Argyle Diamond Mine - 2013 Sustainable development report Diamond Mine_2013... · 2013 was indeed a...

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Sustainable development report 2013 Argyle Diamonds

Transcript of Argyle Diamond Mine - 2013 Sustainable development report Diamond Mine_2013... · 2013 was indeed a...

Sustainable development report 2013

Argyle Diamonds

02

04 Message from our managing director

05 Our location

06 WHO WE ARE

06 Our operations

06 Our purpose

08 Our values

09 Proud past, exciting future

10 OUR HEALTH AND SAFETY

10 Reducing on-site injuries

12 Health and safety initiatives

13 Health and wellness initiatives

14 OUR PEOPLE

15 A reshaped underground workforce

16 Indigenous employment

17 End of an era for Kelly

18 OUR ENVIRONMENT

18 Reducing water and energy use

20 Management of waste rock dumps

20 Remediation of Belmont site

21 Closure planning

22 Leaner and greener use of energy

23 OUR COMMUNITY

23 Ongoing support for community projects

23 Management of Participation Agreement

25 Cultural Recognition

26 Liam lives his diamond dream

27 OUR PRODUCT

29 A good year for reds

31 Fashioning a new Chinese jewellery market

32 CREATION OF ECONOMIC VALUE 

34 FURTHER INFORMATION

Con

tents

Table of contents

03

I am pleased to present the Argyle Diamonds 2013 sustainable development report.

Towards the end of 2012 a member of my team made the comment that 2013 was going to be the biggest year in Argyle’s history and, as the year got underway, it became increasingly clear just how prophetic these words would be.

2013 was indeed a pivotal year in Argyle’s history as we completed our transition from open pit to underground mining and restructured our business to set us up for the future.

Our underground journey has been a long and often challenging one. Since approval was granted by Rio Tinto in 2005 to develop an underground block cave mine to extend Argyle’s production life, we have weathered both unfavourable climatic conditions and unfavourable economic landscapes to see this significant project come to fruition. Underground development was seriously slowed in 2009, for example, by the global financial crisis of 2007/2008. Rio Tinto has since needed to keep a close watch on the ongoing market fundamentals. We were naturally very pleased by Rio Tinto’s mid-year announcement that, following a strategic review, it saw a robust future for the diamond industry and would be retaining its diamonds business.

The commissioning of the Argyle underground mine in April 2013 was a milestone event and a vote of confidence in Argyle’s state-of-the-art underground operations, which will see the life of this iconic asset extended.

This is good news, of course, not only for our Argyle employees and contractors, but for the broader East Kimberley region, the State of Western Australia, and those who benefit from our operations worldwide. The powerful, long-term partnership Argyle has forged with the Indian diamond manufacturing industry, for example, has helped India to become the powerhouse of the world diamond industry, employing thousands of people as diamond cutters, polishers and manufacturers and creating economic wealth.

Locally, Argyle’s extended life will generate significant economic benefits as we continue to tap into the growing interest in diamond fashion jewellery being shown by the rising middle classes in India and China. Argyle’s small, coloured stones are ideally suited to this market.

The opening of our underground mine would not have been achievable without the dedication and commitment of our employees, contractors and suppliers. Reshaping our business to support our new underground operations has not been without its personal disruptions, and the underground environment has certainly thrown up new safety challenges. I appreciate the efforts of each and every person who has been involved in getting us over the line.

I am very pleased to say that, throughout these significant changes, our commitment to Aboriginal employment has remained firm, particularly in relation to our apprenticeship and traineeship program. This year, we celebrated the graduation of seven Aboriginal apprentices and five Aboriginal trainees, who have all been offered jobs at Argyle. We have also paid close attention to our environmental obligations within this new operating environment and have invested significant energy in reducing our energy use and greenhouse gas emissions.

Looking ahead to 2014, our core values – valuing our people, respect for indigenous culture, value creation and accountability – will continue to apply as we bring the underground mine into full production, drive further improvements in safety and continue to engage with our key community stakeholders. It will be an exciting year and I look forward to sharing the outcomes with you in future sustainable development reports.

