lives better. This focus is what led to Daybreak’s community plan, where front porches

encourage neighborliness and a traditional small-town design makes parks, shops, restaurants and offices an easy and healthy

walk or bike ride away. And it has compelled us to do everything we can to keep our own employees safe and healthy.

SAFETY AND HEALTH

To us, there simply isn’t an “acceptable level” of injuries for our industry. We work very diligently to create a work

environment that helps our employees and contractors stay in good health and free of injury. This emphasis on physical

wellbeing has led to policies such as employee incentive pay based partly on the company-wide safety record. All

Kennecott Land employees are required to perform two “safety interactions” onsite per year, where they evaluate and

document the safe practices of our contractors. We also have four safety committees that assess health and safety

practices at our Murray office and at Daybreak.

Improved, comprehensive management system

Kennecott Land is the only land developer in the U.S. to have earned ISO 14001 Certification for our Environmental

Management System (EMS). ISO is an internationally recognized framework that helps businesses work in a way that

protects the environment, prevents pollution and improves environmental performance. In 2007, we strengthened our

EMS by merging three separate policies into one, creating the Health, Safety and Environmental Management System.

This unified framework standardizes requirements and

streamlines our internal processes regarding health,

safety and environmental matters. The benefits include

simplified standards for our employees and contractors,

and a comprehensive, effective system that focuses on

minimizing risk in every aspect of our business.

We strive to create strong and healthy

communities, safe and healthy work

environments for our employees and

contractors, and enduring relationships

with our stakeholders.

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Heather Garcia, Marc Oleson and Tony Caliari work onsiteand communicate Kennecott Land’s strong safety values toour contractors. The TRACK program helps staff and contractors recognize hazards, assess risks and stay safe.

In recognition of their injury-free work overa two-year period, Don Whyte thankedmore than 300 contractors who enjoyed acelebratory luncheon.

7

6

5

4

3

2

1

0US

const 2005

US all industry

2005

US mining2005

Rio Tinto 2007

KLC 2007

6.3

4.6

3.6

.93.29

Injuries per 200,000 hours worked

Figures include both injuries significant enough to require

time away from work (lost time injuries) and injuries that

did not (recordable injuries).

Safety awards

In July, Kennecott Land reached an

important milestone: Our employees and

contractors worked one million hours

without a lost time injury. When

compared with the rest of the construction

industry, this is an accomplishment that we are extremely proud of. To see

how we compare in all work-related injuries, see the chart on the right.

Cultural Safety Assessment

This major initiative focuses on the big picture of keeping our employees

and contractors safe and healthy. The goal was to discover ways to continue

making safety more integral to our corporate culture. By doing so, safe

practices become second nature and simply an outgrowth of the way we

work and live. Using 250 survey responses and follow-up focus groups,

we developed specific strategies for strengthening our safety culture. We

plan to implement these recommendations in 2008.

Healthy habits

Every year, Kennecott Land employees file their Personal Heath, Safety

and Environment Plan. In it, they list their personal goals for the year at

work and at home. Regularly, an ergonomist –– a specialist in the

interface between people and workspaces –– visits the Kennecott Land

offices. Employees can get an ergonomic assessment, which provides

recommendations for changes in or adjustments to equipment. In addition,

flu shots are provided to employees at no charge.

COMMUNITY QUALITY OF LIFE

As resident Kevin Dudley says, “Daybreak already has a sense of community

that other neighborhoods take decades to achieve.” He attributes this to

Kennecott Land “planting the seed, nurturing it, and then letting

the residents take over.” Providing community events and an

abundance of neighborhood gathering places –– a lake,

community center and parks all connected by trails –– helps

people connect. Those trails help in another important way,

too. According to a recent University of Utah study, 71% of

Daybreak Elementary students walk to or from school at least

once a week –– compared to the 22% of walkers at another

local school and the national average of less than 15%.

All Injury Frequency Rate

“This place feels so welcoming.

I don’t think it matters what age

you are.”

Neill and Janie Clark

Owners of the 1,000th home built at Daybreak

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Social events

Built right into the covenants is one of the primary reasons for Daybreak’s

sense of community: Daybreak Community Association Programs

Committee. Subsidized by Kennecott Land and facilitated by a full-time

lifestyle director, this group of 35 resident volunteers coordinated a

record number of well-attended events. Movie Nights in the Park, Casino

Night and the Summer Celebration were just a few of these popular

get-togethers. The biggest news of the year was the launch of the Youth

Committee. The new board of four teenagers planned service activities

and special summer events to help Daybreak teens get to know each

other. Playgroups and clubs –– with interests ranging from scuba diving

to quilting –– also increased in 2007.

