2019 Sustainability Report

Sustainability Report 2019

Sustainability Report 2019 OUR SUSTAINABILITY REPORT HAS BEEN PREPARED IN STRICT COMPLIANCE WITH THE ESTABLISHED MANAGEMENT CONTENT AND APPROACHES, IN ACCORDANCE WITH THE GRI STANDARDS: CORE OPTION, AND THEIR RESPECTIVE CONTENT AND QUALITY PRINCIPLES. THIS WAS VERIFIED BY BSD CONSULTING, AN ELEVATE COMPANY, AND REVIEWED BY THE GRI MATERIALITY DISCLOSURES SERVICE.

PRESIDENT

José Miguel Linares

EDITORIAL BOARD Carolina Riaño Paulo González Juan Pablo Arteaga Pablo Urrutia Krystal Drummond María José Caballero

ACKNOWLEDGEMENTS Alfredo Araújo, Yilda Pineda, Álvaro Daza, Connie Linares, Leda Muñoz, William Espinosa, Amalí Blanco, Aura María Mesa, Luz Aidé Villegas, Wisam Farah, Margarita Saade, Karen Mendoza, Daniela Martínez, Lina M´causland, Carlos Caycedo, Luzmila López, Ricardo Urbina, Ricardo Barros, José Montero, Simón Marulanda, Claudia Acosta, Roberto Ospina, Amílcar Valencia, Alexander Contreras, Carlos Contreras, Armando Calvano, Luisa Ruiz, Óscar Vega, Diana David, María Camila Castañeda, José Guerra, Jorge Rivera, Hugo Romero, Martin Ahrens, Jorge Cotes, Humberto Correa, Edgar Ruiz, Jaime Núñez, Juan Carlos López, Juan Fernando Muñoz, Paul Klee, Eliana Díaz, David Rodríguez, Carolina Villamizar.

WRITTEN BY Drummond Ltd. Colombia KPMG Advisory, Tax & Legal S.A.S.

PHOTOGRAPHY

Comunicaciones Drummond Ltd.

DESIGN AND LAYOUT Good,

Communication for Sustainable Development.

Sustainability Report 2019

Contents I

part

OUR

company

2019 Achievements

04

Our Figures

14

Report Profile

20

Message from the President

22

Corporate Strategy

26

Governance Structure

30

Work in Compliance

32

Value Cycle

36

Economic Performance

38

Supply Chain

48

Work in Communications

50

Commitment to Sustainability

60

International Standards and Sustainability Initiatives

64

Relationships with Stakeholders

67

Materiality Analysis

70

OUR II vision of part

Sustainability We’re committed to having a positive impact!

GRI Content Index

235

Peace and

01 human rights Human Rights Due Diligence

76

Environmental

Comprehensive

02 development Talent Management

94

Workplace Health and Safety

120

Relationships with Unions

134

Relationships with Communities

138

Supplier and Contractor Management

162

Governance for

03 performance

04 development

Water Resource Management

174

Regional Participation and Relations

220

Air Quality

194

Resettlement Management

228

Protecting Biodiversity

204

OUR ACHIEVEMENTS IN

2019 31.1

million tons exported.

4.

TH

consecutive year exporting the largest volume of coal in Colombia

-4-

Sustainability Report - 2019

Economic

performance At the end of 2019

32.6

31.1

tons produced

million tons exported

MILLION

MILLION

During 2019

US$

US$

332.5

209.7

MILLION

MILLION

in royalties and compensations paid to the national government

in taxes, fees and contributions

US$

542.2

Communications

performance

MILLION

2.

ND

TOTAL

place in overall reputation in the Colombian mining sector.

1,486

publications about the Company with a positive tone.

-5-

63 % of media impact with a positive tone.

[Goal 16.1]

Peace and

human rights

1,984

participants in projects focused on reducing violence, protecting human rights and building peace scenarios and protective environments.

[Goal 8.7] [Goal 16.2] [Goal 16.5]

[Goal 16.10]

0

channels implemented to report situations in which ethical or corporate compliance violations are identified.

21

82 %

complaints received, investigated and closed.

of all significant investment agreements and contracts signed

by Drummond Ltd. have human rights clauses.

100%

419

of all security services personnel trained on human rights.

[Goal 16.6]

3

cases of discrimination, child labor, forced labor or human rights violations.

100%

in reporting information to prepare the EITI Colombia Report.

total hours of training for security personnel on policies and procedures related to human rights relevant to the operations.

100%

participation in multistakeholder opportunities for dialogue that promote good human rights practices: • Mining and Energy Committee • H uman Rights and Coal Working Group • Trust in Cesar – CREER.

-6-

Sustainability Report - 2019

Governance for

Audits

complete Bettercoal audit cycle, receiving an outstanding evaluation in all areas assessed.

Development [Goal 9.1]

US$

96 %

369,344

compliance with a highly favorable rating (A) in an audit conducted by a third party for the Hydro firm.

invested in institutional and community infrastructure projects.

[Goal 16.5]

6

municipal oversight agencies trained to monitor and control the investment of resources from the General Royalties System (CSIR).

[Goal 16.6]

2.ND

AT PART OF THE AUDIT, DOCUMENTS (POLICIES, PERMITS, PROCEDURES AND RECORDS) RELATED TO THE COMPANY’S WORKPLACE HEALTH AND SAFETY, ENVIRONMENTAL MANAGEMENT, LABOR ASPECTS, CORPORATE ETHICS AND CORPORATE SOCIAL RESPONSIBILITY WORK. THERE WERE NO MATERIAL FINDINGS AND DRUMMOND LTD.’S ROBUST PROCESSES ACROSS ITS OPERATIONS WERE HIGHLIGHTED.

Resettlement work

200

287

transaction contracts signed with residents and nonresidents of El Hatillo.

OFFICIALS:

elected governors, representatives, mayors and city council members from the area of influence trained on public management.

Direct and indirect hiring within our operations: El Hatillo: 62 people Boquerón: 50 people Plan Bonito: 52 people

-7-

1.st

individual resettlement from El Hatillo

100 %

execution of the census operation in the community of Boquerón.

Environmental

Performance [Goal 6.3] [Goal 6.4]

33,129 m

3

of condensed water vapor collected and reused at the power plant, exceeding the planned goal.

0.29 m

3

of water/ton of coal exported: decrease in the consumption rate in the mining operations as compared to 2018.

12,523 m

3

of condensed water vapor collected and reused in the emulsion manufacturing plant, maintaining a reuse volume of more than 90%.

37 %

use of the flow granted in concession at Puerto Drummond, thanks to its Water Savings and Efficient Use plan.

7,177,000 68,137 liters of water donated to the city of Santa Marta to respond to a public emergency.

liters of water donated to fight forest fires in the Sierra Nevada de Santa Marta.

-8-

[Own goal]

We have the country’s largest fleet of tank trucks per production unit, and the one with the greatest spray capacity.

US$

17,607,614 invested in managing air quality.

We have an internal, real-time air quality monitoring network for more effective operational control.

[Goal 15.1] [Goal 15.2]

100 %

[Goal 15.5]

approval of the Forest Compensation Program for the La Loma – Pribbenow Mine.

+8,500 wildlife specimens (amphibians, reptiles, birds, mammals and insects) rescued.

US$

[Goal 6b]

44,392 million invested in environmental education to promote the Green Towns culture.

A total of

1,245 ha. ha covered by the area recovery protocol, i.e., nearly 20% of the total area affected by the progress of the mining operations.

40,000 seedlings and 3,000 kg of seeds from species native to tropical dry forest were rescued = +500,000 native trees grown in our nursery.

-9-

Comprehensive

Development US$

2,287,227 INVESTED IN EXECUTING OUR 2019 SOCIAL MANAGEMENT PROGRAM.

[Goal 4.a]

US$

243,725

[Goal 4.1]

elementary school children participated in high-quality education projects.

invested in educational infrastructure.

[Goal 4.c]

215

teachers from the area of influence in the department of Cesar participated in training programs to strengthen their teaching practices.

[Goal 4.3]

5,609

[Goal 4.6]

500

fewer illiterate people in 5 municipalities in the area of influence in the department of Cesar.

150

US$ [Goal 8.3] [Goal 2.a] [Goal 2.3] [Goal 2.4]

180,111 invested in productive development and the economic restructuring of the closure plan, envisioning a plan beyond mining.

46

local producers from the municipalities of AgustĂ­n Codazzi, Becerril and La Jagua de Ibirico, participating in the Development of Local Producers grocery supply project = 40,000 kilos of agricultural products sold.

1.st

young people benefitted from college scholarships.

premium chocolate produced with cocoa from La Jagua de Ibirico – Cesar, as part of our productive development projects.

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Sustainability Report - 2019

[Goal 8.3]

30 %

[Goal 8.5]

of Drummond Ltd.’s total billings come from local companies.

48.18 % of all companies that have contracts with Drummond Ltd. are local.

[Goal 8.8]

10,577

[Goal 8.6]

jobs (5,137 direct employees + 5,440 contractors)

90.60 % of the personnel employed by contractor companies are from the Caribbean region.

125

22

98.97 %

75 %

23,016 270,235

36 %

We were able to reduce the occupational exposure index (EI) to crystalline silica to below 0.5 (the level that requires action) with the use of personal protective equipment (PPE).

We established the Transition Plan from the OHSAS 18001:2007 standard to the ISO 45001:2018 standard for the occupational health and safety management system, implemented with a view of obtaining certification under the new standard in 2020.

direct employees benefited from college scholarships.

65

young people from the region began our Dual Training pilot program with contractors and the SENA.

33

young people participated in the in-house training program.

operations leaders certified as Yellow Belt under the Lean Six Sigma methodology.

of direct employees covered with extralegal benefits.

of all employees benefited from the signing of six collective bargaining agreements during the direct agreement stage.

attendances recorded and

reduction in the accident rate.

hours in the regular training cycle.

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We moved forward with the Program to Strengthen the Safety Culture at Drummond: • Safety Mentoring sessions for middle management. • Sustaining and improving training opportunities for employee safety empowerment at all levels.

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Sustainability Report - 2019

I

part

About the

Company

- 13 -

Our

figures { 102-1}

{ 1 0 2-2 }

{102-3}

{102-4}

{102-5}

{102-6}

DRUMMOND LTD. IS A COMPANY ENGAGED IN MINING STEAM COAL IN COLOMBIA, WITH ITS HEADQUARTERS IN BOGOTA AND OPERATIONS CONCENTRATED IN THE DEPARTMENTS OF CESAR AND MAGDALENA. IT IS A PRIVATELY-OWNED BRANCH OF A FOREIGN COMPANY, OWNED 80% BY DRUMMOND COMPANY, INC. AND ITS AFFILIATES AND 20% BY ITOCHU COAL AMERICAS INC. IT IS HEADQUARTERED IN BOGOTA D.C., AND ITS PARENT COMPANY IS HEADQUARTERED IN ALABAMA IN THE UNITED STATES.

GRAPHIC 1.

Drummond Ltd.'s ownership structure.

80%

20%

Drummond Company Inc. and affiliates

ITOCHU Coal Americas

PRODUCTION EXPORTING

EXPLORATION La Loma and El Descanso, in the department of Cesar.

(The Rincón Hondo, Similoa and Cerrolargo projects have not yet begun operations.)

TRANSPORTATION Capacity to export 60 metric tons of coal per year.

13 trains from the mining operations to Puerto Drummond.

The railway lines within the mining operations connect with the national railway corridor.

Drummond Ltd.’s main performance figures in 2019

US$

US$

MILLION

MILLION

Total assets

Income from exports

2,599

2,051

{102-7} - 14 -

Sustainability Report - 2019

18.7 %

11.6 %

North America

21.5 %

Europe

23.5 %

Eurasia

7.4 %

South and Central America

Middle East and Africa

17.3 % Asia-Pacific

GRAPHIC 2.

Export destinations

US$

1,803

Capitalization

TON

31,1

MILLION

MILLION

Sales and operating costs

Metric tons of coal exported

US$

749

MILLION Total liabilities

US$

1,850 MILLION - 15 -

Total equity

General information on employees {102-8} TOTAL NUMBER OF EMPLOYEES IN 2019

4,151

4,251 100 Mining operations and Valledupar

858

Port operations – Cartagena

- 16 -

769 89

47 Bogota

24 23

Sustainability Report - 2019

Drummond Ltd. workers {102-8} GRAPHIC 3.

Direct employees

5,156 4,944

Mining operations and Valledupar

Total employees

Men

212

Port operations – Cartagena

Bogota

MEN 4,147

2019

764 23

4,096

802 38

2018 0%

Women

20 %

40 %

60 %

80 %

4,934 4,936

100 %

WOMEN 97

84

22

100

80

27

2019

203 207

2018 0%

20 %

40 %

60 %

80 %

100 %

GRAPHIC 4.

External workers (hired through temporary agencies)

MEN 4

2019

5

1

13

1

2

2018 0%

20 %

40 %

60 %

80 %

10 16

100 %

WOMEN 3

2019

5

2

1

3

0

2018 0%

- 17 -

20 %

40 %

60 %

80 %

100 %

9 5

- 18 -

Sustainability Report - 2019

GRAPHIC 5.