Shane Johnsonmanaging director

Message

Message from our managing director

04

HAL

LS C

REEK

MO

BILE

ZO

NE

KING LEOPOLD MOBILE ZONE

Derby

Kununurra

Argyle Mine

EAST KIMBERLY

WEST KIMBERLY

LAKE ARGYLE

ELLENDALE

WESTERNAUSTRALIA

Perth

Darwin

Sydney

Melbourne

DIAMOND OCCURRENCE

LAMPROLITE

KIMBEROLITE

TOWN/CITY

MINE SITE

0 100km

100miles

Ou

r locationThe Argyle diamond mine is located in the East Kimberley region of remote north Western Australia. It is 185 kilometres by road from Kununurra, just south of Lake Argyle. Argyle also has offices in Perth and Kununurra.

The mining lease is on the traditional country of the Miriuwung, Gija, Malgnin and Wularr people and was formerly part of the Lissadell pastoral station. The closest communities are Warmun (Turkey Creek), Mandangala (Glen Hill), Woolah (Doon Doon) Juwulinypany (Bow River) and Rugan (Crocodile Hole).

05

Wh

o we are

Who we are

Our operations

Argyle Diamonds is wholly owned by Rio Tinto. The Argyle mine, in the remote East Kimberley region of Western Australia, is one of the world’s largest suppliers of diamonds and the world’s largest supplier of natural coloured diamonds.

Argyle’s open pit diamond mine, which ceased operations in August 2013, produced more than 800 million carats of diamonds over its 28-year life. Since the early 1990s, investigations have been underway to explore the potential of underground mining at Argyle, as it was known that a significant portion of the ore resource could not be mined by the open pit method.

The construction of an underground block cave mine was approved by the Rio Tinto Board in 2005 following extensive feasibility studies into the safest and most economic way to reach deep into Argyle’s ore body. Block cave mining involves undercutting the ore body and allowing it to break up or ‘cave’ under its own weight, removing the need for explosives or blasting. The technologically sophisticated underground operation at Argyle is the first block cave mine in Western Australia and one of only a handful in Australia.

At full production, the Argyle underground mine will generate on average approximately 20 million carats per year over the life of the block cave and is expected to extend Argyle’s mine life until at least 2020.

Argyle’s operation currently comprises the underground mine, a processing plant and accommodation and support facilities.

Our purpose

Argyle’s dual business purpose is to realise the full economic potential of our ore body and to create enduring benefits for the East Kimberley region. Both of these aims are equally important.

Aboriginal people, who have lived in the region for more than 40,000 years form around 50 per cent of the East Kimberley population. They suffer the greatest levels of social and economic disadvantage and the statistics for these communities in the East Kimberley are quite bleak. About 55 per cent of the Aboriginal population is under 25 years old compared to 25 per cent for the non-indigenous population. Only 17 per cent of Aboriginal children complete year 12 education compared to 54 per cent of the non-indigenous population. Only 26 per cent of Aboriginal adults are in participating in the workforce (non-community development employment project work) compared to 87 per cent for non-indigenous people. 79 per cent of Aboriginal people are in public and community housing compared to 14 per cent for the non-indigenous population.

As the region’s biggest employer and largest economic contributor, we have an opportunity to make a real difference to these circumstances. This is guided by the Argyle Diamond Mine Participation Agreement, which was registered in 2005 and continues to form the basis for Argyle’s positive relationships with indigenous groups in the region. The Participation Agreement is based on mutual respect and a shared desire to build a better future for local Aboriginal people. It recognises that the Traditional Owners are the custodians of the land on which the Argyle lease is situated. In return, the Traditional Owners have provided their approval for Argyle to mine the lease area.

06

07

The Argyle underground mine

will extend the mine life until at least 2020

Wh

o we are

Our values

The way in which we work to achieve our dual purpose is underpinned by our key values:

• valuing our people • respect for indigenous culture • value creation • accountability

We strive to conduct our business within the framework of our core values. This includes ensuring a safe and healthy workplace, respecting all people involved with the Argyle operation, and communicating openly and honestly. These values are set out in ‘The way we work’, which outlines Rio Tinto’s business practices around the globe.

Strategic Direction 2014 to 2016

Our purpose is to recognise the full economic

potential of the Argyle ore body and create

enduring benefits for the region. We have four

values and three key principles which inform

the way we operate and make decisions.

Value our people

Respect for indigenous culture

Value Creation

Accountability

FOCUS

All heading in one clear direction

Simplify systems and processes

Work to maximise our profitability

TRUST

Empower our staff

Trust but verify

Safe to make decisions

DELIVER

Do what we say we will do

Operate like it’s our business

Assist others to achieve our goals

Our Values

Our Principles

08

April 30, 2013 was a proud day at the Argyle diamond mine as Traditional Owners, government representatives and employees celebrated the opening of the underground mine.