Charitable activities

Because Daybreak’s design fosters neighborhood interaction and

relationships, the resident philanthropy program is unusually robust for

such a new community. It was even featured in The Wall Street Journal

in November. Each year, residents spearhead several charitable projects,

which Kennecott Land supports with cash donations, staff and other

resources. In 2007, the Annual 5K Fun Run/Walk raised $38,845 for

the Huntsman Cancer Institute –– a leap from 2006’s donation of

$12,747. Other activities included a holiday gift program for needy

children, and food, shoe and blanket drives.

School news

One key ingredient in Daybreak’s plan is to have good schools right

in the neighborhood. That’s why construction is already underway

for Eastlake Elementary, which will serve primarily the new

Eastlake Village, beginning in 2008. Our donation of 8.8 acres to

Jordan School District expedited the school’s construction. And

the learning continues with after school activities at the

Community Center. Some of the various programs introduced

children to other cultures through holiday celebrations, such as

Cinco de Mayo and Oktoberfest.

Social Wellbeing - continued

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Meg Nielsen helps the DaybreakCommunity Association release 36,000ladybugs in the community garden fornatural pest control.

“We lived in Taylorsville for ten years

and knew only our immediate neighbors.

But after only three years at Daybreak

we have dozens of close friends.

The Programs Committee is great at

bringing people together.”

Kevin Dudley

Resident

2008 SOCIAL GOALS

• Implement recommendations from theCultural Safety Survey

• Design a program that encourages a sustainable lifestyle among Daybreak residents

• Undergo the first comprehensive health,safety, and environmental management system audit

• Formalize the establishment of a sustainability orientation for all newDaybreak residents

• Install a set of sustainability educational displays in Village 3

New resident outreach

New residents learn all the perks and responsibilities of living at Daybreak

through quarterly orientations. Meetings always include a healthy dose of

sustainable development education with thematic focuses on topics like

recycling, safety, water and energy conservation, and water-wise landscaping.

So many newcomers attended a Landscape Plan Drawing Seminar that the

time was extended four and a half hours. At the seminar, residents met

one-on-one with landscape professionals who drew plans for their property.

Residents then took the plans to irrigation and nursery booths to get started.

More room for the zucchini

When we provided fifty plots in the original community garden in Founder’s

Park, we underestimated resident demand.The long waiting list led us to double

the garden's size to 100 plots. In addition, Eastlake Village now has 105 plots

of its own. The gardens combine the pleasures of growing food organically and

socializing with neighbors. One example: the Ladybug Release Party, where

36,000 ladybugs were set free to munch on aphids –– and to tickle the arms

of dozens of giggling children.

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Daybreak’s Community Associationformed a youth committee where kidsplan events that appeal to them.

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Economic Prosperity

Building a strong, balanced economic infrastructure –– homes, shops, offices and recreation –– right into the community

promotes economic health for present and future generations. This long-term view also nurtures Kennecott Land's viability:

Daybreak’s market share in Salt Lake County increased from 7% to 10.8% in 2007. More and more Utahns are seeing the

value of a sustainable approach to living.

COMPANY SUCCESS

The biggest challenge today's companies face regarding sustainable

development is this: How do you run a business that is environmentally and

socially sustainable…and profitable? At Kennecott Land, we're pleased to

demonstrate how it can actually be good business to do good things for

people and the planet.

The bottom line

The national downturn in housing hit Salt Lake County. New home permits

were down from 5,971 in 2006 to 3,989 in 2007. Bucking this trend,

however, Daybreak sold 430 new homes in 2007, up from 417 in 2006. This translates into a 3% increase in sales for us

and, in relation to the rest of the County, an almost 4% increase in market share. In other words, while the overall pool of

new homebuyers has shrunk, Kennecott Land’s portion of those buyers has expanded.

Relative to the market, these figures were excellent –– but they still fell short of Kennecott Land’s projected sales. Because

of this downturn, we needed to reassess our staffing plans. Unfortunately, we had to decrease our workforce by about 10%

to keep our cost structure in line with the current realities of the housing market. Nonetheless, our main plans for

Daybreak remain unchanged, especially our commitment to sustainable development.