External workers by type of contract Direct employees by type of contract

External workers by type of contract

MEN (Indefinite contract)

MEN (hired through temporary agencies)

4,050

2019

713 23

3,994

732 37

2018 0%

20 %

40 %

60 %

80 %

100 %

97

51

0

102

70

1

80 %

100 %

4,786 4,763

4

2019

5

1

13

1

2

2018 0%

20 %

40 %

60 %

80 %

10 16

100 %

MEN (Fixed-term) 2019

2018 0%

20 %

40 %

60 %

Mining operations and Valledupar

148 173

Port operations – Cartagena Bogota

WOMEN (Indefinite contract) 2019

External workers by type of contract

93

84

22

93

78

27

2018 0%

20 %

40 %

60 %

80 %

100 %

199 198

WOMEN (hired through temporary agencies) 3

2019

5

2

1 3

0

2018 0%

20 %

40 %

60 %

80 %

100 %

WOMEN (Fixed-term) 4

2019

0 7

2

0

2018 0%

20 %

40 %

60 %

80 %

100 %

4 9

Mining operations and Valledupar Port operations – Cartagena Bogota

- 19 -

9 5

Report

profile

{102-54}

THIS REPORT HAS BEEN PREPARED IN ACCORDANCE WITH THE GRI STANDARDS, CORE OPTION, BY THE VICE PRESIDENT OF CORPORATE SOCIAL RESPONSIBILITY AND RISK MANAGEMENT AND THE VICE PRESIDENT OF PUBLIC AFFAIRS AND COMMUNICATIONS. IT WAS ALSO VALIDATED BY THE SOCIAL RESPONSIBILITY AND SUSTAINABILITY COMMITTEE AND THE EXTERNAL VERIFICATION OF BSD CONSULTING, WHOSE CONCLUSIONS CAN BE FOUND IN THE INDEPENDENT VERIFICATION STATEMENT IN THE ATTACHMENTS TO THIS DOCUMENT.

{102-32} {102-50} {102-51} {102-52} {102-56}

For the past ten years, and as of 2012 under the GRI Standard, Drummond Ltd. has been reporting its economic, social and environmental performance to the public each year for the period from January 1 to December 31.

For this year, the materiality analysis that has been used as the basis for defining the content of this report was updated, maintaining the traceability of the procedures presented in previous years, demonstrating its contribution to the Sustainable Development Goals and other initiatives to which Drummond Ltd. has voluntarily adhered as part of its Corporate Social Responsibility Strategy.

{102-53} Any comments, suggestions or questions about this sustainability report should be sent to: JUAN PABLO ARTEAGA DE BRIGARD Vice President of Sustainability +57 1 5871000 Email: jarteaga@drummondltd.com

- 20 -

Sustainability Report - 2019

- 21 -

Message from the

president

Message from Richard Mullen CEO of Drummond Company Inc.

I AM WRITING THIS MESSAGE AT A TIME WHEN SUSTAINABILITY AND THE CONTRIBUTIONS TO SOCIAL, HEALTH, ECONOMIC AND ENVIRONMENTAL DEVELOPMENT ARE CRUCIAL TO THE WORLD. WHILE THIS REPORT THAT WE ARE PUBLISHING TELLS YOU ABOUT OUR WORK DURING THE 2019 FISCAL YEAR, I WOULD LIKE TO TALK ABOUT THE LESSONS THAT, AS THE LEADER OF AN ORGANIZATION AND AS A CITIZEN, I CONTINUE TO LEARN FROM THE CRISIS THAT WE ARE EXPERIENCING AS A RESULT OF THE COVID-19 PANDEMIC.

Managing relationships with communities and their leaders, the alliances that are created and the cooperation between different actors to achieve common goals will be the key to achieving more sustainable development that is less dependent on individual management by the private sector.

I want to mention these lessons because it is very possible that what we have spent years building, including the evolution of our sustainability strategy, could be the very foundation that allows us to identify the best ways to contribute to building a better future for Colombia, its communities, its employees and, in general, for all our stakeholders. While there are no formulas or models that are appropriate to all contexts and situations, there are key elements that need to be included to understand the role of companies in society.

This crisis has shown us that, as expressed at the World Economic Forum, the world cannot survive for long without economic activity, without creating financial value.

Thousands of organizations have had to close and it is possible that up to 40% of companies worldwide may not recover from the COVID-19 disaster. This is key if we consider that the generation of resources and jobs is inherent in the role of companies in society. That is the main role that the State has entrusted them, but it is not the only one.

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I am convinced that it is time to examine how companies generate value in order to secure their viability.

It is time to understand that the way in which an organization participates in a society is what will allow it to survive turbulent times like these, regardless of the sector in which it operates or the product or service it provides. This is the basis for obtaining and maintaining its social license.

In a very challenging scenario for the mining industry, in which we have had more than two years of falling coal prices on the global market, this becomes even more relevant. Managing relationships with communities and their leaders, the alliances that are created and the cooperation between different actors to achieve common goals will be the key to achieving more sustainable development that is less dependent on individual management by the private sector.

Another great lesson that the crisis has taught businesses around the world is the need to prioritize the protection of

Sustainability Report - 2019

workers and their work environment.

Beyond the proper implementation of biosecurity measures, which is mandatory for all companies, the efforts taken so that they can perform their jobs safely, comfortably and efficiently are critical.

Something else that the COVID-19 crisis also confirmed is that the decision to incorporate the sustainability strategy throughout the entire organization and to adopt this vision at all of the company’s hierarchical levels is what allows us to perform better. In our case, this, in addition to aligning the strategy with the Sustainable Development Goals and the adoption of international standards to improve performance, allows more and more people to recognize coal’s positive impact on the world.

Finally, our ability to adapt to radically different circumstances is another message that I want to share with you here. Responsible financial management must always be accompanied by an open, transparent and timely dialogue with stakeholders about what is

- 23 -

important, which good practices can be implemented and how to change course when what we do does not have the necessary results.

It is time to transform organizational leadership and to bet on structural, comprehensive, flexible sustainability management and ongoing dialogue with stakeholders. I have been in the mining industry for more than 35 years and I know that today, more than ever, that vision translates into tangible progress for the communities, our employees and the country. These values will be the ones that make it possible for us to survive this crisis that we are experiencing, and those that may come in the future.

Message from

the president

{102-14} {102-15}

JosĂŠ Miguel Linares President of Drummond Ltd.

THE PUBLICATION OF THE SUSTAINABILITY REPORT IS AN EXERCISE IN TRANSPARENCY AND ONGOING DIALOGUE TO WHICH WE HAVE BEEN COMMITTED FOR TEN YEARS. OUR REPORT IS A TOUR OF OUR ACHIEVEMENTS AND THE LESSONS WE HAVE LEARNED FROM OUR WORK DURING 2019.

Within these pages you will find testimonies to what we have been able to build, improve, manage and resolve (and what we have not), for the benefit of our employees, the communities, the environment, our suppliers, customers and the country overall.

This report is a fundamental part of our sustainability strategy. It is precisely the clarity and veracity of the information about what we do that makes it possible to build trust, thanks to elements that are

- 24 -

not transactional but rather intangible, such as transparency.

In this challenge of finding a way of relating that positively impacts our stakeholders, while generating value for the business, we discovered that the best way to do so is by creating and strengthening capabilities, especially local ones. By doing so, our aim is to help the communities in Cesar and Magdalena become less and less vulnerable, so their development does not depend mainly

Sustainability Report - 2019

on mining activity, and to act in a way that makes us co-responsible for the region’s progress.

Understanding our role as promoters of partnerships and cocreators of solutions with multiple actors to create progress and contribute to the fulfillment of the Sustainable Development Goals, allows us to achieve the goals that we have set for ourselves to generate real and positive impact.

The vision of sustainability that we have adopted has been enriching for us as a company. Understanding our role as promoters of partnerships and co-creators of solutions with multiple actors to create progress and contribute to the fulfillment of the Sustainable Development Goals allows us to achieve the goals that we have set for ourselves to generate real and positive impact.

This is not just our perception. It is also reflected in the most recent results of the study by Brújula Minera (Mining Compass) that show that the municipalities where steam coal is mined in the northern area of the country have the highest levels of social license, understood as the perception of the legitimacy and credibility of the mining project.

Similarly, in the case of its measurements by regions, Brújula Minera found that the highest levels of social licenses for mining activity where recorded in the departments of Cesar and La Guajira, where it is already classified as ‘Approved’ by stakeholders.

Understanding that Drummond Ltd. is the largest coal producer in the country, these results mean that there is greater recognition of the constant work by our projects to generate shared value throughout the territories.

In the effort to convince more and more Colombians that mining is positive for the country, these results show us that, although there is still work to be done, we are on the right track. Nonetheless, the challenges are many. While this

- 25 -

report corresponds to our work in 2019, we cannot fail to mention the impact that the health emergency caused by COVID-19 has had on the country, the region and, of course, our operations.

At this crucial moment in history, when human life must take precedence over any other considerations, we activated our contingency plan and implemented all biosecurity protocols to protect our employees and the communities.

Additionally, with our partners, we are providing emergency humanitarian aid through donations of drinking water, groceries and medical supplies, benefitting more than 30,000 families from Cesar and Magdalena. We also adjusted our social investment initiatives to be able to provide continuity to the majority of our projects, so that mandatory quarantine does not stop the progress that the beneficiaries of these initiatives are making.

We invite you to read on the following pages the data, cases and information that confirms that we continue to achieve strong results on this path to sustainability. Just as we face challenges, we learn and find opportunities to improve our performance. Colombians can be certain that they can count on Drummond Ltd. to use its experience, knowledge and opportunities to help us all get through one of the greatest challenges in our history.

Corporate

strategy DRUMMOND LTD.’S VALUE PROPOSITION IS TO PROVIDE HIGH-QUALITY COAL UNDER COMPETITIVE CONDITIONS, DEVELOPING PRODUCTS AND SERVICES TO RESPOND TO MARKET DEMANDS WITH ECONOMIC, SOCIAL AND ENVIRONMENTAL SUSTAINABILITY CRITERIA, PROTECTING THE ENVIRONMENT AND PEOPLE’S LIVES AND HEALTH.

Product development: diverse products and competitive services.

High-quality coal: offer coal with high caloric value and lower moisture, ash and sulfur content.

Safe processes: protect the environment and the lives and health of our employees, contractors, visitors and communities.

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Sustainability Report - 2019

As a necessary component of achieving its mission, Drummond Ltd. recognizes, assesses and manages its impacts at all levels, both internally and with its environment. Its impacts are classified and managed in three areas:

1

ECONOMIC PILLAR • Incorporate sustainability • Monitor best practices and incorporate strategies into our mining them when appropriate, operations that respond seeking to to changing markets maintain the highest and technology. industry standard.

• Maintain an efficient recovery of reserves at a competitive cost, to maintain the dynamism of local economies.

2

SOCIAL PILLAR • Respect and promote • Contribute to the workers’ rights and socioeconomic ensure their well-being, development of maintaining a good Colombia and the region, organizational climate going above and beyond and the necessary what is mandatory. conditions so they • Actively coordinate can do their work with local governments, comfortably, efficiently implementing programs and safely. for the development and benefit of the communities.

3

ENVIRONMENTAL PILLAR • Control, mitigate and compensate for the impacts of mining throughout the entire value chain.

• Maintain high standards in environmental practices to protect and restore the natural environment.

- 27 -

TO ENSURE FULFILLMENT OF THESE COMMITMENTS, DRUMMOND LTD. HAS THE FOLLOWING POLICIES, CODES, MANUALS AND DOCUMENTS THAT GUIDE ALL WORKERS’ PERFORMANCE IN EVERY AREA AND AT EVERY LEVEL:

Drummond Ltd.’s Comprehensive Policy: sets out the general guidelines for our work. https://www.drummondltd. com/wp-content/uploads/ Health-and-Safetypolicy-2018.pdf

Environmental Policy: establishes the Company’s commitment to abiding by environmental laws, and the continuous evaluation and reduction of potential impacts on this resource. https://www.drummondltd. com/wp-content/uploads/ Politica-de-SostenibilidadAmbiental-ENG-Feb262020-1. pdf

Sustainability Policy:

Community Services Policy:

establishes the Company’s commitment to having a positive impact on stakeholders and contributing to sustainable development.

establishes mechanisms that facilitate and promote the continuous improvement of relationships with the residents of the towns located in the areas of influence.

https://www.drummondltd. com/wp-content/uploads/ DLTD-Sustainability-PolicyFeb26-2020.pdf

establishes respect for and promotion of Human Rights within the Company. https://www.drummondltd. com/wp-content/uploads/ Human-Rights-PolicyDrummond-Ltd.pdf

https://www.drummondltd. com/wp-content/uploads/ DTLD-Community-ServicesManual.pdf

Occupational Health and Safety and Environment Policy:

Human Resources Policy:

outlines how caring for health, safety and the environment is key to carrying out all operations. https://www.drummondltd. com/wp-content/uploads/ Health-and-Safetypolicy-2018.pdf

Human Rights Policy:

encompasses the labor rights recognized and respected in Colombia. https://www.drummondltd. com/wp-content/uploads/ Human-Resources.pdf

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Selection and Recruitment Policy: seeks to attract and hire people with high ethical and professional standards. https://www.drummondltd. com/wp-content/ uploads/SELECTION-ANDRECRUITMENT-POLICYCHANGE.pdf

Sustainability Report - 2019

Code of Conduct and Compliance Manual:

Anti-Bribery and Corruption Policy:

Salary Policy:

establishes some ethical guidelines for employees and stakeholders based on the principles of honesty and integrity.

establishes a commitment to abiding by the applicable laws and regulations, carrying out the operations honestly and ethically.

provides the guidelines for attracting, motivating and retaining talent that will contribute to the organizational objectives.

https://www.drummondltd. com/wp-content/uploads/ Code-of-Conduct-approvedRM.pdf https://www.drummondltd. com/wp-content/uploads/ Compliance-Manual-1.pdf

Conflict of Interest Policy:

https://www.drummondltd. com/wp-content/uploads/ POLICY-AGAINST-BRIBERY-ANDCORRUPTION-signed.docx.pdf

https://www.drummondltd. com/wp-content/uploads/ Salary.pdf

Communications Policy:

Resettlement Policy:

offers guidelines for avoiding and resolving these types of conflicts.

describes the guidelines for the communications generated by the Company.

https://www.drummondltd. com/wp-content/uploads/ CONFLICTS-OF-INTEREST-ATDTLD-signed.pdf

https://www.drummondltd. com/wp-content/uploads/ Communications.pdf

contains the guidelines that the Company must follow in resettlement situations, always contributing to the sustainable development of the communities in its areas of influence. https://www.drummondltd. com/wp-content/uploads/ DLTD-Resettlement-PolicyFeb26-2020.pdf

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Governance

structure

Board of Directors

The Board of Directors is the Company’s main governing body and, therefore, is directly responsible for its strategy and direction. The Board is chaired by the CEO of Drummond Company, Inc. and includes four other directors, three from Drummond Company Inc. and one from Itochu Coal Americas, Inc.