The official proceedings began with a special Manthe ceremony, performed by the Traditional Owners, the Gija and Miriuwung people, who welcomed each guest to their land with a smoking and water blessing.

Chief executive officer for Rio Tinto Diamonds & Minerals, Alan Davies, took the opportunity to reflect on Argyle’s rich history – from its enduring relationships with the Traditional Owners, to its commitment to sustainability, and its marketing efforts to establish Argyle Diamonds as an internationally recognised brand.

“Today, Argyle diamonds are one of the few gemstones identified by their very specific origins, immediately known by name, with their own distinctive in-built ‘brand’. They have been responsible for creating new chapters in the history of diamond jewellery.”

Then managing director of the Argyle mine, Kim Truter, spoke about the important benefits Argyle continued to deliver to East Kimberley communities.  

“We are involved in capacity-building and partnerships to ensure we leave a positive legacy in this wonderful part of the world,” he said.

“As the Argyle mine has grown deeper with each passing year, so too have our bonds of partnership with this region”.

Proud past, exciting future

09

Ou

r health

and safety

Our health and safety

Rio Tinto Diamonds observes internationally established safety standards, and these are enforced at all of its operating sites, including Argyle. The company’s comprehensive system for identifying health and safety hazards is designed to ensure that, from the first day of employment, all of its workers enjoy safe working conditions and, through their own behaviour, contribute to an incident and injury-free workplace. Rio Tinto’s sites are audited against these standards every two years, with the results reported to its Executive Committee and follow-up actions tracked and monitored. This is a key approach to improving safety at Argyle.

Reducing on-site injuries

While the changing operating environment has presented new safety challenges for Argyle in the last few years, we significantly improved our safety record in 2013. However, we still have some way to go in improving safety across our operation and this will be a key focus for 2014.

In April 2013, Argyle took over the operation and finalisation of construction of the underground mine. Construction, development and production activities in an underground environment, especially when occurring simultaneously within the same work area, typically carry higher risk and a higher injury incident rate and this was reflected in our safety figures for 2012. However, the shift to production and a heightened focus on safety has seen our all-injury statistics reduce by more than half over the past year over all operations from 75 in 2012, from the combined underground project and existing Argyle surface operations, to 27 in 2013.

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A heightened focus on safety has seen our all-injury statistics reduce by more than half over the past year

Argyle Diamonds health and safety performance 2012 to 2013

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All Injury Frequency Rate (per 200,000 man hours)

Lost Time Injury Frequency Rate (per 200,000 man hours)

Number of injuries

Number of signi�cant incidents

4.28

3.45

1.04

1.88

64

121

23

48

11

27

1.14

2.03

2012 (Argyle DiamondsUnderground Project - T&I)

2012 (Argyle DiamondsUnderground Project - T&I)

2012 (Argyle DiamondsUnderground Project - T&I)

2012 (Argyle DiamondsUnderground Project - T&I)

2012 (Argyle Diamonds - Surface Operations)

2012 (Argyle Diamonds - Surface Operations)

2012 (Argyle Diamonds - Surface Operations)

2012 (Argyle Diamonds - Surface Operations)

2013 (Argyle Diamonds)

2013 (Argyle Diamonds)

2013 (Argyle Diamonds)

2013 (Argyle Diamonds)

Ou

r health

and safety

Some of the safety initiatives implemented throughout the 2012 and 2013 years included:

• projects to review, align and streamline the core safety standards between underground operations, surface operations and construction

• the commencement of a frontline safety leadership development program

• refreshment of our site life-saving rules, setting clear expectations for frontline leaders and making life-saving rules more visible and felt in the workplace on a daily basis

• formation of a single health and safety representative committee across site and the provision of greater support to health and safety representatives

• implementation of a new assurance model, which involves quarterly first party inspections of areas by leaders, six-monthly verification of this process by the managing director and an annual review by peers from other diamonds businesses

• various safety stand-downs and interventions used to refocus the workforce and reset expectations on risk management

• the implementation of a successful business partner program where members of the Health Safety Environment and Communities team link up with site leaders to give them ongoing support

Health and Safety Initiatives

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Argyle’s site wellness program won it the ‘People’ award in the 2011 Western Australian Chamber of Minerals and Energy’s safety and health innovation awards

Ou

r health

and safety

Health and wellness initiatives

The East Kimberley’s tropical monsoon climate presents challenges for workers, especially in the wet season (October to March) when temperatures and humidity levels are high. Dehydration is a particular risk, especially for those labouring outdoors. In 2013, Argyle’s thermal stress management plan was reviewed to tighten up thermal work limits and action triggers and a comprehensive promotional campaign was again run throughout the wet season to make staff more aware of how to prevent dehydration. This campaign has seen a trend of at least a 50 per cent reduction in dehydration cases, year on year, since 2009. Staff are provided with water stations in strategic locations across site and state-of-the-art equipment is readily available for staff to accurately measure their hydration levels.

