2018 Sustainability Report Summary

Sustainability report

‘18

Message from the president At Drummond Ltd. we believe that well done mining generates wealth for everyone and builds the nation.

It’s a privilege for us to use this space to show our stakeholders how responsible mining adds value to regions, communities, and the Colombian state, and also to describe the challenges we took on in 2018 as an organization, related to each goal we set. Please allow us to share our main milestones with you in this summary, as a reflection of our commitment to continuous improvement.

Our

Company

We are dedicated to the exploration, production, transportation, and export of steam coal.

Here you will find what we are and what we want the whole world to see: the excellent mining we do in Colombia, and the way we’ve made our operation responsible toward the environment, the communities, and our workers. Today at Drummond Ltd. we continue to believe that this type of mining generates wealth for everyone and builds the nation. Thank you for accompanying us on this path.

Our figures 2018 Metric tons of coal exported

2.2 billion

31.5 million tons 1.9 billion

Income from exports (US$)

Total Assets (US$)

2.7 billion

Cost of sales and operations (US$)

0.8 billion

Total Liabilities (US$)

1.9 billion

Total Equity (US$)

Total employees

5,143

NORTH AND SOUTH AMERICA

31%

Our goal is to offer high-quality coal to our many clients around the world, maintain our ability to compete, and develop products and services in response to an increasingly demanding market.

We will do this under a production arrangement that is economically, socially, and environmentally sustainable, with safe processes that allow us to protect the surrounding areas and the lives and health of our employees, contractors, visitors, and communities.

Corporate strategy

EURASIA (TURKEY)

27.5%

Our company’s corporate strategy has three strategic pillars: ASIA AND THE PACIFIC

19.6%

1

2

ECONOMIC

3

SOCIAL

ENVIRONMENTAL

EUROPE

15.4% Work In compliance THE MIDDLE EAST

6.5%

We promote strict compliance with our code of conduct by employees, providers, contractors, and other stakeholders, whose conduct must be governed and inspired by the highest ethical standards, thus promoting zero tolerance for corruption and bribery.

We have made different communication channels available that can be used by employees and other stakeholders to report any conduct suspected of involving some type of bribery or corruption, or to communicate any doubts or needs related to compliance with the Business Ethics Program.

3rd

consecutive year as the company with the largest volumes for coal production and exports in Colombia.

2nd

place in overall reputation in the Colombian mining sector.

denuncias@drummondltd.com

Ethics Hotline: +01 8000 91 9161 Direct line +57 5 571 9499, ext. 8499

Report to the postal address: Calle 72 No. 10-07 Office 1302 BogotĂĄ D.C.

Communication channels

Economic Performance

Since the beginning of our operations in 1994:

440.3

30.8

million tons

million tons

mined

mined

31.5

3.4

US$ billion

million tons

in royalties and compensations

exported

+

387.5

2.4

US$ million

US$ billion

Royalties and compensations paid to the national government

Taxes, fees and contributions

=

236.2

5.8

US$ million

Taxes, fees and contributions

US$ billion

total

Achievement of goals and objectives

Work in communications Communicating with our stakeholders is one of the most important elements to ensure our organization functions well. Some of the benefits of excellent communication are:

Improved ability to compete

Quick response to labor situations

Adaptation to changes in the surroundings Good working environment

The involvement of all stakeholders

Our vision

for sustainability We actively contribute to closing existing gaps in the country, especially those connected with the following SDGs:

16

17

2

15 4 We are committed to having a positive impact on Colombia and its people. We work hard to make sure our operations contribute to the sustainable development and well-being of our employees and the communities in our area of influence. We understand that our responsibility goes beyond just mitigating the impacts generated on society and the environment as a result of our operations and organizational decisions.

6

12 11 9

8

We are committed to:

The law and international standards

Sustainable development The incorporation of social responsibility in every business activity

We have voluntarily signed, or base our actions, on the following initiatives:

Our stakeholders

We have adopted as our strategic vision, “to increase and share the benefits of the business project with stakeholders in our areas of influence by building and strengthening local skills.�

This vision has the following four pillars:

1

2

3

4

Peace and human rights: establish skills to build a fair and tolerant society that lives in peace.

Governance for development: strengthen local institutional capabilities for greater efficiency in planning and public administration.

Environmental performance: enhance the business skills that will guarantee world-class performance.

Comprehensive development: strengthen local skills in favor of the prosperity of employees, their families, and the communities in our area of influence.

Working Group on Human Rights and Coal

1

Peace and human rights

Due diligence in human rights We are committed to promoting and respecting the human rights of all people involved in our operations in Colombia and those living in the area of influence.

Our proactive contributions to the exercise of human rights include:

DECENT AND WELL paid work

IMPROVEMENTS in access to education

ENVIRONMENTAL MANAGEMENT REGULATED and supervised by the State

STRENGTHENING of healthcare infrastructure

GENERATION OF royalties and tax payments

PROMOTION on the ground of peaceful coexistence with former combatants and communities

TRUST-BUILDING ARENAS to prevent conflict and promote agreements

LOCAL PURCHASING AND CONTRACTING to spark dynamism in other sectors

VOLUNTARY SOCIAL INVESTMENT to strengthen institutions

100% of security personnel have received human rights training

2

Governance for development

Regional outreach and participation

We engage in outreach activities to form partnerships with national and regional stakeholders, so together we can build and promote shared visions for the future.