We build neighborhoods

where people can live, work,

recreate and shop, enabling

economic prosperity. We

support the local economy and

run a profitable business.

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Kennecott Land is an important part ofKennecott Utah Copper’s mining legacy.This year a display was added at theBingham Canyon Mine Visitors Center tocommunicate the long-term vision for the West Bench.

Daybreak residents, Michael and LorrainePatton, pictured here with their son Dirk,value living in a Energy Star rated homewhich helps them save money on utilityexpenses while helping the environment.

Marketing success

Unusual for such a young community,

Daybreak now has a remarkable 86% brand

awareness among Salt Lake County residents.

This high recognition is owed partly to a

distinctive ad campaign and appealing events

that allow potential buyers to experience

Daybreak firsthand. At events like Camp

Daybreak (attendance: 1,000-1,500) or the

Summer Celebration (around 1,000),

newcomers mingle with residents and get a taste of Daybreak’s sense

of community –– while touring model homes. They also learn more about

Daybreak at the Information Pavilion, which has added new displays on

Eastlake Village, the commercial center and Energy Star.

Local economic impact

Adding up 2007 salaries, money spent on goods and services, taxes and permits,

Kennecott Land’s expenditures totaled about $95 million, the majority of

which went to the local economy. In adherence to Rio Tinto’s procurement

policies, we buy local when possible from businesses that share our

commitment to sustainable development. We believe in free and fair

competition and in supporting neighbors who exhibit

good business practices.

COMMUNITY DEVELOPMENT

In the past year, Daybreak took great strides toward

economic diversity in both the residential and

commercial sectors.To attract more types of

homebuyers, we now provide eight building types

(single-family homes, condos, etc.) with 65 floor

plans at a wide variety of prices. And now that

Daybreak has more than 1,400 homes, new

businesses have a growing base of customers.

Residential offerings

In this new era of tightened mortgage lending,

buyers are seeking lower-priced offerings.

We’ve responded with new, affordable choices,

such as condominium homes that start in the

$150,000s, and single-family homes priced

from the low $200,000s.

Other new, affordable options include terrace condominiums, townhomes,

carriage homes, and mansion townhomes, which have the exterior of a

large estate home, but contain three townhomes within. These new

choices promote diversity of age and income by appealing to first-time

buyers, singles, couples and empty-nesters who want low-maintenance living.

Originally, Daybreak was planned to provide 14,000 residential units. Now

we plan to have 20,000 residential units at completion, with an increase

in options like condos, townhomes and apartments. This signifies a

maximization of land already designated for housing –– a “going up,” rather

than “going out.” We stay committed to providing affordable housing for

everyone, ranging from young singles to retirees, while protecting open

space and the sustainability and integrity of Daybreak’s vision.

To help our builders stay in touch with buyers’ needs, too, we’ve enhanced our Builder Scorecard. Daybreak homebuyers

use it to rate their builders in terms of quality, service, warranty work and other parameters. We then present the results

to our builders. This information helps builders align their business values with ours and may have already helped improve

performance — customer satisfaction showed an increase in 2007.

Commercial ventures

Due to open in Summer 2008, the Daybreak Corporate Center

will bring residents 175,000 square feet of office space within walking and

biking distance. The rest of the Village Center –– housing a neighborhood

grocery store, restaurants and other retail –– is due to be completed

later in 2008. Daybreak Commerce Park, Daybreak’s first light industrial

building, is also under construction. With so many services right in

the neighborhood, the local economy will grow while car trips (and

greenhouse gas emissions) diminish.

Economic impact

In the fall of 2007, the University of Utah released its West Bench

Economic Impact Study. Although originally released in 2005, this

updated study details the positive economic impact of Kennecott Land

developing the West Bench. For example, within the 50-year development

period, local governments will collect an estimated $12 billion in taxes

and fees. To read a summary of the study, please visit our website,

kennecottland.com.

Daybreak offers low-priced townhomes inthe Salt Lake Valley starting at $170,000.

The Daybreak Corporate Center under construction will be completed in late 2008.

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Economic Prosperity - continued

2008 ECONOMIC GOALS

• Move Rio Tinto office employees in the Salt Lake Valley to the Rio TintoCorporate Center

• Enhance the prominence of sustainabilityin our marketing

• Explore the viability of creating aKennecott Land sod farm and tree farm

• Provide more housing that accommodateslower household income levels

• Provide active adult housing

• Open Village 3

• Combine Kennecott Land and Kennecott Utah Copper's outreach programs to maximize impact

Employees from the Kennecott UtahCompanies volunteered to clean up a portionof highway outside Copperton, Utah.