Monitoring activities continued as a matter of due diligence for potable water, noise, hydration and airborne contaminants. No new concerning or emerging trends have appeared out of the annual statistical analysis process, although we remain focused on reducing risks related to noise and diesel particulate matter exposure.

More granular sampling and analysis of our welding fume exposure will also take place in 2014, to better understand how we can manage this airborne contaminant for our maintenance personnel.

Argyle’s award-winning site wellness program won the ‘People’ award for outstanding efforts in site wellness at the 2011 Western Australian Chamber of Minerals and Energy’s safety and health innovation awards. It provides both pit-stop health assessments in the field and comprehensive one-on-one individual assessments to both staff and contractors. It also offers after-work healthy lifestyle activities and improved healthy eating choices within the two camp mess locations.

A total of 120 employees and contractors voluntarily participated in our wellness program in 2013 and several hundred workers took the opportunity to be vaccinated against influenza.

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Argyle’s site wellness program won it the ‘People’ award in the 2011 Western Australian Chamber of Minerals and Energy’s safety and health innovation awards

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As the largest employer in the East Kimberley, Argyle provides significant opportunities for individuals within the region

Ou

r people

Our people

As the largest employer in the East Kimberley, Argyle provides significant opportunities for individuals within the region to build their skills and economic prospects. In 2000, only 11 per cent of our workforce was living in the region and five per cent was Aboriginal. Our decision to localise the workforce to ensure the benefits of the business are kept in the region have since seen these figures rise to as much as 71 per cent local and 26 per cent indigenous. In recent years, however, the critical skills shortage facing the Western Australian mining industry and the technical skills required in the underground operation has contributed to a decrease in local employment figures: in 2013, we had a workforce of 499 people and 43 per cent of these were local.

A reshaped underground workforce

It was expected that 2012 and 2013 would be a time of significant organisational change for Argyle as we made the shift from open cut to underground mining. This shift resulted in a reduction in employee numbers, primarily in support service areas and in the surface mining operations. However, because this was a planned event, staff had been advised in advance that this change was coming and had time to carefully consider their options. Numerous discussions took place with those affected to develop transition plans; opportunities were provided to work in other roles at Argyle, to transfer to other Rio Tinto sites or to accept a redundancy. The wind-back and eventual cessation of surface mining operations resulted in 29 roles being made redundant in 2012 and 98 roles being made redundant in 2013.

Some employees from the surface mining team transitioned across to the underground operations, with the training department using mining simulators and on-the-job training to skill these staff to work in the underground environment. There were 87 new starters in the underground mine department in 2012 and an additional 51 new starters in 2013.

Total Employee Numbers

5502012

499

43

452

417

15

13

32

22

98

82

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

56

East Kimberley Employment (%)

Gender SplitMale

Gender SplitFemale

Indigenous Employment (%)

Apprentices and Trainees

Argyle Diamonds workforce figures 2012 to 2013

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Ou

r people

For some of Argyle’s long-serving employees, like open pit mining supervisor Kelly Dasborough, the changeover to underground mining provided the perfect timing to end their Argyle career.

Indigenous employment

Under the Participation Agreement, Argyle is committed to increasing the representation of Aboriginal people in its workforce, to help build their skills base, expand their career options and increase their economic participation. Our commitment to Aboriginal employment remained strong in 2013.

A total of 12 apprentices and trainees successfully completed their training and all were offered a permanent, full-time role at Argyle.

In addition to employing Aboriginal people at the mine site, we also support the development of local, indigenous businesses and are increasingly outsourcing some of our in-house work to indigenous contractors. As of 2010, Argyle was outsourcing work to 48 indigenous contractors. In 2013 the amount spent on local indigenous businesses was over AUD $8.7 million.

16

The removal of the last load of ore from the Argyle open pit in August 2013 marked the end of an era for the superintendent of mining and quarry manager, Kelly Dasborough.