•

As a member of the Working Group on Human Rights and Coal, we backed a joint declaration rejecting threats against people’s lives and integrity.

Work in resettlement In our work with the resettlement of the communities of Plan Bonito, Boquerón and El Hatillo, during 2018: •

We signed the Resettlement Action Plan – RAP with the communities of Hatillo, El Paso, and Cesar.

•

We continued implementing actions to improve the quality of life of families in Boquerón, La Jagua de Ibirico, and Cesar in the areas of education, community infrastructure, job creation, and community strengthening.

•

In Plan Bonito, we continued implementing the Livelihood Restoration Program for the families relocated in 2015.

•

We employed 140 people from the resettlement communities either directly or through contractors.

3

Environmental Performance

Administration of water resources We work at properly managing this vital liquid in every area of our operation. A comprehensive strategy helps us take care of water and efficiently use the resources available.

In

2018

our Plan for Efficient Use and Savings of Water produced a decrease of

54.8%

in withdrawals from natural sources relative to the year 2017 by means of recycling rainwater stored at the mining complex.

Protection of biodiversity

Air quality

This is one of the main objectives of our environmental management, given the relevance of biodiversity in sustaining current and future generations, as well as the company’s responsibility for timely implementation of measures to preserve, conserve, and recover ecosystems.

Having the right strategies for controlling air quality, which take into account socioeconomic dynamics and the region’s weather conditions, is basic to taking care of the health of the people living here and of our workers, and taking care of the natural environment. Through the Program for Environmental Monitoring and Management of Air Quality, we identify the impacts of each stage of the process and determine and monitor actions for mitigation.

ENVIRONMENTAL COMPENSATION Our Forest Compensation Program, a pioneering effort in Colombia, has the purpose of forming biological corridors between fragments of different natural ecosystems in the Department of Cesar, using restoration and conservation hubs and productive projects as tools for connectivity.

494 wild animals

+150 ha of intervened areas

Were released through our wildlife protection program.

In 2018, the recovery process began for more than 150 ha of intervened areas.

planted around 60,000 We 60,000 trees from 30 trees

native species.

We have the country’s largest fleet of tank trucks per production unit, with the greatest capacity for spraying

The budget resources allocated to air quality management in our mining projects in

2018 totaled

US$15,458,044.37 with another

US$70,524.97 for the port project.

4

Occupational Health and safety Human talent management Industrial safety is our lifestyle.

Comprehensive development

We have an occupational health and safety system based on and certified under the international standard OHSAS 18001:2007. This means that, once we have identified our priority risks and implemented all of the operational controls, our employees can perform their work safely.

• Recertification of the Management System in accordance with OHSAS standard 18001:2007 • Emerald Cross of Merit Medal in the category of Excellence for the operations of the Transportation Department (Railroad).

• Reduction to under 0.5 of the risk index (RI) for occupational exposure to crystalline silica.

The importance of continuously and properly managing human talent lies in how doing so contributes to meeting corporate standards and the goals and strategic objectives for each role in our organization.

Work with suppliers and contactors

We stimulate professional and business development in the area of influence, while injecting dynamism into the regional economy, by providing direct and indirect job opportunities in high-tech environments with high standards for industrial safety, the environment, and social issues. This transforms our suppliers and contractors into a determining factor in the operation’s efficiency, effectiveness, and long-term sustainability.

1,040 suppliers

in a commercial relationship, with invoicing in the amount of US$ 1,213,394,000.

31%

of all domestic suppliers

are from the Caribbean region and their invoicing represented US$ 262,753,000.

Local labor hired by contractors Mine Port Total

4,069 499 4,568

10,178 jobs

(5,143 direct employees – 5,035 with contractors).

90.7% of local hiring in 2018

103 direct

employees benefiting from college scholarships.

Community relations

Generating a positive impact, respecting the communities, and working toward progress for the people in the area where we operate are basic pillars supporting the organization’s sustainable development.

55

people

THE INVESTMENT OF US$2,290,718.76 IN BENEFIT OF MORE THAN 1,362,485 PEOPLE IN THE DIRECT AREA OF INFLUENCE OF OUR OPERATIONS.

THE EXECUTION OF MORE THAN 30 PROJECTS IN THE 11 MUNICIPALITIES IN THE AREA OF INFLUENCE OF CESAR AND MAGDALENA.

COLLEGE SCHOLARSHIPS FOR 130 HIGH SCHOOL GRADUATES FROM PUBLIC SCHOOLS IN CESAR AND MAGDALENA.

24

trade union relations

professionals

We believe that a good relationship with our trade unions, based on respect for freedom of association and the right to collective bargaining, helps strengthen arenas for social dialogue and maintain a good working environment. These, in turn are fundamental conditions for achieving the company’s objectives.

WE CREATED ADDITIONAL ARENAS FOR SOCIAL DIALOGUE BASED ON THE NUMBER OF UNION ORGANIZATIONS (8) IN 2018.

taking In House Training, of a total of 712 who have completed the program.

WE CLOSED OUT THE YEAR WITH 73% OF THE WORKFORCE COVERED

BY THE COLLECTIVE EMPLOYMENT AGREEMENTS.

in training.

98.03% of direct

employees covered by extralegal benefits.

Web: www.drummondltd.com Twitter: @DrummondLtdCo Instagram: @drummondltdco