{102-18} {102-20} {102-26}

President DLTD

CEO

Executive Vice President & Chief Financial Officer (CFO)

Executive VP & Chief Accounting Officer

Corporate Legal VP

VP Public Relations & Commu.

VP of Taxes

Sr. VP Risk Management & CSR

VP Corporate Controller

VP CSR

VP Sustainabillity

{102-34} The matters and alerts transmitted to the Board of Directors can mainly be summarized in the following categories:

Policy updates

Reviews of contractual issues

Information published about the company

Changes in legislation

Situation of the coal market

Progress with social processes

Environmental issues

Social Responsibility Programs

- 30 -

Sustainability Report - 2019

{102-19} {102-33}

Committees

BOARD COMMITTEE Executive Management Committee Approves major investments within the operations MANAGEMENT COMMITTEES Sustainability Committee Guides the Company toward a sustainable development model Communications Committee Promotes and facilitates access to and exchange of information with stakeholders

Chief Administrative Officer (CAO)

President of Mining (DCI)

Ethics Committee Reviews compliance with the Code of Conduct and the policies that support the Business Ethics Program

HR VP

VP Operations Support & Admin.

Transportation VP

Operations Support VP

Audit Committee Reviews and monitors the effectiveness of internal controls

HR VP

Director Materials Management

The committees transmit information and alerts related to economic, environmental and social issues to the President of Drummond Company Inc. and the President of Drummond Ltd. Then, they communicate directly with the CEO and the President of the Board of Directors, who inform the other Board members to evaluate the situations and made decisions

- 31 -

Compliance

work

{102-16} {102-17} PRINCIPLES

HONESTY

EMPLOYEES

Business Ethics Program

SUPPLIERS

Drummond Ltd. has a Business Ethics Program that is the basis for its corporate culture and has people at its core, promoting self-control and the identification of inappropriate behaviors, in addition to internal controls focused on the prevention of situations that would violate the law, regulations and internal policies.

The Business Ethics Program combines policies, guidelines and procedures aligned with the Code of Conduct, which in turn includes the declaration of the Company’s principles of behavior, which

- 32 -

INTEGRITY

CONTRACTORS

OTHER STAKEHOLDERS

are frequently shared with all employees and suppliers, contractors and other stakeholders, also providing a channel to answer questions about the application of the program’s guidelines or parameters, or reports related to ethics or conduct that violates corporate policies and guidelines.

The Business Ethics Program is shared through publication on the Company website, ensuring it is accessible to and known to all stakeholders. Additionally, the Compliance Officer conducts periodic training sessions for employees, suppliers and contractors on this matter.

Sustainability Report - 2019

Ethics Committee Our Ethics Committee is made up of the managers of these departments or their delegates

Legal Department

Ensure compliance with the guidelines of our Code of Conduct.

Internal Audit Department

Ensure compliance with the policies that support our Business Ethics Program.

The Company has a Complaints Channel, with different contact mechanisms so that employees and other stakeholders can report concerns or situations that they identify as a breach of ethical compliance or corporate compliance.

The information is received by the Ethics Committee, which analyzes the evidence gathered and facts to issue a fair and objective opinion, always ensuring the confidentiality of the information and the person providing it, protecting against any kind of retaliation.

Email

denuncias@drummondltd.com Labor Relations Department

Report to the mailing address: Calle 72 No. 10-07 Suite 1302 Bogota D.C.

Ethics Line:

Materials Department managers

018000919161 Direct dial: 57 (5) 5719499 Internal extension: 8499

They meet at least once a year and/or when particular situations arise that require a review of their impact.

- 33 -

In 2019, 99 reports were received, of which

78%

were not complaints but rather commercial information, personal requests or notifications of legal proceedings.

21

COMPLAINTS received were investigated and closed.

EMPLOYEES • The disciplinary process for matters related to Drummond Ltd. workers is carried out in accordance with labor laws and the internal labor rules.

• As part of the Corporate Onboarding Program that is conducted for all employees who join the Company, the Compliance Officer presents topics related

to the Compliance Systems. Through this onboarding process, the policies, guidelines, procedures and responsibilities of each Drummond Ltd. employee are explained.

SUPPLIERS AND CONTRACTORS • Drummond Ltd.’s suppliers and contractors must comply with the terms of their contractual agreements, since they define the rights and obligations of the parties, including the parameters of ethical conduct, and

the legally established ways to terminate the relationship, if necessary.

• Training sessions are held regularly for suppliers and contractors on all Compliance matters.

COMMUNITIES IN THE AREA OF INFLUENCE • In the case of communities in its areas of influence, Drummond Ltd. has Community Service Offices, where, among others, these types of situations are channeled when

- 34 -

they are reported to Compliance, where appropriate. More information on this channel is provided in the Community Relations chapter.

Sustainability Report - 2019

Money Laundering and Terrorism Financing SelfRegulation and Risk Management System – SAGRLAFT

Personal data protection

In compliance with Basic Legal Bulletin 100-000006 of 2017 – Chapter X, issued by the Superintendency of Corporations, and aware of the importance of maintaining stakeholder credibility and trust in the Company, since 2014 it has used the Money Laundering and Terrorism Financing Self-Regulation and Risk Management System (SAGRLAFT, in Spanish) as an instrument to prevent and minimize the likelihood that the Company, in the course of its operations or business, could be used directly or indirectly to carry out illicit activities tied to money laundering or terrorism financing.

The system has a corporate policy that is used to define the general concepts and guidelines for preventing and controlling these types of risks, a Money Laundering and Terrorism Financing Management Manual, which provides the procedures and controls to reduce the likelihood of occurrence or the impact of related risk events.

It also has a procedure for responding to requests from the authorities and a Suspicious Transactions Report – STR. All of these actions are accompanied by education and training for employees.

Information is one of the most valuable assets, both for the Company and for the people whose data is handled by it. For this reason, the Personal Data Protection Program continues to be strengthened, adopting the measures necessary to comply with the terms of the Personal Data Protection Law. To ensure this compliance, Drummond Ltd. has an internal Personal Data Protection Policies and Procedures Manual, which contains the appropriate and effective measures for complying with Drummond Ltd.’s responsibility for stakeholders’ personal data. The Company complies with the National Registry of Databases (RNBD, in Spanish), described in External Circular 002 of 2015, issued by the Superintendency of Industry and Commerce.

- 35 -

Value {102-9}

Cycle

DRUMMOND LTD. ENGAGES IN LARGE-SCALE, HIGHLY TECHNOLOGICAL OPEN PIT MINING UNDER EXHAUSTIVE MONITORING AND CONTROL PROCESSES TO CARE FOR THE ENVIRONMENT, COMMUNITIES AND EMPLOYEES. FOR THIS REASON, ITS VALUE CYCLE IS BASED ON ECONOMIC FEASIBILITY STUDIES THAT MUST GUARANTEE OPERATIONAL EFFICIENCY SUBJECT TO THE PRESERVATION OF THE NATURAL AND CULTURAL WEALTH OF THE AREAS OF OPERATION.

1

2

3

4

5

Archaeological rescue, relocation of wildlife, collection of native seedlings and seeds, implementation of forestry projects and collection of soil samples

Design, development, assembly and preparation of mines.

Extraction: waste is managed using practices that guarantee the smallest possible environmental impact.

The coal, once extracted, is transported from the mines to a collection center and train loading station, where it is classified and crushed so that the final product meets the quality conditions required by customers and the market.

Finally, the coal is transported to Puerto Drummond on the Company’s trains for export. There, the product is classified according to its characteristics and quality, so that at the time of shipment, mixtures can be prepared according to the quality requirements of each client.

Certifications at the mining operations • OHSAS 18001 • ISO 14001

Certifications at the port operations • OHSAS 18001 • ISO 14001 • Physical Security and Port Protection - ISPS • Business Alliance for Secure Commerce - BASC

- 36 -

Our value chain Mining process

We conduct operations that are environmentally responsible, complying with our legal obligations and taking steps to protect our environment through good practices.

Mining environmental design

GEOLOGICAL, MINING AND ENVIRONMENTAL STUDIES

1.

The overburden is taken to dumping areas that are later rehabilitated / replanted.

4.

Removal of alluvial material

•

Wildlife relocation

Ecological Rehabilitation

Disposal of overburden

•

Cleaning and extraction of coal

The coal cycle continues

5.

We have reliable and sustainable facilities that enable us to conduct our operations efficiently and responsibly Coal storage

7.

Conveyor belt Car dumpers

We implement our environmental management, monitoring and control plan

We apply the control measures that are necessary to reduce environmental pollution.

We recognize that water is an essential element for life and nature, and critical within the mining process. We treat our water for use and management.

We have air quality control strategies that are sufficient to preserve the health of the population and our workers, as well as the natural environment.

Ship Loading

Ship

Electric Power Generation

9.

Coal export

Transportation to the thermoelectric plant

Hoppers

Wetting and compacting

We reduce water consumption, using additionality criteria, according to which we comply with environmental regulations and reduce our consumption even further.

8.

We contribute to the reduction of the carbon footprint through competitive and nextgeneration strategies

Wetting

Sampling station and quality testing lab

We are aware of the importance of having a sustainable operation, which is why we work every day to keep Drummond Ltd. a world class benchmark.

Direct Loading Dock

Coal unloading

Crusher

Water truck

3.

Collection of seedlings and seeds Soil collection and storage

Coal yards

Removal of overburden

Drilling and blasting

COMPLIANCE WITH LEGAL OBLIGATIONS

Forestry

Archaeological rescue

We base our processes on high standards and quality principles

2.

MINING ENVIRONMENTAL DESIGN

We have a constant Irrigation Plan for roads, coal storage yards and the communities to maintain air quality.

6.

Unloading facilities

Handling and Loading of Coal Mine - Port transportation

We take measures to preserve, conserve and recover ecosystems, and also protect the fauna and flora given their importance to sustain current and - 37 future generations.

Loading facilities

We separate our waste for storage and management.

After loading the ship, the customer is responsible for the export, unloading and transportation processes, until the coal reaches its final destination.

We have a positive impact, we respect the communities, and we work to improve quality of life in the area where we operate.

These actions are fundamental pillars for our organization’s sustainable development.

We promote and respect the human rights of all people involved in our operations in Colombia, and of those who live in our areas of influence.

We manage our Human Talent and maintain a healthy work environment, nurturing productivity with increasingly specialized knowledge, a teamoriented business culture and comprehensive work.

Industrial safety is our way of life. We make sure to protect the environment and the health and life of all of our employees, contractors, visitors and communities.

We work to hire and develop local companies in our area of influence, taking into account their economic and social impact.

ECONOMIC PERFORMANCE

Economic

performance

{103-1}

DRUMMOND LTD. IS AWARE THAT ITS ECONOMIC PERFORMANCE AND, IN GENERAL, THE PROGRESS OF ITS OPERATIONS, BOTH MINING AND TRANSPORTATION AND SHIPPING IN COLOMBIA, HAVE AN IMPACT ON ITS ENVIRONMENT AND VALUE CHAIN, FROM ITS SHAREHOLDERS, THE NATIONAL GOVERNMENT AND MUNICIPAL GOVERNMENTS, TO ITS SUPPLIERS AND CONTRACTORS, EMPLOYEES AND THE COMMUNITIES LOCATED IN ITS AREAS OF INFLUENCE.

OUR

value chain

Mining represents close to 40% of the GDP of the Cesar department.

In terms of coal production at the national level, this department accounts for 62%

The global economic environment affects supply and demand for coal on international markets, which has a significant impact on price behavior, which determine, in a large part, the sustainability of the business and the future development of other mining areas.

Mining represents close to 40% of the GDP of the Cesar department. In terms of coal production at the national level, this department accounts for 62% and, of this percentage, Drummond Ltd. contributes 64%, demonstrating the Company’s critical participation in Colombia’s consolidation as a reliable supplier of coal worldwide.

{103-2} To deal with an increasingly competitive environment, Drummond Ltd. maintains an efficient and robust cost structure, based on minimum debt levels that allows it to face difficult market situations and meet its commitments to clients and other stakeholders.

The most common indicators used by the Colombian authorities include:

FOB Price Colombian port API 2

FOB Price Colombia BCI 7

• steam coal price • maritime freight indicator in USD$ per between Puerto metric ton for CIF ARA Bolívar and deliveries (Amsterdam, Rotterdam, published Rotterdam, Antwerp,

by SSY in the SSY published by Argus Mineral FFA Report, McCloskey in the Coal from the Baltic Price Index Report (6,000 Exchange.

Kcal/Kg NAR).

- 38 -

• Published by Platts in Coal Trader International (6,000 Kcal/Kg NAR).

Sustainability Report - 2019

FOB Price Colombian Port

81.75 80.00 75.00

Argus API 2 - BCI 7 Platts FOB Colombia

78.27

70.00

67.68

65.00

Under the API2-BCI7 index, the FOB price Colombian port showed a 44% decrease (USD $34.72/ton) at the end of 2019 at USD $43.55/ ton, while at the end of 2018, its price was USD $78.27/ton.

63.10

60.00 55.00

54.70

51.63

48.81

47.40

50.00

46.66

45.00 40.00

46.15

41.99

40.11

Mar 2020

Feb 2020

Jan 2020

Dec 2019

Nov 2019

Oct 2019

Sep 2019

Aug 2019

Jul 2019

Jun 2019

May 2019

Apr 2019

Mar 2019

Feb 2019

Jan 2019

Dec 2018

35.00

For 2019, the average quality of the coal exported from the La Loma area was 11,119 BTU/lb., while the average for coal from the El Descanso area was 10,584 BTU/lb., very similar to those from the previous year. The BTU quality and characteristics such as humidity, ash, sulfur, etc. levels are determining factors in the price of coal on the international market.

In terms of the FOB price Colombian port published by Platts, at the end of 2019 it was USD $52.94/ton, while the price at the end of 2018 was USD $81.75/ ton, representing a decrease of 35% (USD $28.81/ton).