Kelly, who was present for the excavation of the first load of ore from the open pit back in 1985, farewelled Argyle after 28 years of service, during which time he operated every piece of equipment at the mine and witnessed many changes in the operating environment. Like other open pit employees at Argyle, he dealt with the many challenges thrown up by the weather, the landscape and the time and distance spent away from home.

After starting as a machine operator, he progressed to team leader roles in Load and Haul, then Drill and Blast, before becoming superintendent of mining and quarry manager.

“The environment at Argyle when the mine first started was challenging and exciting; this was the first diamond mine in Australia and the largest diamond-producing mine in the world. Wow!,” recalls Kelly of his early days with Argyle.

“In the mining game, it was the place to be. The facilities at the mine site were second-to-none, with brick self-contained accommodation built on a hill to maximise the stunning Kimberley views. There wasn’t a donga in sight. People who came to work at Argyle stayed as the facilities, equipment and ideas were state-of-the-art.

“There was a great sense of comradeship, with people working and socialising as a team. Of course, in those days most people were employed from Perth, whereas now workers are largely locally-based and we have a strong Indigenous workforce.”

Asked what he would miss most about working at Argyle, Kelly cited his friends, his colleagues and the “harsh, rugged, red scenic earth that the Kimberley is so famous for”.

However, he added that he wouldn’t miss “the flies and temperatures of 50 degrees in the bottom of the pit in summer. I also won’t miss six-and-a-half hours on a plane each week. Argyle has the longest commute flight in the world.”

End of an era for Kelly

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Ou

r environm

ent

Our environment

Argyle’s environmental management program includes a range of projects to prevent, minimise, mitigate or remediate the mine’s environmental impacts, including:

• conservation of natural resources to promote efficient use of water and energy

• protection of rare, endangered or priority plant species

• management of exotic species

• promotion of environmental awareness throughout the workforce

• protection of indigenous heritage sites

• environmental performance monitoring and measurement

Argyle has a dedicated environmental team that ensures the mine is compliant with all current environmental legislation, obtains required licences and permits and meets environmental reporting requirements.

Reducing water and energy use

Water management is a very important issue at Argyle given its limited supply, the potential impact of operations on local groundwater and because there are important, water-dependent indigenous cultural sites located on the Argyle lease. The mine’s water is sourced from Gap Dam, Jacko’s Dam and Lake Argyle. There have been some great successes where the bulk of the water available for recycling is being recycled. Also, Lake Argyle is a recognised wetland site and the mine has worked hard to reduce its use of water from this source, with its use now restricted to drinking water.

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Lake Argyle water consumption (ML)

Energy use (GJ)

Greenhouse gas (tCO2-e)

Water recycling (%)

Signi�cant Environmental Incidents

300

464

2012

2013

154.184

163.065

48.606

54.913

22.5

22.4

1

0

2012

2013

2012

2013

2012

2013

2012

2013

Argyle Diamonds environmental performance 2012 to 2013

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Argyle’s environmental management program

includes a range of projects to prevent, minimise,

mitigate or remediate the mine’s environmental impacts

Argyle Diamonds environmental performance 2012 to 2013

The greater issue now for Argyle is the discharge of water into the environment. In 2013, we developed a discharge target for the period 2014 to 2018 which commits us to a 25 per cent decrease in the five-year rolling average of total dissolved solids (TDS) discharged to water per day. TDS is a water quality indicator and includes the nutrients and waste rock dump seepage parameters that are Argyle’s main chemicals of concern for site. A TDS kg/day target allows Argyle to focus in on reducing the downstream environmental impact of its operations and a five-year rolling average allows us to smooth out the effect of rainfall on this target. There are several cost-effective actions that can be taken to reduce the discharge that will in turn decrease the likelihood of water supply issues in the future. Currently Argyle is investing the use of different onsite materials as a means of neutralising waste rock dump seepage.

A concerted effort was also made throughout the year to reduce Argyle’s energy usage and its greenhouse gas output, which resulted in considerable savings on both fronts (see profile story, page 22).