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COMPANY-COMMUNITY PARTNERSHIPS

This is our community too, and we’re committed to making our presence

here a lasting benefit to our neighbors.

Corporate giving

In 2007, Kennecott Land donated an 8.8-acre parcel of land to the

Jordan School District. Valued at $4 million for residential development,

the plot is across from a large park, giving students access to even more

play space. Besides aiding the school district financially, this donation

has allowed construction of Eastlake Elementary to begin earlier, to

better serve newly arriving residents.

We also donated $164,000 to various organizations, including Western

Governor’s University for education scholarships, the Jordan Valley

Water Conservation Garden, the Utah Arts Festival eARTh Team,

and various programs at the University of Utah. Our contributions

increased from $127,863 in 2006. In 2008, we will combine our

outreach activities with those of Kennecott Utah Copper.

Another donation focused on the town of Copperton, an original

West Bench community. Copperton’s historic ties to mining inspired us

to preserve the memories of those who lived there in its heyday.

For a special oral history project, Kennecott Land and Kennecott Utah

Copper jointly commissioned the University of Utah Humanities

Department to interview 12 long-time Copperton residents. Compact

disks of the interviews were distributed at Copperton Town Days and

donated to local libraries.

Employee giving

Each year, a steering committee of employees suggests volunteer

projects that align with Kennecott Land's principles of sustainability.

This year’s events included supporting Magna Night Out Against Crime,

an Adopt-a-Highway road cleanup in Copperton, a holiday food drive,

and serving Thanksgiving and Christmas dinners at the Magna Senior

Citizen Center. We also encourage employee cash donations through

a matching program.

Governance refers to our internal processes –– the structures that keep us progressing in sustainable development and

accountable to our external stakeholders. All Kennecott Land employees are required to comply with the policies set out

in Rio Tinto’s statement of business practice, The Way We Work.These policies require that our daily work exhibit values

such as accountability, fairness, integrity and openness. Below are a few internal structures that help promote those values.

Sustainable Development Advisory Board (SDAB)

The SDAB includes 18 representatives of government, academia, non-profit associations, utility providers and

environmental groups. Collaborating with these various entities gives the company an outside, objective view of how

we’re doing. The SDAB enables us to communicate our plans to the community, test our ideas, hear their ideas and discover

beneficial ways to partner. We met three times in 2007, and the group’s input helped us create the 2007-2012

Sustainable Development Plan (see chart on right). The membership includes representatives from these entities:

Governance

Kennecott Utah Copper

National Renewable Energy Laboratory

Questar

Rocky Mountain Power

Salt Lake City

Salt Lake County

Sierra Club

South Jordan City

The Nature Conservancy

Utah Clean Energy

Utah Division of Water Resources

Utah Division of Facilities and Construction Management

University of Utah

“The SDAB meetings are very productive. Kennecott

Land has brought in a good group of stakeholders

who are immersed in energy and water issues, and

have a strong environmental ethic.”

Mark Heileson

Southwest Regional Representative, Sierra Club

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The Kennecott Land Assurance Forum

The Kennecott Land Assurance Forum was created with the

purpose of ensuring the identification and management of risks

associated with non-compliance of laws, regulations, codes,

standards and Rio Tinto policies. It is a committee of senior

managers who, in addition to their other duties, collectively

assume and execute accountability for the program. The

Assurance Forum meets quarterly to provide updates on the

status of non-compliance and formulates plans to remediate any

non-compliance. Annually, the group performs a structured risk

profiling exercise to formally document risks and risk ratings.

Based on the work of the Assurance Forum, vice presidents

annually certify compliance in their respective areas.

Builder design workshops

In 2003, Kennecott Land presented builders with sustainable

development guidelines that mandated specific features. In 2007, we introduced a more inclusive process.

At our first design meeting or “charrette,” we began collaborating on plans to significantly improve sustainability in

Villages 4 through 6. This open dialog will continue in 2008 and is increasing our builders' passion about sustainable

practices, and our understanding and responsiveness to their challenges.

Brainstorming workshops

At these meetings, Kennecott Land and Kennecott Utah Copper employees and Daybreak residents brainstormed

improvements to sustainable development performance. Several of these ideas will be implemented over the next

five years.