For 2019, the average quality of the coal exported from the La Loma area was

11,119 BTU/lb

Other factors that affect the price are:

10,584 Inventory levels worldwide.

Freight costs.

The intensity of the weather, in both winter and summer.

Change in internal regulations in producing countries that may limit their production.

Regulatory restrictions that could affect consumption in importing countries.

Cleaner and lower-cost sources of power generation.

- 39 -

BTU/lb

average for coal from the El Descanso area

ECONOMIC PERFORMANCE

{103-3} The Company’s main monitoring mechanism on this topic is a detailed review of production costs and their execution as compared to the budget.

Production and export levels are detailed below:

For the fourth consecutive year, Drummond Ltd. remained the largest coal producer in Colombia.

PRODUCTION VOLUME (million tons)

EXPORTS (million tons)

32.6

31.1

2019

30.8 2018

2019

32.5 2017

28.4 2016

31.5 2018

32.4 2017

32.6 2016

In 2019, there was an 11% devaluation of the peso as compared to 2018, when the average exchange rate went from COP $2,956.55 to COP $3,282.39.

Main economic performance indicators

EBITDA (US$ million)

EBITDA Operating income

US$

434.4

21.2%

44,950/ton

2019

480.1

21.9% 18.2% 17.3%

2019

2018

45,069/ton

2017

2016

2018

362.2

When determining EBITDA per ton, it is clear that it is very similar to the previous year, going from US $15.3/ton in 2018 (US $480.1 million/31.5 million tons.) to US $14.0/ton in 2019 (COP $434.4 million/31.1 million tons).

32,622 /ton 2017

In addition to the above, it is important to highlight the EBITDA margin ( EBITDA / Operating Income), which reflects a drop from 21.9% in 2018 (US $480.1 million/US $2,196.4 million) to 21.2% in 2019 (US $434.4 million/US $2,050.9 million).

278.8

25,413/ton 2016

- 40 -

Sustainability Report - 2019

Direct economic value generated and distributed1 {201-1}

1. This indicator was built based on the parameters established in the Guide for Preparing Sustainability Reports from the Global Reporting Initiative (GRI). Therefore, figures related to depreciation and amortization were not considered within operating expenses.

The execution of operations during 2019 has brought with it investments in the Company’s area of influence, thanks to its long-term mining plans.

In accordance with the Sustainable Development Goals (SDGs), Drummond Ltd. contributes to the creation of conditions that guarantee a decent and safe work environment, as well as economic growth for stakeholders, seeking to achieve higher levels of economic productivity, always promoting fair and equitable job opportunities for men and women, as well as equal compensation in terms of work for equal value (Goal 8.5).

Resources have been invested in education and training, strengthening businesses and generating income, institutional and community infrastructure, promoting human rights and peace, health and the environment, to achieve sustainable development and promote greater and better social stability.

The technological and infrastructure progress that is being made by the Company increases the efficiency of the operation and makes it possible to generate higher revenues, which translates into greater social, economic and environmental contributions, which support the development of local communities.

Item

2017 amount (US $)

2018 amount (US $)

2019 (US $)

Income from net sales

1,988,157,876

2,196,382,517

2,050,912,868

Income from financial investments

3,491,722

3,411,516

5,839,836

Income from asset sales

6,668,185

4,192,101

5,210,179

Direct Economic Value Generated

1,998,317,783

2,203,986,133

2,061,962,883

Operating expenses

974,500,265

941,132,492

907,232,042

Employee wages and benefits

263,232,373

296,123,239

305,348,163

Payments to capital providers

0

0

0

Payments to governments

528,417,167

608,522,794

544,314,718

Investments in communities

25,161,243

20,045,523

19,092,088

Economic Value Distributed

1,791,311,048

1,865,824,048

1,775,987,011

Economic Value Withheld

207,006,735

338,162,086

285,975,872

- 41 -

ECONOMIC PERFORMANCE

Payments to Government

Voluntarily, Colombia joined the Extractive Industries Transparency Initiative (EITI), which seeks to develop a tool to complement government management to promote transparency and accountability in the extractive sector; aligned with the national initiatives, Drummond also voluntarily joined this initiative.

The EITI International Secretariat confirmed, on July 29, 2018, that Colombia is the first country in the Americas to reach the category of satisfactory in its progress in implementing this initiative.

Additionally, in the disclosure of contracts, management of income and expenses, national economic contribution and access to mining-energy information, it achieved the highest rating: outstanding.

All of this implies a substantial improvement in the transparency indicators and more stability for the country’s mining-energy investment, as well as a generalized environment of trust in civil society, since it will have greater access to information on the use of public and private resources.

Administration of extractive industry resources by the Colombian State

TAXES Collector DIAN (National Directorate of Taxes and Customs) Purpose Contribute to the General National Budget

ROYALTIES Collector ANM (National Mining Agency) Purpose Transferred to the General Royalties System

In 2019 alone, in royalties and compensations

US$

332.5 MILLION

were paid to the national government.

At the end of 2019, the number of tons produced at Drummond Ltd.’s mining operations totaled 32.6 million, of which 9.5 million came from the La Loma area, and its operation was conducted in the municipality of La Jagua de Ibirico. Additionally, with regards to the El Descanso area, the number of tons produced totaled 23.1 million, an activity carried out in the municipalities of Codazzi and Becerril.

In 2019, 31.1 million tons were exported to 22 countries.

- 42 -

In 2019 alone, in royalties and compensations, US $332.5 million were paid to the national government, and in terms of taxes, fees and contributions, the Company paid US $209.7 million, for a total of US $542.2 million.

Since the start of the mining operations in 1994, 473 million tons have been produced, paying US $4,191.9 million, plus US $2,966.3 million in taxes, fees and contributions, for a grand total of US $7,158.2 million.

Sustainability Report - 2019

Financial implications and other risks and opportunities derived from climate change {201-2}

DESCRIPTION OF RISKS

FINANCIAL IMPLICATIONS

Water is a fundamental resource for the development of the mining and port operations, so, in a climate change scenario, Drummond Ltd. would face significant risks in operational, social, economic and environmental terms. Severe rainy seasons or extreme droughts could cause floods and landslides or, conversely, reduce the availability of water, not only for the Company, but also for other users in the basin. Either of these two situations would lead to socio-environmental conflicts and the environmental authorities could even restrict or deny the granting or renewal of permits for the use of this resource, or for the general operation of the project.

In accordance with Drummond Ltd.’s industrial safety protocols, in the event of emergencies such as fires, floods or large landslides, operations must stop completely, which would have serious economic consequences for the Company, in addition to the events themselves, both due to the environmental impacts and material damage or effects on neighboring communities.

DESCRIPTION OF IMPACTS The effects of atypical climate conditions would affect the normal development of operations. For example, if there were rainy periods with very heavy rainfall, storage capacity could be surpassed, floods could occur, the contribution of sediments to bodies of water could increase, and landslides could occur in the pit2 or in the dumping areas, compromising employee safety. Additionally, in the opposite scenario, with long droughts and very high temperatures, the flow rates in streams, channels and rivers would drop, as well as water reservoir levels, affecting aquatic fauna and the availability of this resource to control particulate matter and, obviously, for the operation. Areas in the recovery process could show signs of water stress, there would be high seedling mortality rates, and forest fires would be more frequent.

Taking all of this into account, the Company has been developing a series of initiatives focused on reducing the risks caused by climate change, such as:

• Expansion of the network for rainwater collection, storage and use.

• Expansion of water treatment systems prior to discharge.

• Campaigns on saving and efficiently using water.

• Use of plant species better adapted to extreme conditions in the recovery of the dumping areas.

• Reinforcement of the fire prevention and management program within the operations and in the neighboring communities.

• Restoration of areas affected by forest fires.

• Implementation of new techniques to control particulate matter.

2. Pit: in the extraction mining method, a descending bank is created and a circular pyramid to the bottom is formed.

Taken from the Colombian Ministry of Mines and Energy’s technical mining glossary.

- 43 -

ECONOMIC PERFORMANCE

METHODS FOR MANAGING RISK Drummond Ltd. has created different strategies for mitigating and adapting to climate change. For example, it has a water resource management plan, whose central concept is the Program to Save and Efficiently Use Water, which ensures the availability of water 12 months a year, even for neighboring communities, if necessary.

Program to Save and Efficiently Use Water, which ensures the availability of water 12 months a year, even for neighboring communities, if necessary.

Additionally, the maintenance of conservation areas means that forests contribute to water and climate regulation and act as carbon sinks, as well as the areas where the forestry compensation program is executed or the protocol for recovering affected areas is implemented.

Another strategy is to continually improve the effectiveness of the program to prevent and manage forest fires, which has an immediate response protocol and support from the local disaster response offices that train residents on fire-related topics.

COSTS ASSOCIATED WITH ACTIONS TAKEN TO MANAGE RISKS Drummond Ltd. constantly evaluates the possible effects of climate change and alternatives to mitigate the impacts or adapt its mining and port operations to that scenario, under the premise of guaranteeing the environmental and economic sustainability of the business.

This year, the estimated costs for risk management are

US$

3,990,995 - 44 -

Sustainability Report - 2019

Obligations under the defined benefits plan and other retirement plans {201-3}

Ratio of standard entrylevel wage by sex compared to the local minimum wage {202-1}

Each year, the Company manages the contributions corresponding to the legally established pension funds that are freely chosen by each employee, as established by the General Pension System in Colombia. Drummond Ltd. does not have retirement plans in addition to those established by law.

The estimated value of the defined benefits contributions paid by the Company in 2019 was US $26,053,443.

Additionally, through the pension funds it contributed an amount equivalent to 16% of base wages, corresponding to the income for the year for each employee.

Mining and hydrocarbon operations / Valledupar

1.85

1.29 Port operations/ Cartagena

1.85

1.85

Bogota

2.26

2.31

GRAPHIC 6.

Relationship between the minimum wage paid by the Company and the country’s minimum wage for 2019 0.00 Mining operations (Cesar) and Valledupar office

0.50

1.00

1.50 1.29

Port operations (Magdalena) and Support Cartagena

2.00

2.50 Men Women

1.85 1.85 1.85 2.31 2.26

Bogota

- 45 -

- 46 -

Sustainability Report - 2019

Proportion of senior executives hired from the local community

For Drummond Ltd., it is very important to promote the social wellbeing of the communities where it operates. For this reason, it seeks to hire senior executives from the local community who meet the necessary characteristics to hold these positions: i) experience in the industry, ii) appropriate academic profiles,

{202-2}

iii) familiarity with the areas in which it operates, facilitating an understanding of local needs.

GRAPHIC 7.

Percentage of senior executives hired from the local communities in locations where significant operations are conducted 0.0%

4.0%

8.0%

12.0% 16.0% 20.0%

Mining operations (Cesar) and Valledupar office

15.5%

Port operations (Magdalena) and Support Cartagena Bogota

16.4%

2018 2019

6.4% 5.5% 0.9% 0.0%

This percentage is calculated based on the total number of employees at the Company’s managerial level, which includes the president, vice presidents, superintendents, managers and assistant superintendents. In all cases, the proportion has varied due to slight changes in the workforce at all levels.

( - 47 -

Milestones At the end of 2019, Drummond Ltd. was, for the fourth consecutive year, the largest coal producer in Colombia.

SUPPLY CHAIN

Supply

Chain

{102-9}, {102-10}

FOR DRUMMOND LTD., IT IS A PRIORITY TO WORK WITH COMPANIES THAT ARE IN ALIGNMENT WITH ITS POLICIES, PROCEDURES, CONTROLS, GUIDELINES, CHECKLISTS AND ACTIVITIES.

Drummond Ltd.'s Contractors Manual: This document seeks to guide contractors/suppliers and make them aware of certain essential requirements related to providing goods and services

Therefore, its base of suppliers and contractors must comply with the highest industry standards from an operational, technical and economic perspective. This will then guarantee the sustainability and profitability of its mining and port operations, responsibly complying with legal regulations and promoting the highest standards in terms of safety, health and the environment.

In the month of January 2019, the fourth version of Drummond Ltd.’s Contractors Manual was published, which aimed

Inclusion of a reference framework for the process of supplying goods and/or services to Drummond Ltd.

to simplify and reorganize its contents, in addition to incorporating new elements, to continue with the process of continuous improvement and ensure that it meets the current needs of the Company’s operations.

This document seeks to guide contractors/suppliers and make them aware of certain essential requirements related to providing goods and services.

Among the changes made, the following are especially noteworthy:

Clear assignment of roles and responsibilities (user, contract administrator and contractor/supplier).

Regarding the Corporate Social Responsibility strategy, the following aspects are highlighted: hiring local labor, local supplies and services, response to requests, complaints and claims, and reporting on voluntary social investments.

Reorganization of the content into six chapters: Safety; Administrative provisions and general aspects; Workplace health and safety; Environmental management; Corporate Social Responsibility (CSR), and Vehicles and transportation.

- 48 -

Sustainability Report - 2019

The supply process for all goods, inputs and services required includes the following stages:

1

2

3

4

Requisition prepared by the user (good/service)

Requisition approved by the user

Market research (identify bidders)

RFQ (request for quote) or invitation to bid

8

7

6

5

Supplier registration (if supplier is new)

Awarding of offer (approval of offer)

Comparative analysis (technical and economic)

Receipt of offers

9

10

Issuance of purchase order (connects with the flowchart proposed in the report)

Receipt of goods and/or services from suppliers (flowchart from the report)

11 Payment processing (accounts payable and treasury)

During 2019: we had commercial relationships with

US$

SUPPLIERS

INVOICING VOLUME

954

1,146,913,527 generated

Of that total

US$

ARE DOMESTIC

TOTAL BILLINGS

859 90 % Of those

346 ARE LOCALS SUPPLIERS

801,825,401 US$

242,305,621

BILLINGS TOTALED

suppliers located in the Caribbean region, mainly in the departments of AtlĂĄntico, Cesar, Magdalena and BolĂ­var - 49 -

COMMUNICATIONS MANAGEMENT

Communications

management

{103-1}

EFFECTIVE, APPROPRIATE AND ACCURATE COMMUNICATION WITH DRUMMOND LTD.’S STAKEHOLDERS IS ESSENTIAL TO ACHIEVING THE RESPECTFUL AND TRANSPARENT INTERACTIONS THAT ARE NECESSARY TO PROPERLY CARRY OUT THE OPERATIONS. PERFORMING EXCELLENT COMMUNICATIONS MANAGEMENT GENERATES VARIOUS BENEFITS, SUCH AS:

Improving competitiveness

Adapting to changes in the environment

Effective, appropriate and accurate communication with Drummond Ltd.’s stakeholders is essential to achieving the respectful and transparent interactions that are necessary to properly carry out the operations.