Management of waste rock dumps

An area of focus for the environmental team in 2013 was exploration of the best options for containing waste rock dump seepage. Most of the waste rock is inert, however, there are several locations where there is seepage that is acidic and has dissolved salts such as magnesium sulphate. Although the flow rates from these areas are very low, seepage from these dumps into their surroundings, either during or after mining, can present environmental risks. In May, Argyle invited an environmental specialist from Rio Tinto Iron Ore to the site to help determine the best options for minimising this risk. During the visit, a range of experiments were carried out to test different onsite materials for their neutralisation capacity. The seepage water was also tested to determine if trench-style treatment would be a suitable management action. Designing and installing the treatment system will be a key project for 2014.

Remediation of Belmont site

As part of the buyout of Ashton Mining in 2000, Argyle inherited a disused mineral laboratory in the Perth riverside suburb of Belmont. In 2001, as part of the decommissioning of the laboratory, Argyle discovered that a plume of tribromoethene (TBE) had leaked into the groundwater from a ruptured drainage pipe. The TBE had the potential to seep through the aquifer.

Only a handful of industries use TBE so knowledge of potential impacts on the environment and/or human health was almost non-existent in 2001. Subsequently, state, national and international experts were engaged to design a robust remediation strategy and this has now been recognised as leading practice globally. While the initial estimates were that it could take between 20 to 50 years to remediate the site, Argyle’s efforts over the past 10 years have reduced this timeframe considerably. To date, Argyle has spent approximately AUD $10 million on this project.

Our environment

20

Closure planning

Whilst Argyle is still seven years away from closure (as per the current mine plan), 2014 will see the review and submission of the Argyle Mine Closure Plan. The plan will be prepared in accordance with the latest guidelines jointly prepared by the Department of Mines and Petroleum and the Environmental Protection Authority, for submission to the Department of State Development Western Australia.

The focus of the review will be to ensure that the information included in the plan is a true reflection of the needs and expectations of stakeholder groups and that the most up-to-date expert information is included. This will entail engaging with the Traditional Owners and other relevant stakeholder groups on closure objectives, interests, risks and completion criteria as well as seeking input, expertise, updates and review on content from within the Argyle business and the broader Rio Tinto organisation.

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Leaner and greener use of energyA number of initiatives have been underway at Argyle to reduce the site’s energy consumption and its greenhouse gas output. Over the past two years, for instance, it has delivered more than AUD $4 million in direct power savings through more effective use of its diesel/hydro power mix and has reduced greenhouse gas emissions at the site by 30 per cent.

One of the strategies employed is running equipment at night, instead of during the day, as there is greater availability of power from the Ord Hydro at night and the cost is significantly less than power generated from diesel: at Argyle, the cost of diesel-generated power is approximately twice that of the power supplied by the Ord Hydro network. The hydro power is also significantly more environmentally friendly.

Another major contributor to the savings has been the ‘Spinning Reserve’ project, designed to optimise diesel generation on site. Completed in 2013 in partnership with Ord Hydro and Dawson Technology, the project has changed the control logic of Argyle’s diesel generators to allow maximum power draw from the Ord Hydro power network when capacity is available. The results of this project will be seen in 2014 and are likely to save AUD $2M in diesel costs and will increase Argyle’s usage of the Ord Hydro by 12 per cent.

Argyle’s Spinning Reserve project was nominated as a finalist in the 2014 Golden Gecko Awards which recognises leading practice and innovation in environmental management in Western Australia.

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Ou

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un

ity

Because the Argyle mine operates in a region of significant economic and social disadvantage, a key priority is to help build a stronger and more robust local economy that is not dependent upon the mine’s operations. Today, Argyle is a significant contributor to the East Kimberley region in terms of employment, infrastructure, tourism and flow-on business. Argyle also provides particular support to local indigenous communities through its Participation Agreement with Traditional Owners.

Through its localisation policy, Argyle has sought to develop a local workforce that spends most of its money in the East Kimberley, creating both immediate and longer-term economic benefits for the region. Although the move to underground operations has resulted in Argyle having to source technical skills from outside the region, Argyle is still committed to providing employment opportunities for local residents.

Ongoing support for community projects

Argyle invests in a wide range of health, recreation, education, environmental and cultural initiatives for the benefit of the communities in which it operates. Despite the significant changes occurring at the mine this year, we maintained our focus on supporting community events and programs and, during 2013, contributed close to AUD $325,000 to community projects. This included events such as the Barramundi Concert and the Ord Valley Muster, partnerships to support Aboriginal business development, and health and education programs. We also took the opportunity to make a dream come true for a brave young boy living thousands of miles from the mine (see profile, page 26).