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Sustainable Development Planning Process

SDAB

Builderdesign

workshopsBuilders

Residents

KL / KUC

Stakeholders

Brainstormingworkshops

Proposal

Implementation

Feb

June

May

July August

2007 - 2012

Planningsummits

2008 GOVERNANCE GOALS

• Provide builders with the support they needto implement new sustainability guidelines

• Add Daybreak residents to the SustainableDevelopment Advisory Board

Project Manager Evaluation Form (PMEF) -

internal governance

For every project, employees must conduct a risk assessment using

this form. The PMEF requires an explanation of the project's

potential impacts with regard to Health, Safety, Environment and

Sustainable Development (HSESD). No work may begin without

the approval of the HSESD management team. Projects that

require a large investment of resources go through an additional

approval process with an investment committee.

We hope you have found this report to be informative andlook forward to receiving your feedback.To provide comments, visit www.kennecottland.com and fill out a quick online survey. Thank you.

To request additional copies of this report,e-mail westbench@kennecott.com or call 801-743-4328.

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Governance - continued

Kennecott Land 2007 Sustainability Scorecard

To measure how well we are doing in our commitment to sustainable development principles, Kennecott Land

has identified the following key performance indicators as relevant measurements for our business.

Result Comments

Establish a strategy to increase renewable energy at Daybreak.

Develop an Energy Conservation Program to educate homeowners about energy-saving measures.

Establish an energy consumption baseline for homes.

Improve the household recycling program forDaybreak in cooperation with South Jordan City.

Implement a computerized program to control out-door watering on lots bigger than 5,000 square feet.

Complete a feasibility analysis on the optimal re-use ofgray water for irrigation.

Test a drip irrigation system that helps keep water at the root level instead of being lost to evaporation.

Test a variety of non-native trees for drought tolerance and canopy size to increase tree diversity.

The established strategy includes a demonstration project, the inclusion of solar panels at the corporate center building, and the designand construction of prototype homes.

Workshops were conducted to educate residents, and a challenge waslaunched to match resident renewable energy purchases.

The baseline was established.Please refer to the energy graphs for more details.

An awareness campaign was launched, and activities were conducted in the community. The program will continue in 2008.

Installed 380 evapo-transpiration controllers during 2007.

Study completed. The re-use of gray water in homes was determined non-feasible at this time.

The test was completed and the technology was installed in a few parks.

This project is on-going and it will be finalized in 2009.

Result Comments

Conduct a resident survey through the DaybreakCommunity Association (DCA) to better addresssocial desires and needs of the community.

Combine the Environmental Management Systemwith the Health & Safety System for increased effectiveness and efficiency.

Open Oquirrh Lake to community fishing.

Conduct an EPA Indoor Air Quality Standard feasibility study for homes.

Perform full-scale disaster management exercise and undergo third-party evaluation.

Four focus groups were conducted and the feedback obtained will be used to enhance programs.

The system was successfully integrated in 2007.

The lake was opened to fishing in April 2007.

The study was completed and an implementation strategy will be discussed in 2008.

The exercise was successfully conducted in August of 2007.The third-party evaluation has been postponed.

Environmental Goals

Social Goals

Result Comments

Continue researching an affordable housing partnership.

Break ground on an active adult project and other housing types.

Break ground on the Daybreak Village 1 Center.

After several partnerships were considered, the company chose instead to increase offerings of affordable housing in Village 3,whose construction will start in 2008.

A very affordable, single-family, detached home and a new type of condominium were added to Daybreak. Plans continue to offer specific products for active adults.

The project started in February 2007.

Economic Goals

Goal Accomplished Goal in Progress Target not met

5295 South 300 West, Suite 475

Murray, Utah 84107

Ph: (801)743-4624

Fax: (801)743-4659

email: westbench@kennecott.com

www.kennecottland.com

RIOTINTO A member of the Rio Tinto group. Printed on recycled paper using soy-based ink.

Awards and Certifications:

• International Organization for Standardization –– Recertification of ISO 14001, 2004

• Utah Business Magazine –– Selected as a Most Admired Company in Utah

• Utah Chapter of the Public Relations Society of America and the Utah Chapter

of the International Association of Business Communicators –– Gold Award for the

2006 Kennecott Land Sustainable Development Report

• National Safety Council –– Award for one million hours worked with no lost time injuries

• South Jordan Chamber of Commerce –– Business of the Year

• Best of Utah Award – Community Development Division for Large Business