Achieving defined goals and targets

Maintaining a good work environment

Reacting quickly to labor situations

Involving all of our stakeholders

Our operations are known for: Caring for and protecting the environment

Reducing our impacts and respecting human rights

Strengthening the development of the communities in our areas of influence

To accomplish this, we are committed to informing stakeholders in a way that is:

DIRECT

ACCURATE TRANSPARENT

- 50 -

TIMELY

Sustainability Report - 2019

The Company is conscious that an assertive and effective exchange of information promotes interaction on a reciprocal basis, which takes place through internal and external communication:

INTERNAL:

EXTERNAL: government entities, oversight agencies, suppliers, customers, civil society organizations and communities.

Internal communication at Drummond Ltd. covers the company’s various sites: the Pribbenow and El Descanso mines in the department of Cesar, Puerto Drummond in Ciénaga, in the department of Magdalena, Bogota, Valledupar, Santa Marta and Cartagena.

The impact of clear and assertive communication is able to reach and influence even workers’ families. For this reason, it is critically important that the messages delivered are transparent, aligned with the business objectives and consistent with the management of the challenges and risks that the operation must address.

In the Company’s external context, communications mainly occur in our areas of influence (Cesar and

employees and contractors that manage our brand on an ongoing basis.

Magdalena), and on many occasions at the national and international levels.

Having good communication with our stakeholders is one of the Company’s key pillars and objectives. The risk of failing to achieve effective and efficient communication can affect Drummond Ltd.’s image and, as a result, its relationships with different stakeholders could be altered.

Good communications management begins with having strong organizational performance that, in turn, will be beneficial by leading to a positive assessment of the Company’s reputation.

- 51 -

COMMUNICATIONS MANAGEMENT

{103-2} {DLTD-01} Drummond Ltd.’s Corporate Communications Strategy is directed by a series of practices that guide its management. They have been used to build relevant indicators to measure compliance with the communications plans: Media analysis Crisis management Digital transformation

Promoting the corporate identity

Relationships with stakeholders

For this reason, having a positive impact on the Company’s different stakeholders, with the goal of contributing to the organization’s processes, requires coordination and communication objectives:

Having a positive impact on the Company's different stakeholders, with the goal of contributing to the organization's processes, requires coordination and communication objectives.

VICE PRESIDENT OF PUBLIC AFFAIRS AND COMMUNICATIONS

DEPARTMENT TEAM

Development and implementation of communication strategies aligned with the business objectives.

- 52 -

Promotion of the corporate image.

Strengthening relationships with our stakeholders.

Sustainability Report - 2019

To achieve strong results, the Communications department uses components such as: perception surveys, feedback and identification of our stakeholders, risk mapping and management plans to minimize impacts. This makes it possible to develop tools to meet the area’s objectives:

Communications Policy

Corporate Identity Manual

Drummond Informs You newsletter

Drummond Informs You – Special Edition

https://www.drummondltd. com/about-us/ourcommitment/?lang=en

As part of the development of the communication strategy in its Corporate Identity indicator, the third update to the Identity Manual is underway, establishing fundamental elements and standards to project a solid image.

Monthly publication.

It is published as necessary.

Press Releases

Drummond Magazine

Digital Posters

Physical Posters

At least two per week.

Published every three months.

Published weekly.

Permanent updates.

Aimed at all employees.

Aimed at all employees.

Location: Dining rooms for operations personnel at the mines and port.

30 locations throughout mines and port.

Aimed at press and media members, employees, contractors, public officials, embassies, among others.

Aimed at all stakeholders

Aimed at all stakeholders, especially to employees.

Aimed at all stakeholders, especially to employees.

Internal email

Website

Organizational announcements

Cacica stereo

Information is sent whenever necessary.

www.drummondltd.com

Published monthly.

(Commercial FM station)

Constantly updated.

Daily broadcast.

Aimed at all stakeholders.

Aimed at all administrative employees.

Drummond In the News newsletter

“La Nota Bacana”

Connect with Drummond Program

Published monthly.

Published monthly.

Aimed at external stakeholders (contractors, suppliers, government authorities, among others).

Aimed at all employees.

To support the operations, we hold radio programs through the Company’s radio base. It is aimed at truck operators who work in the Production and Coal areas.

Aimed at all employees.

- 53 -

Aimed at employees and all stakeholders in our area of influence and those who listen online.

COMMUNICATIONS MANAGEMENT

SOCIAL MEDIA

@DrummondLtdCo

Drummond Ltd.

Updated daily.

Aimed at all stakeholders.

Updated constantly.

Aimed at all stakeholders.

@drummondltdco

DrummondLtdCo

Updated daily.

Aimed at all stakeholders.

Videos on different Company processes are published occasionally.

Aimed at all stakeholders.

Other channels available for our audiences:

Communications email and website The Communications department responds to requests and concerns raised by the media. With access located in the Contact - News and Publications section of our website,3 we were able to provide a direct link to journalists, the media or companies associated with providing communication services.

Email: comunicacionesrh@drummondltd.com4 3. Contact us at: https://www.drummondltd. com/news/media-contact/?lang=en 4. comunicacionesrh@drummondltd.com - This email account was created for purposes related exclusively to Drummond Ltd. employees and is used for automated mailings only.

Using this communication channel, we reinforce our exclusive contact with our internal audience; we use it to send all information associated with internal and external publications or official Company messages. Also, we constantly receive

- 54 -

concerns, requests or comments from our workers, which are redirected to the different areas so that they can provide an appropriate response. This channel is available for: • Personnel whose work tools include corporate email, usually employees from administrative areas or in supervisory positions.

• Operations personnel who do not have access to corporate email but have authorized the use of their data to receive official company information using their personal and/or authorized email.

Since 2014, Drummond Ltd. has provided workers with this ability through the “Give us your email” campaign, which has also reduced the use of paper.

{103-3} The mechanisms used to measure our Communications work include: • Perception survey of the mining sector called “Mining Compass.” This study is conducted annually and is executed

by Jaime Arteaga y Asociados, in conjunction with the National Consulting Center.

• Perception survey in the area of influence conducted by the firm Cifras y Conceptos, with qualitative methodology through focus groups and in-depth interviews.

• Documentary and audit evaluation that includes visits to our Company’s operations and chats with different

stakeholder audiences (both internal and external). As a result of these visits, the human rights risk matrix and management methods are updated.

• Periodically, visits are made to evaluate whether new issues have arisen and the current status of our Company’s progress with respect to the recommendations.

• Evaluation by a group of European clients through the external validation conducted by the Bettercoal organization.

TWO-WAY DIALOGUE WITH THESE AUDIENCES HAS ALLOWED THE COMPANY TO ADJUST ITS INTERNAL AND EXTERNAL MESSAGES FOR GREATER EFFECTIVENESS, IDENTIFYING POTENTIAL RISKS BASED ON EXTERNAL PERCEPTIONS OF THE COMPANY’S PERFORMANCE (SUCH AS ITS INVOLVEMENT IN PROJECTS TO IMPLEMENT THE PEACE AGREEMENTS), AND BEING MORE AGGRESSIVE IN COMMUNICATING ITS ACHIEVEMENTS AND SOCIAL RESPONSIBILITY ACTIVITIES, WHICH ALSO HELP TO IMPROVE THE COMPANY’S IMAGE.

On the Company’s website, there is an option enabled for stakeholders to send feedback on the communication processes.3 During 2019, no requests were received.

{DLTD-02}

This plan is mainly focused on employees, their families, the communities in the municipalities and townships located in the mining and port areas of influence (departments of Cesar and Magdalena),

MEDIA PLAN Since 2012, we have had a Regional Media Plan, and its primary objective is to position our Company as one that is committed to its stakeholders, and that provides information to the communities in its area of influence about the programs and projects it develops.

This plan is mainly focused on employees, their families, the communities in the municipalities and townships located in the mining and port areas of influence (departments of Cesar and Magdalena), as well as along the railroad corridor. They are joined by the local and regional authorities, regulatory entities, the media, contractors and the community at large.

5. Contact us at: https://www.drummondltd. com/contact-us/?lang=en

- 55 -

Some of the topics covered are: employment, benefits, environmental management, corporate social responsibility, support for communities, industrial safety, human rights, our operations, innovation and technology, and compliance.

COMMUNICATIONS MANAGEMENT

For Communications Management, especially the development and implementation of the Regional Media Plan, the following resources have been allocated:

HUMAN RESOURCES

01

01

03

01

05

Vice President of Public Affairs and Communications

Director of Communications

Communications Analysts

Assistant

Student Interns

FINANCIAL

TECHNOLOGICAL

US$

• Computers

per year

• Photographic and video camera, with their respective memories and accessories, such

187,000

as lenses, tripods, flash, batteries • Headphones • Tape recorders

RESULTS OF THE MINING COMPASS As a result of the fifth reputation panel on the Colombian mining sector, Drummond Ltd. was ranked as the second best company in the general ranking, showing the Company’s reputation among its various stakeholders. This is the result of the effective work carried out on the different fronts that the operation requires.

Among the main changes identified, the Company moved up one spot from

- 56 -

2018, ranked as the third best mining company for managers. Additionally, according to government authorities, it moved from third place in 2018 to second place in 2019 for the best mining company.

From the perspective of mining sector workers and public opinion in the mining municipalities, the Company remained in second place for the best mining company.

Sustainability Report - 2019

(

Milestones

SOCIAL MEDIA:

The Company completed the update of its Communications Policy in 2019.

We gained 1,750 new followers during 2019, ending the year with 8,170.

In 2019, its media impact showed 63% of publications having a favorable tone, with 1,486 positive publications.

During 2019, the Company supported events in the region, such as the RCN #LoQueNosUne tour in La Jagua de Ibirico, Cesar.

{

Live broadcast of Caracol Radio’s Trip to the Heart of the Caribbean from Puerto Drummond.

We gained 8,563 new followers during 2019, ending the year with 11,900.

To continue with the ongoing improvement of the area and referring to the communications strategy’s Digital Transformation indicator, during 2019, new photography and video equipment with the latest technology was purchased to produce multimedia material to support the activities and programs carried out at the company.

We reactivated our account on this social network in September 2019. As of December 31 we gained 10,386 followers, ending the year with 34,024.

We reactivated our account on this social network in April 2019. As of December 31 we gained 182 followers, ending the year with 428.

Challenges 2020 Increase the number of followers on social media with positive interactions.

followers

16,000

9,000 followers

60,000

550

Seek to create digital communities.

Open up a new social network to reach new audiences.

Build relationships based on trust and transparency.

Present Communications Annual Report

Create a Facebook account - 57 -

followers

followers

Prepare an annual report on Communications work

Our vision of Sustainability

- 58 -

II

part

Our vision of

sustainability Commitment to a positive impact is the foundation of Drummond Ltd.’s sustainability vision

- 59 -

Our vision of Sustainability

Commitment to

sustainability DRUMMOND LTD. UNDERSTANDS THAT ITS RESPONSIBILITY GOES BEYOND MITIGATING ITS IMPACTS. IT WORKS CONSTANTLY TO ENSURE THAT ITS OPERATIONS CONTRIBUTE TO THE SUSTAINABLE DEVELOPMENT AND WELL-BEING OF ALL OF ITS STAKEHOLDERS, ESPECIALLY THOSE CLOSEST TO THE COMPANY: EMPLOYEES, CONTRACTORS AND THE COMMUNITY. Given that Corporate Social Responsibility must go beyond complying with the law and mitigating risks, the Company works to maintain relationships that contribute to creating shared value in the region and the country.

The Sustainability Policy1 reiterates the Company’s commitments in the following areas:

To sustainable development

6. Drummond Ltd. Sustainability Policy: https:// www.drummondltd.com/ wp-content/uploads/ DLTD-Sustainability-PolicyFeb26-2020.pdf

To incorporating CSR into company actions To stakeholders To the law and international standards

- 60 -

Sustainability Report - 2019

To fulfill these commitments, the Company’s strategic vision is “to increase and share the benefits of our business operations with stakeholders in our areas of influence through building and strengthening local capacities.� This vision starts to fall into place based on the following pillars:

Environmental performance

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Strengthen the business capabilities that ensure world-class environmental performance.

Comprehensive development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Governance for development Strengthen local capacities for greater efficiency in public planning and management.

In 2019, the Corporate Social Responsibility department took steps as part of the Social Responsibility Strategic Matrix, launching its Programs Portfolio with the respective monitoring and assessment of relevance and effectiveness in meeting stakeholder expectations, as well as their contributions to meeting the United Nations Sustainable Development Goals (SDGs) and international standards.

- 61 -

During 2019, the monitoring targets and indicators were identified, which will be validated internally in 2020.

Our vision of Sustainability

In addition, quarterly meetings of the Sustainability Committee, whose main mission is to direct the Company towards a model of sustainable development, aligning the business with leading practices in the global mining-energy sector, were coordinated and led.

for Sustainable Development Goals7, prioritizing and communicating Drummond Ltd.’s contributions and including information on work in progress and sustainability in the reporting cycle.

Drummond Ltd. works to actively contribute to reducing the gaps existing in the country related to the following SDGs:

The Social Responsibility Strategy remained aligned with the 2030 Agenda

17 2

16

15

4

Drummond Ltd. works to actively contribute to reducing the gaps existing in the country related to the following SDGs: 6

12

11

9

7. https://www.refworld. org/docid/57b6e3e44.html [accessed 23 February 2019].