Management of Participation Agreement

The mine has in place a Participation Agreement with the Traditional Owners of the Argyle land to ensure that they benefit directly from the mine’s operations, now and for generations to come. This agreement encompasses cultural heritage management, employment and training, land access and land management, business development, cross cultural training and mine closure. A Traditional Owner relationship committee meets regularly with Argyle representatives to oversee the implementation of the agreement.

As well as providing the above opportunities, the Participation Agreement has set up long-term financial trusts for the Traditional Owners (the Kilkayi and Gelganyem Trusts) to manage the beneficiary payments. While there are several payment processes in the Agreement, the key income stream from the agreement is indexed to Argyle’s net profits.

In 2013, a Trust Payment Smoothing Deed was finalised and formally ratified. This Deed creates a more predictable payment stream for the Traditional Owners so that health, education and other community-building programs do not have to be curtailed during periods of low return for Argyle, as has been the case in recent years.

Our community

Community and Social Investment AUD$K

EBITDA* payment AUD$M

Other Agreement Payments AUD$M

3172012

3252013

32012

2.12013

02012

2.62013

* Earnings before interest, taxes, depreciation and amortisation

Argyle Diamonds community investments figures 2012 to 2013

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24

Argyle invests in a wide range of health, recreation, education, environmental and

cultural initiatives for the benefit of the communities in which it operates

Cultural Recognition

The value that Argyle places on its relationship with the Traditional Owners, particularly the sharing of the richness of their culture, was in strong evidence at the underground mine opening ceremony in April 2013. The Traditional Owners were key participants in this major event, welcoming the guests to country at the start of the ceremony and then, later, conducting a Manthe for all guests at the portal to the new underground mine.

The Manthe ceremony is a means by which the Traditional Owners, the Gija and Miriuwung people welcome employees and visitors to the Argyle site and ensure that they are safe while they are on site. The Gija ceremony is a smoking ceremony and the Miriuwung ceremony is a water ceremony. During the dry season the Manthe ceremony is conducted on site each month for new and existing employees. Additional Manthes are conducted for special events and key site visits.

For the final Manthe of the year, the underground operation was shut down so that all staff could attend. This was a significant cultural experience for both the Traditional Owners and the 250-plus people on site who attended the ceremony.

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Liam lives his diamond dreamA favourite computer game was brought magically to life for Sydney schoolboy Liam Latz when he visited the Argyle underground mine in October.

Liam was diagnosed with a rare cancer condition at the age of six and underwent months of intensive treatment before entering remission. During his treatment, he spent many hours in hospital playing the computer game Minecraft, which ignited his passion for mining and for the game’s cherished prize of diamonds.

Argyle worked over several months with the Make-a-Wish Foundation to help the eight-year-old fulfil his wish of spending a day in the life of a diamond miner. To help replicate the full experience, Liam travelled to the mine site with his family on a commute flight and spent the night in an on-site donga. The next morning he enjoyed a 6am breakfast in the mess hall, attended a safety briefing, took a ride in a haul truck

and sorted some rough diamonds before experiencing the highlight of his visit – a trip underground into the 42 kilometre Argyle mine tunnel. Liam and his older brother Adam (10 years) were the first children ever to visit the underground mine.

Liam was greeted underground by more 70 miners and presented with gifts, including a polished diamond bought by the Argyle staff social club.

Chief executive of Rio Tinto Diamonds & Minerals, Alan Davies, said the visit embodied Rio’s philosophy of enhancing the lives of the people it touched and the communities in which it operated.

“I congratulate the many people involved in taking the time to help make a difference to the life of this young boy and his family,” he said.

Argyle Diamonds is the world’s largest producer of champagne and cognac diamonds and the primary producer of the rarest diamonds of all - the Argyle pink diamond. Argyle produces around 90 per cent of the world’s pink diamonds, which account for less than one per cent of total production.

Argyle’s rough diamonds are sorted and valued at Rio Tinto Diamonds sales and marketing headquarters in Antwerp, Belgium. Pink diamonds are retained for cutting and polishing in Perth. Once a year Rio Tinto issues a special release of Argyle pink diamonds which are sold by private tender to an exclusive

clientele (the prestigious Argyle Pink Diamonds Tender). The remainder of Argyle’s pink diamonds are sold to an exclusive group of customers known as Select Diamantaires.

Rio Tinto’s bold and innovative marketing campaigns have helped to build an appreciation of coloured diamonds around the world, particularly in the lucrative US fashion jewellery market. The coloured gems are also gaining a strong following amongst the rising middle classes in China and India. Rio Tinto has established representative offices in these three major markets.