8

The process for aligning the Sustainable Development Goals with Drummond Ltd.’s Corporate Responsibility Strategy was carried out in 2018, based on identifying the contributions by the different projects developed by the Company throughout its operations, and analyzing their relationship to each SDG. In this exercise, the four pillars of the Company’s work were connected to the SDGs, which are correlated through Goal 17 (Partnerships to achieve the goal).

- 62 -

Sustainability Report - 2019

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development

• Peace and social dialogue

• Institutional and community strengthening

• Coexistence and conflict resolution

Contribution to capacity building

Comprehensive development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

• Transparency and citizen oversight

• Training and promotion

• Environmental sustainability

• Education and training • Creating opportunities

• Conservation and restoration

• Work environment

Strengthen local capacities for greater efficiency in public planning and management.

Environmental performance Strengthen the business capabilities that ensure worldclass environmental performance.

Alignment of the CSR strategy, SDGs and material issues at Drummond Ltd.:

Peace and human rights

Environmental performance

Comprehensive development

Governance for development

Human rights due diligence

Water resource management

Talent management

Regional participation and relations

Air quality

Workplace health and safety

Protecting biodiversity

Relationships with unions

Resettlement management

Relationships with communities Supplier and contractor management

THE BEGINNING OF EACH SUBCHAPTER SHOWS THE RELATIONSHIP BETWEEN THE MATERIAL ISSUE AND THE CSR STRATEGY, THE SUSTAINABLE DEVELOPMENT GOALS, AND THE SDGS TO WHICH IT CONTRIBUTES. - 63 -

e iniciativas e iniciativasenensostenibilidad sostenibilidad Our vision of Sustainability

EN DRUMMOND EN EN DRUMMOND DRUMMOND LTD.,LTD., LTD., SUSCRIBIMOS SUSCRIBIMOS SUSCRIBIMOS O TENEMOS OO TENEMOS TENEMOS EN CUENTA EN EN CUENTA CUENTA DE FORMA DE DE FORMA FORMA VOLUNTARIA VOLUNTARIA VOLUNTARIA LASLAS LAS SIGUIENTES SIGUIENTES SIGUIENTES INICIATIVAS: INICIATIVAS: INICIATIVAS:

International Standards

Sustainability Initiatives and

{102-12}

DRUMMOND LTD. HAS SIGNED OR VOLUNTARILY ABIDES BY THE FOLLOWING INITIATIVES:

Bettercoal

Voluntary Principles on Security and Human Rights

As part of the initiative, Bettercoal reviews management systems, sustainable performance Voluntary code of and impacts, Dentro Dentro Dentro decomparing las de deiniciativas las las iniciativas iniciativas business conduct them with the terms of aimed at facilitating mencionadas mencionadas mencionadas anteriormente, anteriormente, anteriormente, its Code, and it works the management of withimportante the to es es esCompany importante importante resaltar resaltar resaltar larelated la la with public risks improve its practices. and private security in

gestión gestión gestión que que realiza que realiza realiza Bettercoal, Bettercoal, Bettercoal, terms of human rights, examinando examinando examinando los sistemas los losparticularly sistemas sistemas de those de de derived from operating in areas gestión gestión gestión y desempeño yy desempeño desempeño sostenible sostenible sostenible where illegal armed e impactos, ee impactos, impactos, que que son quegroups son comparados son comparados comparados are active. con con las condisposiciones las las disposiciones disposiciones del Código del del Código Código de Bettercoal de de Bettercoal Bettercoal y trabaja yy trabaja trabaja con con la con la la Compañía Compañía Compañía parapara para mejorar mejorar mejorar sus sus sus 3 prácticas prácticas prácticas a lo alargo a lo lo largo largo del tiempo del del tiempo tiempo . 33..

Por otro Por Por otro otro lado,lado, lado, en elen en Grupo el el Grupo Grupo de de de Trabajo Trabajo Trabajo de DD.HH. de de DD.HH. DD.HH. y Carbón, yy Carbón, Carbón, se se se intercambian intercambian intercambian experiencias, experiencias, experiencias, se se se identifican identifican identifican lecciones lecciones lecciones replicables replicables replicables y oportunidades yy oportunidades oportunidades de mejora, de de mejora, mejora, 3 se elaboran se se elaboran elaboran recomendaciones recomendaciones recomendaciones frente frente frente a la a política a la la política política pública pública pública y seyy se se promueven promueven promueven iniciativas iniciativas iniciativas de trabajo de de trabajo trabajo conjunto conjunto conjunto en las en enempresas las las empresas empresas y yy sus áreas sus sus áreas áreas operacionales operacionales operacionales en en en materia materia materia de DD.HH. de de DD.HH. DD.HH. y empresa. yy empresa. empresa.

64 Drummond_Informe2018_2019_impresion.indb Drummond_Informe2018_2019_impresion.indb Drummond_Informe2018_2019_impresion.indb 69 - 69 69 -

UN Guiding Principles on Business and Human Rights Behavior and performance parameters related to the responsibility of States and companies to respect and promote human rights in regards to the impacts of corporate operations.

Retos Ret

20192019 2019 Realizar Realizar Realiza el p acerca acerca acerca del c empresa empres empres de Vea 33 elVea Vea artículo el elartículo artículo completo completo completo en en en https://bettercoal. https://bettercoal. https://bettercoal. org/producers/ org/producers/ org/producers/ drummonddrummonddrummondcompany-inccompany-inccompany-incitochu-corp/ itochu-corp/ itochu-corp/

Esta actividad Esta Estaactivi activti la gestión lalagestión gestión en re Código, Código, Código, para en pa p manejan manejan manejan los rielo operación. operación operación El pr nuestras nuestras nuestras operac o

asenibilidad en sostenibilidad Sustainability Report - 2019

ENEMOS SUSCRIBIMOS EN CUENTA O TENEMOS EN CUENTA SIAINICIATIVAS: LAS SIGUIENTES INICIATIVAS:

Grupo de Trabajo de DD.HH. y Carbón

Grupo de Trabajo de DD.HH. y Carbón

I n f o r m e d e s o s t eWorking n i b i l i d a dGroup 2 0 1 8 IFC Performance Standards on on Human Rights Environmental and and Coal Social Sustainability Informe de sostenibilidad 2018

An IFC initiative for Initiative to share corporate commitment experiences, identify to sustainability, with lessons I n f o r[102-12] m e d e s o s t e n i b i l i d a d 2 0 1replicable 8 a focus on managing and opportunities for [102-13] Adicionalmente, risks and impacts, that improvement.

I n f o r m e dnos e s encontramos o s t e n i b i Public l i d a d policy 2018 provides guides for asociados a cincorecommendations organizacionesare ercoal, identifying situations made, human rights and de promoción nacional: [102-12] s de related[102-13] to sustainability business initiatives for Adicionalmente, nos encontramos in all phases of a project the companies and their ostenible or investment. operational areas to work asociados a cinco organizaciones mparados on together are promoted. de promoción nacional:

s mente,

Retos Retos

Mining Energy Committee Multi-actor initiative for the promotion, protection and respect for human rights as they relate to security. It is especially linked to the Voluntary Principles on Security and Human Rights.

Extractive Industries Transparency Initiative (EITI) Global standard to promote the open and responsible management of extractive resources.

[102-12] el[102-13] Código r m e d e s o[102-12] s t e n nos i b i l iencontramos dad 2018 on la I n f oAdicionalmente, asociados a[102-13] cinco organizaciones Adicionalmente, nos encontramos sus de promoción nacional: 3 asociados a cinco organizaciones empo . de promoción nacional: 2019 2019 {102-13} Additionally, the Company is a member of five national po de Realizar el proceso de Realizar evaluación el proceso de evaluación advancement organizations: rbón, se acerca del cumplimiento acerca dedel la cumplimiento de la 2-12] empresa del Estándar empresa Bettercoal. del Estándar Bettercoal. as, se 2-13] Adicionalmente, nos encontramos licablesasociados a cinco organizaciones Esta actividad tiene el propósito Esta actividad de evaluar tiene el propósito de evaluar ora, artículo de promoción 3 Vea nacional: el artículo la gestión en relación con los la gestión requisitos en del relación con los requisitos del ciones eto en completo en Código, para entender la manera Código,enpara queentender se la manera en que se /bettercoal. https://bettercoal. a y se National Association Colombian Mining Colombian manejan los riesgos relacionados manejan con los nuestra riesgos relacionados con nuestraPetroleum org/producers/ eoducers/ trabajo of Entrepreneurs oftendrá Association – ACM Association operación.

El proceso operación. como alcance El proceso tendrá como alcance – ACP monddrummondColombia – ANDI as y nuestras operaciones mineras nuestras y portuarias. operaciones mineras y portuarias. any-inccompany-incen -corp/ itochu-corp/ presa.

Council of American Companies – CEA

- 65 20/10/2019 3:59:54 p. m.

Colombo-American Chamber of Commerce – AMCHAM Colombia

20/10/2019 3:59:54 p. m.

- 66 -

Sustainability Report - 2019

Relationships with

{102-41}

With the negotiations that took place in 2019, Drummond Ltd. was able to sign six collective bargaining agreements with eight of its unions during the direct agreement stage. These agreements benefit 74.56%8 of all Company employees. It should also be noted that 61.10% of Drummond Ltd. employees are unionized.

Stakeholders {102-42} In accordance with the Social Responsibility Strategy, the Company maintains constant contact with stakeholders to maintain a strong foundation of trust, not only to add to the Materiality Analysis and the preparation of the Sustainability Report, but rather to establish true relationships of empowerment, co-management and co-responsibility. To do so, the Company has a Communications department that encourages stakeholder participation and facilitates access to and exchanges of information.

Influence Those with the capacity to affect organizational decision making

Dependency Those who are affected by the Company's decisions

8. For information on this negotiation process, see: https://www.drummondltd. com/drummond-signedeight-collective-bargainingagreements-withunions/?lang=en/ - 67 -

Drummond Ltd. has communication mechanisms for all actors that are part of its geographic, political, socio-economic and market environment at the local, national and global levels; additionally, as part of the Social Responsibility Strategy, it emphasizes relationships with the actors that, because of significant levels of influence or dependency on the Company, have been designated stakeholders.

Our vision of Sustainability

Air quality

X

X

X

Workplace health and safety

X

X

Economic performance

X

X

X

Human rights due diligence

X

X

X

Talent management

X X

X

Community relations Regional relations

X

X

X

X

X

X

X

X

X

X

X

Resettlements Communications management

X

X

X

Protecting biodiversity

X

X

X

Union relations

X

Supplier and contractor management

X

Public opinion

X

Competitors

X

Shareholders

Communities

X

Clients

Suppliers and contractors

Water resource management

Government

Employees and families

Topics discussed with each stakeholder group

The topics discussed with each stakeholder and the mechanisms for maintaining dialogue are defined using criteria for relevance and pertinence, selecting important issues for each group and appropriate language to facilitate understanding and interest.

Organizations, community associations

{102-40} {102-43} {102-44}

X

- 68 -

X

X

X

Manual

X

X

X

X

X

X

Informational meetings

Public opinion

X

Policy

Competitors

X

Shareholders

X

X

Clients

360° chats

X

Government

X

Organizations, community associations

Ongoing dialogue

Communities

Employees and families

Mechanisms

Suppliers and contractors

Sustainability Report - 2019

X

X

X

X

X

X

X

X

X

X

X

X

X

Request letters Training workshops

X

X

Communication of projects

X

X

Visits to operations

X

X

Radio program

X

X

X

X

Sustainability report

X

X

X

X

X

Drummond Informs You

X

X

X

X

X X

Newsletter Revista Drummond

X

Press releases

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

Financial reports

X

Help Centers

X

X

X

X

Email

X

X

X

X

Complaints @ DrummondLTD.com

X

Website

X

X

X

X

X

X

X

Twitter @ DrummondLtdCo

X

X

X

X

X

X

X

Instagram @drummondltdco

X

X

X

X

X

X

X

YouTube DrummondLtdCo

X

X

X

X

X

X

X

LinkedIn Drummond Ltd.

X

X

X

X

X

X

X

X

- 69 -

Our vision of Sustainability

Materiality

analysis

{102-46} {102-47}

DRUMMOND LTD. UNDERSTANDS THAT RISKS AND OPPORTUNITIES ARE DYNAMIC OVER TIME AND RELATED IN DIFFERENT WAYS, COMBINING AS CAUSES AND EFFECTS OF EACH OTHER AND AFFECTING BOTH THE BUSINESS AND THE ENVIRONMENT.

Since 2012, the Materiality Analysis has been carried out objectively, with the support of an independent third party that identifies the decisive factors in the Company’s environmental, social and corporate governance issues and their significant influence on decisions by stakeholders.

Updating the Materiality Analysis

The Materiality Analysis is the basis for defining and monitoring the roadmap for the Social Responsibility Strategy and, therefore, it is also the parameter by which the content for the reports are defined each year.

Since the Company conducted a full Materiality Analysis in 2018, that analysis was updated for this period, which involved consultations with those responsible for matters within the organization and a review of sources that represent stakeholder expectations and concerns. The analysis maintained the scope of the mining and port operations, concluding that the matters identified in 2018 and their coverage remain current and have only undergone slight variations in their relevance weighting.

INPUTS FOR THE 2018 MATERIALITY ANALYSIS

• GRI standards.

• Materiality report baseline “Update to the 2016 Materiality Analysis.”

area of influence of Drummond Colombia’s operations,” Grupo DIS 2016.

• Human Rights Strategy.

• Report on “Identification, mapping and consultation with relevant stakeholders,” Grupo DIS 2016.

• “Socio-economic study of households in the

• Materiality in the mining sector.

• Drummond’s Corporate Social Responsibility Strategy.

- 70 -

• International standards: Global Compact and standards from the Sustainability Accounting Standards Board (SASB).

• News from Drummond and the mining sector in Colombia.

Sustainability Report - 2019

GRAPHIC 8.

Drummond Ltd. materiality matrix 100

Human rights due diligence

98

Water resource management

96 94

Workplace health and safety Economic performance Relationships with local communities Union relations Communications management Supplier and contractor management Talent management Biodiversity protection Resettlements Regional participation and relations

92 Influence on the evaluation and Stakeholder decisions (Y)

Air quality

90 88 86 84 82 80 78 76 74 72 70 68 66 64 62 60 58 56 54 52 50 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100 Significance of economic, social and environmental impacts (K)

INPUTS FOR THE UPDATE FOR THIS PERIOD

• Interviews with those responsible for economic, environmental and social matters at the Company. • Review of sources that represent stakeholder perceptions.

- 71 -

Our vision of Sustainability

Highly relevant Air quality

Water resource management

Relationships with local communities

Procedures for the prevention, reduction and control of atmospheric emissions and particulate matter in the operations, and for responding to emergency situations, abnormal emissions and dispersion and excess situations, with respect to the standards and measures allowed under air quality criteria, minimizing health impacts.

Methodologies and procedures to identify, evaluate and mitigate the impacts derived from the use of water resources.

Implementation of technically and financially viable policies and programs to achieve the efficient and rational use of this resource, including the reuse, recycling and preservation of aquifers.

Programs carried out with the objective of preserving the Company’s social license, promoting the social and economic development of the communities located in the area of influence of the projects.

ASSOCIATED GRI ASPECT

ASSOCIATED GRI ASPECT

• Emissions (partial non-GHG)

ASSOCIATED GRI ASPECT

• Local communities • Indirect economic impacts • Closure planning

• Water • Effluents and waste (partial water)

Somewhat relevant Economic performance

Supplier and contractor management

Regional participation and relations

Impacts of the project on the economic situation of its stakeholders as a result of financial capital flows affecting them.

Strategies to identify, contract with and evaluate suppliers for the project, in order to maximize positive impacts on the supply chain among stakeholders.

Relationship and partnership actions with national and regional stakeholders, aimed at jointly building and promoting shared visions of the future of the region.

ASSOCIATED GRI ASPECT

ASSOCIATED GRI ASPECT

ASSOCIATED GRI ASPECT

• Economic performance

• Market presence • Socioeconomic compliance

• Supplier environmental assessment • Supplier social assessment

• Procurement practices

- 72 -

• Public policy

Sustainability Report - 2019

Workplace health and safety

Talent management

Resettlement

Human rights due diligence

Programs implemented in order to conduct operations safely, maintaining the comprehensive management system, aimed at protecting and preserving the health and lives of employees.

Actions that are aimed at selecting, training and developing employees who contribute to the sustainability of the business and meeting the objectives set, operating with honesty, integrity and openness in a team-oriented corporate culture.

Coordinated community relocation and support processes, in accordance with international standards and best practices, aimed at maintaining or improving the living conditions of the resettled populations.

Policies and practices to promote respect for human rights and prevent any action that could cause their violation in the value chain.

ASSOCIATED GRI ASPECT

• Workplace health and safety

ASSOCIATED GRI ASPECT

ASSOCIATED GRI ASPECT

• Resettlement

• Employment • Training and education • Diversity and equal opportunity • Equal pay for men and women

ASSOCIATED GRI ASPECT

• • • • •

Non-discrimination Child labor Forced labor Security practices Rights of indigenous peoples • Evaluation

Biodiversity protection

Union relations

Communications management

Policies and programs focused on effective environmental management in order to protect, preserve, mitigate, restore and compensate for the biodiversity of the affected land and areas of influence of the mine and port, to maintain the value and functionality of priority ecosystems and to increase resource efficiency in the operations.

Practices to guarantee the free association of workers and response to requests by the existing union organizations in a respectful and harmonious manner.

Communication actions and strategies to maintain the corporate image and reputation, reporting the company’s actions transparently, directly, accurately and at the appropriate time to all of its stakeholders through all of its existing communication channels.

ASSOCIATED GRI ASPECT

• Biodiversity

- 73 -

ASSOCIATED GRI ASPECT

• Freedom of association and collective bargaining • Labor / management relations

ASSOCIATED GRI ASPECT

• Communications management

PEACE AND HUMAN RIGHTS

01 - 74 -

Sustainability Report - 2019

PEACE AND

Human rights STRENGTHEN CAPACITIES AMONG STAKEHOLDERS TO BUILD A PEACEFUL, FAIR AND RESPONSIBLE SOCIETY THAT ALSO PROMOTES RESPECT FOR HUMAN RIGHTS.

- 75 -

PEACE AND HUMAN RIGHTS

Due diligence

in Human

rights

For Drummond Ltd., collaborating in achieving global objectives such as the UN Sustainable Development Agenda is a mechanism that has proven to further contribute to achieving its Corporate Social Responsibility targets. From our due diligence on human rights, we contribute to:

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development • Transparency and citizen oversight

• Training and promotion • Peace and social dialogue

• Institutional and community strengthening

• Coexistence and conflict resolution

Strengthen local capacities for greater efficiency in public planning and management.

CSR Strategy Contribution to capacity building

Integral Development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Environmental performance • Environmental sustainability

• Education and training • Creating opportunities

• Conservation and restoration

• Work environment

Drummond Ltd.'s contribution to achieving the Sustainable Development Goals

- 76 -

Strengthen the business capabilities that ensure worldclass environmental performance.

Sustainability Report - 2019

Goals • Goal 8.7: Take immediate and effective measures to eradicate forced labor, end modern slavery and human trafficking. Also, contribute to the abolition of all forms of child labor at the Company’s various locations and among its stakeholders.

• Goal 8.8: Protect labor rights and promote a decent work environment, with growth opportunities, that is safe and risk-free for all workers.

• Goal 16.1: Significantly reduce all forms of violence and human rights violations at the Company’s various locations and among its stakeholders.

• Goal 16.2: Contribute to the abolition of abuse, exploitation, trafficking, torture and all forms of violence against children at the Company’s various locations and among its stakeholders.

• Goal 16.5: Promote a culture of legality, to reduce and prevent corruption and bribery in all their forms and ethical, human rights and corporate breaches at the Company’s various locations and among its stakeholders.

• Goal 16.6: Participate in and create spaces at all levels of effective and transparent institutions that are accountable.

• Goal 16.10: Ensure that all direct employees and contractors of Drummond Ltd. have access to information and training on human rights, for the promotion and for the protection of their fundamental freedoms.

- 77 -

PEACE AND HUMAN RIGHTS

{103-1}

DRUMMOND LTD. PROMOTES RESPECT FOR HUMAN RIGHTS WITH ALL PERSONS DIRECTLY OR INDIRECTLY INVOLVED IN THE OPERATIONS. IT ACTS WITH INTEGRITY, COMPLYING WITH INTERNATIONAL NORMS AND STANDARDS AND RELATED CORPORATE POLICIES.

- 78 -

Sustainability Report - 2019

For Drummond Ltd., efficient and effective management of risks is essential. For this reason, it has developed a series of instruments that make it possible to detect, resolve and mitigate possible scenarios of disrespect of human rights, in addition to maintaining relationships with the public sector, always coordinating issues associated with safety.

Additionally, Drummond Ltd. acts with due diligence to prevent and mitigate impacts violating human rights that may be derived from the operation, or from third parties in the area of influence.

If this occurs, and if the Company has any responsibility, it will take the necessary corrective measures to improve their handling and compensate those affected, ensuring corporate

consistency with applicable national and international standards. It will also work with the authorities, public agencies and communities to prevent and, as much as possible, to avoid violations of fundamental rights by third parties. This approach includes the risks of violating the human rights of employees and contractors caused both by third parties and members of the armed forces in the area of influence, or members of the private security companies hired by the Company.

These instruments address issues related to workplace health and safety, resettlements, public safety, labor issues and, additionally, they involve different parts of the operational chain, from employees to suppliers, to carry out a complete monitoring of the operations.

- 79 -

Drummond Ltd. acts with due diligence to prevent and mitigate impacts violating human rights that may be derived from the operation, or from third parties in the area of influence.

PEACE AND HUMAN RIGHTS

The risk management instruments are detailed below: TABLE 1.

Risk management instruments

Possible risk

Possible impact

TO HUMAN RIGHTS IN COMMUNITIES, EMPLOYEES AND CONTRACTORS

• Environmental conditions affecting people.

• Violations of labor and OSH rights.

• Acquisition of assets related to violations of human rights.

• Impacts on the rights of ethnic groups.

• Application of the Employee Manual and policies related to personnel.

• Ensure that procurement processes remain in accordance with the law.

• Ensure that management processes remain in accordance with the law.

• Prevention with constant listening and dialogue.

• Application of voluntary standards on respect for human rights in relation to purchase, such as Guías Colombia, among others.

• Social impacts on the environment.

Management • Acting in accordance approach with standards such as

{103-2}

ISO 14000.

• Application of standards such as the United Nations Guiding Principles on Human Rights and Business (UNGPs) and the Voluntary Principles on Security and Human Rights (VPs).

• Prevention with constant listening and dialogue with stakeholders.

• Monitoring the work of suppliers, contractors and subcontractors.

• Acting in accordance with standards such as OHSAS 18000.

• Availability of multiple reporting channels, including anonymous options.

• Prevention with constant listening and dialogue with stakeholders.

• Maintain prior consultation as a main guideline.

• Acting in accordance with standards such as ISO 14000.

• Application of standards such as the United Nations Guiding Principles on Human Rights and Business (UNGPs) and the Voluntary Principles on Security and Human Rights (VPs).

• Prevention with constant listening and dialogue with ethnic groups.

• Coexistence Committees by location.

Mechanisms • Periodic performance for evaluating evaluation through the approach indicators such as

{103-3}

compliance with the management methods included in the risk matrices related to human rights.

• A udits by organizations such as Bettercoal, as well as customers that complete independent audits.

• Periodic performance evaluation through indicators such as compliance with the management methods included in the risk matrices related to human rights.

• Audits.

- 80 -

• Legal control and due diligence procedures implemented through acquisition processes.

• Periodic performance evaluation through indicators such as compliance with the management methods included in the risk matrices related to human rights • Legal control procedures implemented through processes related to ethnic groups.

Sustainability Report - 2019

TO HUMAN RIGHTS RELATED TO PHYSICAL SAFETY

• Impacts on people in the resettlement process.

• Impacts on public safety and security situations for people and the Company.

• Inclusion of concerns and expectations of the communities in the processes

• C onstant contact and coordination with the armed forces.

• Application of standards such as the United Nations Guiding Principles on Human Rights and Business (UNGPs) and the Voluntary Principles on Security and Human Rights (VPs).

• Prevention with constant listening and dialogue with the communities.

• W ork in cooperation with government entities, other companies and organizations to understand and promote human rights • K nowledge transfer and work in cooperation with suppliers and contractors.

• Environmental or social impacts caused by suppliers and contractors.

• Knowledge transfer and work, including international human rights and business standards, in conjunction with suppliers and contractors, especially security services.

• Prevention with constant listening and dialogue.

• A pplication of standards such as the United Nations Guiding Principles on Human Rights and Business (UNGPs) and the Voluntary Principles on Security and Human Rights (VPs).

• P revention with constant listening and dialogue.

• Performance evaluation through indicators such as compliance with the management methods included in the risk matrices related to human rights.

• Monitoring of the channel for reporting issues and questions by the community.

• Monitoring of the channel for reporting issues and questions by the community.

- 81 -

• Monitoring of the channel for reporting issues and questions by the community.

PEACE AND HUMAN RIGHTS

Proactive contributions to exercising human rights:

FIGURE 1.

Proactive contributions to exercising human rights

Decent and well-paid work.

Environmental management regulated and supervised by the government.

Contribution to improving access to education.

Strengthening infrastructure for healthcare services.

Local purchasing and contracting to energize other sectors.

Voluntary social investments to strengthen institutions.

Generation of royalties and tax payments.

Contribution to peace.

Trust-building opportunities to prevent conflict and promote agreements.

Develop security activities for employees, infrastructure and assets, as well as the residents of the areas of operation, in a framework of respect for human rights.

Act with due diligence to prevent and mitigate the adverse impacts that may arise from the mining operations.

Opportunities for dialogue with audiences of regional and national interest.

Participation in multiactor spaces, such as the Human Rights and Coal Working Group, and the Mining and Energy Committee (CME in Spanish) for Security and Human Rights.

- 82 -

Sustainability Report - 2019

- 83 -

PEACE AND HUMAN RIGHTS

Cases of discrimination, child labor and forced labor {406-1} {408-1} {409-1}

DURING 2019, NO CASES OF DISCRIMINATION, CHILD LABOR OR FORCED LABOR WERE IDENTIFIED THROUGH THE FORMAL CHANNELS FOR RECEIVING INFORMATION. For Drummond Ltd., it is very important to abide by the laws, norms, principles and agreements established in Colombia and internationally on issues related to child labor, discrimination and forced labor, so any activity and/or situation involving those practices is prohibited.

This commitment is reaffirmed by including these standards in the Human Resources and Selection and Recruitment Policies, and in the Code of Conduct.9

Along the same lines, the Company has opportunities for dialogue with its employees, unions, contractors and suppliers operating on the ground, the national government and its peer companies. These arenas for dialogue take place within the framework of due diligence and promote monitoring of cases that are not directly related to the operation, but that may present potential risks.

TABLE 2.

Preventive actions taken by Drummond Ltd.

Preventive actions taken by Drummond Ltd. 9. https://www.drummondltd.com/wp-content/ uploads/Human-Resources.pdf https://www.drummondltd.com/wpcontent/uploads/Code-of-Conductapproved-RM.pdf https://www.drummondltd.com/ wp-content/uploads/SELECTION-ANDRECRUITMENT-POLICY-CHANGE.pdf 10. https://www.drummondltd.com/wp-content/ uploads/Human-Resources.pdf https://www.drummondltd.com/wpcontent/uploads/Code-of-Conductapproved-RM.pdf https://www.drummondltd.com/ wp-content/uploads/SELECTION-ANDRECRUITMENT-POLICY-CHANGE.pdf 11. https://www.drummondltd.com/wpcontent/uploads/MECHANISM-TO-REPORTIRREGULARITIES-PRESENT-CLAIMS-signed.pdf atencionalusuario@drummondltd.co

Discrimination

{406-1}

• The Human Resources and Selection and Recruitment Policies10 and the Code of Conduct demonstrate the Company’s position on the risk of discrimination and provide guidelines on the mechanisms for identifying incidents and determining the path for addressing them.