Ou

r product

Our product

Carats produced (million carats)

92012

11.62013

Process plant throughput (million tonnes)

7.32012

7.42013

Argyle Diamonds production performance 2012 to 2013

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A good year for reds

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The 2013 Argyle Pink Diamonds Tender set new records for the most valuable diamonds ever sold from Argyle. It was dubbed the ‘Red Edition’ because it included the very special offering of three Fancy Red diamonds – the pinnacle of value and ultimate rarity in the diamond industry.

Since mining at Argyle began, only six diamonds certified as Fancy Red by the Gemmological Institute of America have been presented for sale at the tender, so to have three of these rare red diamonds in one tender represented a very special moment in time.

The hero of the reds was Argyle Phoenix™, a 1.56 carat round gem named in honour of the new underground mine, which achieved the highest per carat price for a diamond ever produced from the Argyle mine.

The 2013 tender attracted a record number of bids over US$1 million and bidding also broke through the US$2 million ceiling for a single stone.

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Fashioning a new Chinese jewellery market Rio Tinto’s marketing initiative to help develop the fashion jewellery market in China – ‘The Fashion of Diamonds’ – was launched in Shanghai in November 2013.

The initiative showcases the versatility of diamonds as a fashion accessory through the highly creative use of smaller, more affordable diamonds from the Argyle mine. Five world-class designers collaborated with Rio Tinto to create more than 90 jewellery pieces across 13 new collections. These reflected trends revealed by extensive market research to speak directly to the Chinese consumer.

“Rio Tinto initially launched its China strategy in 2010 at the Shanghai World Expo. Since that time, we have continued to focus on developing the fashion jewellery market in China, creating opportunities for diamond purchasing beyond the solitaire engagement ring,” explained Rio Tinto Diamonds managing director director Jean-Marc Lieberherr.

“These collections are symbolic of a new era in China’s jewellery industry, one that will be much more design-driven than ever.”

This sentiment was echoed by leading Chinese designer Fei Liu, one of the collaborators on this project: “The introduction of diamond fashion jewellery has changed consumers’ traditional understanding of diamonds. Jewellery is no longer just a showcase of the stone, but a better expression of design itself.”

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2009 2010 2011 2012 2013

Creation of economic value

Employees 524 (as at Dec 2009)

481 (as at Dec 2010)

501 (as at Dec 2011)

550(as at Dec 2012)

499 (as at Dec 2013)

Wages and Salaries (AUD$M) 69 64 70 82 90

Spend on materials, goods and services (AUD$M) 312 330 516 583 483

Export revenue for Australia (AUD$M) 159 194 139 257 205

Royalty payments to WA Government (AUD$M) 6.3 12.5 9.8 10.6 12.9

Payroll tax (AUD$M) 5.4 4.2 4.9 4.4 5.6

Safety

LTIFR (lost time injury frequency rate) *per 200,000 man hours 0.69 0.24 0.46 0.93 1.88 *

AIFR (all injury frequency rate) *per 200,000 man hours 0.92 0.36 0.81 1.04 2.03 *

Staff

Absenteeism (%) 2.6 2.6 3 3.1 2.8

Planned Turnover (%) 28.9 4.5 0.2 6.9 28.6

Unplanned Turnover (%) 11.8 21 13 11.8 13.2

Local Employment (%) 70.5 68.1 64 56 43

Indigenous Employment (%) 26.4 24.7 22 15 13

Production

Process Plant throughput (mt) *million tonnes 4.6 7.3 6.4 7.3 7.4

Ore grade (ct/t) *carat per tonne 2.3 1.3 1.2 1.2 1.2

Carats produced (mct) *million carats 10.6 9.8 7.4 9 11.6

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Creation of economic value 

This graph denotes the economic value that Argyle Diamonds has created over the past five years.

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Argyle Diamonds head officeArgyle’s headquarters are located in Perth, Western Australia.

Argyle Diamonds Limited1 William StPerth, 6000, Western AustraliaPhone (61 8) 9168 4900Fax (61 8) 9482 1161Email [email protected] www.riotinto.com/argyle

Diamond Exchange BuildingHoveniersstraat 53, 2018Antwerpen BelgiumPhone (32 3) 303 6800Fax (32 3) 303 6900Email [email protected] www.riotinto.com/diamondsandminerals

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