- 84 -

• Drummond Ltd. has channels for responding to complaints and grievances that can be used to report situations of discrimination11 (complaints channel, ethics hotline, and coexistence committees at all locations to respond to any case that any employee may file).

Sustainability Report - 2019

Child labor

Forced labor

{408-1}

• Hiring processes do not allow for the employment of persons under the age of 18.

• Contractors are required to terminate any type of labor commitment with minors through clauses established in the contracts.

• Drummond Ltd. has channels for responding to complaints and grievances12 through which the communities, suppliers and contractors can report any case associated with child labor.

{409-1} • To control access to the work facilities, there are security checkpoints where access is limited for those people who do not have a citizenship identification card, making it possible to restrict access by minors to the Company’s operations and facilities.

• Drummond Ltd. conducts audits of its contractors to evaluate different aspects including compliance with:

• Recruitment processes • Compensation policies • Working hours and shift rotations

• Preventive controls are implemented to identify cases of child labor; for example, there are random inspections of payments to social security and to contractors. Additional controls include audits, information sessions on Drummond Ltd.’s policies and specific clauses about this issue in contracts.

- 85 -

• Social security contributions

12. https://www.drummondltd.com/ wp-content/uploads/MECHANISM-TOREPORT-IRREGULARITIES-PRESENTCLAIMS-signed.pdf atencionalusuario@drummondltd.co

PEACE AND HUMAN RIGHTS

Security personnel trained on human rights policies or procedures {410-1}

For Drummond Ltd., security personnel play an important role, since they are responsible for ensuring safety based on compliance with the Security and Protection Policy. Additionally, they must inform the relevant authorities in cases where information is obtained that presents a risk for one or more persons.

Aware of the importance and significance of security, the Company included training sessions related to human rights in its training strategy, in order to strengthen its employees’ skills.

The training sessions held for security personnel include:

Code of Conduct for Law Enforcement Officials

Drummond Ltd. Security Policy

Universal Declaration of Human Rights

UN Guiding Principles on Human Rights

Procedure on the Path for Protection against Threats to Life and Integrity

International code of conduct for providers of private security services

Specific Drummond Ltd. security objectives

Drummond Ltd. Human Rights Policy

- 86 -

Drummond Ltd. Human Rights Risk Matrix

General commitments on information management and protection of the right to a good reputation and privacy

Human rights evaluation

Basic principles on the use of firearms and the use of force by law enforcement officials

Sustainability Report - 2019

One hundred percent of the security personnel at the Company, its own employees and third parties, has received formal training on the Company’s policies.

All of the activities carried out by the Security Department take place in compliance with human rights; their understanding is essential to prevent and mitigate adverse effects that may arise from the operations. These training sessions are focused on the prevention of risks of violating the human rights of employees and contractors caused by third parties and risks that members of the armed forces in the area of influence or members of the private security companies hired by the Company could violate these rights.

The three companies that provide security services to Drummond Ltd. defined a human rights policy that is aligned with the Company’s policy, and they have a document with all information corresponding to this issue that is distributed to all security personnel.

Additionally, the Security Department at the mining complex continued to

reduce its use of conventional firearms, replacing them and adding nonlethal weapons; it went from 50% lethal weapons to 35%, and to 65% use of nonlethal weapons for the entire security presence at the mining operations, in compliance with the recommendations on human rights and voluntary principles (Basic Principles on the Use of Force and Firearms by Law Enforcement Officials, General Provisions, Paragraph 2).

One hundred percent of the security personnel at the Company, its own employees and third parties, has received formal training on the Company’s policies and specific procedures for human rights issues and their security applications. The training sessions at the mine take place on a cycle where a specific topic is reinforced once a week for three weeks, so as to cover all members of the department.

The topics covered in these training sessions were:

FIGURE 2.

Topics of 2019 training sessions

• Drummond Ltd. Security Policy • Specific Drummond Ltd. security objectives • Drummond Ltd. Human Rights Policy

Universal Declaration of Human Rights

Procedure on Path for Protection against Threats to Life and Integrity

International code of conduct for providers of private security services

Code of Conduct for Law Enforcement Officials

Human rights evaluation

Human Rights Risk Matrix Information management and protection of the right to a good reputation and privacy

Use of firearms and the use of force by law enforcement officials Voluntary Principles on Security and Human Rights United Nations Guiding Principles

- 87 -

PEACE AND HUMAN RIGHTS

The importance of these trainings comes from the fact that they help identify and prevent possible social conflicts arising from the mining activities, through evaluations of human rights risks. This analysis, in the mineral extraction, transportation and exporting components, are mainly based on a study of the general characteristics of the mining operations area, on the identification, analysis and evaluation of threats from OAG or PTS (Organized Armed Groups – Persistent Threat Systems), on the security processes

Obstruction of transportation systems (railroad, national roads and maritime routes) using physical violence

Human rights evaluation

carried out by the national government, in current legislation, in coordination, liaison and informational meetings with the armed forces, on the project’s security needs and on the effects on public safety throughout the Company’s area of influence, in order to prepare management plans that establish a harmonious relationship with the authorities and communities in the area of influence.

The social risks that have a direct impact on the safety of the operation include:

Invasion of properties, intrusion by criminals into the areas of operation, intrusion by fishermen and others

Threats to company employees and/or community leaders in the region.

Evaluations of the impacts on human rights have been conducted by 100% of the segments of the value chain in our mining and port operations, generating action plans for improvement. Below are three examples of the risks in this matrix and the methods for managing them:

{412-1}

1.

Risk: Negative impact on the environment

Internal audits to assess and certify compliance with the environmental management parameters.

Management method: ISO 14001 audits and certifications conducted

by Lloyd’s Register.

- 88 -

Consultations with outside stakeholders to share information about the Environmental Management System and ensure there are no other risks that have not been identified.

Although this risk refers to impacts that go beyond what is authorized under permits and/ or licenses, it is worth noting that we receive periodic visits and inspections from government regulatory agencies and autonomous corporations.

Sustainability Report - 2019

2.

Risk: Negatively impact the social environment

Through dialogue with stakeholders, the Company seeks to take their perspective into account on the risks of negatively impacting the social environment and how to manage these types of situations.

3.

ALONG WITH THE HUMAN RIGHTS AND COAL WORKING GROUP, THE COMPANY HAS REFLECTED ON THE BEST MECHANISM FOR PROACTIVELY ENGAGING WITH ALL STAKEHOLDERS, WHICH WILL BE ENRICHED BY THE RESULTS OF THE WORK BEING DONE

BY CREER-IHRB TO BUILD TRUST. THIS IS A PROJECT THAT HAS BEEN UNDERWAY FOR ONE YEAR AND IS PROJECTED TO TAKE THREE YEARS TO COMPLETE THE FIRST PHASE; IN 2019, SEVERAL WORKSHOPS ON THE SUBJECT WERE HELD.

Stakeholders are involved in managing human rights.

The Company presents its strategy on this topic in order to receive feedback, following the principles of inclusion, materiality and response implicit in the UNGP (United Nations Guiding Principles) and the Voluntary Principles (VP), and explicit in the AA1000 series and other benchmarks.

Risk: Violation of human rights or international humanitarian law by the armed forces in our areas of influence

There is constant communication with the armed forces about their commitment to respecting human rights and international humanitarian law and the use of instruments such as the Voluntary Principles on Security and Human Rights and the United Nations Guiding Principles on Human Rights and Business.

These mechanisms are used in formal communications and in the minutes of joint meetings, at the onboarding chats on physical security upon entering the field and in email messages.

The Security Department holds structured meetings with the armed forces in the Company’s area of influence, in order to discuss matters related to compliance with the Voluntary Principles on Security and Human Rights, examine the records of the training sessions held by the military units associated with the Company’s activities, and to support the training of uniformed personnel deployed to the mining operation area in their routine rotations.

- 89 -

The armed forces have been invited to talk about the risks of violating human rights in order to make improvements.

All personnel assigned to each of the military units located in the mining complex receives sensitivity training on issues related to human rights, which are also mandatory for all Security Department personnel. A photographic and documentary record of attendance is kept of the respective training sessions.

PEACE AND HUMAN RIGHTS

Employee training on human rights policies and procedures {412-2}

The following are the results in numbers of the human rights training sessions conducted by the Company.

TABLE 3.

Human rights training Topic

2015

2016

2017

2018

2019

3,015

2,345

8,190

74

0*

Total hours of training for security personnel on policies and procedures related to human rights relevant to the operations

129

50

55

219

419

Workers trained on policies and procedures related to human rights

30

35

4,095

357

0*

Percentage of workers trained on policies and procedures related to human rights that are relevant to the Company

0.6

0.71

81

6.91

0

-

100

100

100

100

Total hours of worker training on policies and procedures related to human rights relevant to the operations

Percentage of security personnel trained on policies and procedures related to human rights that are relevant to the Company.

* During 2019, no employee training sessions were conducted, since this period was used to redesign the training module that will be implemented in 2020.

Significant investment agreements and contracts with human rights clauses or subject to human rights assessments {412-3}

Drummond Ltd. defines significant investment agreements as those managed by the Company’s Contracts department for the supply of goods or services that are essential to the operation, which normally have a value of more than US $50,000 per year. There may be cases where the value is less than this figure.

Drummond Ltd. has signed 105 significant investment agreements and contracts,

The appendix of Terms and Conditions attached to the commercial bids accepted

by Drummond Ltd. include the parties’ commitments to understand fundamental human rights and their provision of services in strict compliance with them.

- 90 -

equivalent to 82% of the total, that have human rights clauses or have undergone human rights assessments. This figure has increased by 13 agreements, equivalent to 7 percentage points as compared to 2018.

To expand the human rights strategy to suppliers and contractors, as well as other stakeholders, these measures have been implemented:

Dialogue sessions regarding the human rights strategy in order to increase commitment to the policy, communicate the risks and management measures and receive feedback.

The Contractors Manual established that they must respect all rules regarding human rights.

(

Sustainability Report - 2019

Milestones In 2019, the percentage of nonlethal weapons in use increased to 65%, in contrast to the reduction in lethal weapons.

The following action protocols on security and human rights issues were approved and implemented:

Drummond Ltd.’s security service providers trained 100% of its employees on human rights issues

• Managing risk of obstructions • Rules on the use of force by Drummond Ltd. • Procedure on the Path for Protection against Threats to Life and Integrity

{

Human rights issues were adopted as an integral part of the safety culture, making this a crossdepartmental strategy for the entire security operation.

Information on progress in the execution of the strategy was collected on the two cut-off dates and within the following two months.

Challenges 2020 Building performance indicators that make it possible to monitor, control and evaluate the performance of private security contractors throughout the Company to develop and ensure compliance with their contractual obligations relating to human rights and security.

Continue with the Trust-Building project in Cesar department with the multi-stakeholder skill-building program (CREER-CBI), meeting opportunities and implementation of agreements.

- 91 -

Review and update the risks and management mechanisms for each one, identifying the risks from different points of view, physical security, reputation and the environment, among others.

Integral Development

02 - 92 -

Sustainability Report - 2019

INTEGRAL

Development STRENGTHEN LOCAL CAPACITIES FOR THE WELL-BEING AND PROSPERITY OF EMPLOYEES AND THEIR FAMILIES AND THE COMMUNITIES IN OUR AREA OF INFLUENCE.

- 93 -

Integral Development

Human

talent management

For Drummond Ltd., collaborating in achieving global objectives such as the UN Sustainable Development Agenda is a mechanism that has proven to further contribute to achieving its Corporate Social Responsibility targets. From our work on managing human talent, we contribute to:

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development • Transparency and citizen oversight

• Training and promotion • Peace and social dialogue

• Institutional and community strengthening

• Coexistence and conflict resolution

Strengthen local capacities for greater efficiency in public planning and management.

CSR Strategy Contribution to capacity building

Integral Development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Environmental performance • Education and training

• Environmental sustainability

• Creating opportunities

• Conservation and restoration

• Work environment

Drummond Ltd.'s contribution to achieving the Sustainable Development Goals

- 94 -

Strengthen the business capabilities that ensure worldclass environmental performance.

Sustainability Report - 2019

Goals • Goal 4.4: Substantially increase the number of youth and adults who have relevant skills, particularly technical and professional skills, for employment, decent jobs and entrepreneurship.

• Goal 8.5: Achieve full and productive employment and decent work for all men and women, including youth and people with disabilities, as well as equal pay for work of equal value.

• Goal 8.6: Reduce the proportion of young people who are not in employment, education or training in the communities in the area of influence.

• Goal 8.8: Protect labor rights and promote decent working environments, with growth opportunities, that are safe and secure for all workers.

- 95 -

Integral Development

{103-1}

FOR THE COMPANY, THE ABILITY TO MEET ORGANIZATIONAL STANDARDS AND ADDRESS ITS GOALS AND OBJECTIVES IN EACH ROLE REFLECTS THE IMPORTANCE OF CONSTANT AND SUFFICIENT HUMAN RESOUCE MANAGEMENT. The effective development and growth of the operation is directly related to the people who execute it, which is why topics such as training and career development, as well as organizational culture and equal employment opportunities are the foundations for managing risks associated with these stakeholders and maintaining a healthy working environment, leading to productivity with specialized knowledge and comprehensive actions.

{103-2}

At Drummond Ltd., the entire operation has guidelines dictated by the Recruitment and Hiring, Human

Resources and Salary policies and by the Employee Manual,13 which make it possible to retain human talent, and to preserve the knowledge and experience development in each position, in a balance with their well-being and quality of life. Detailed information can be found on our website.14 For managing human talent, the Company has three main areas of focus developed by the Human Resources department in order to select people who meet the required profiles and the Company’s organizational objectives:

TABLE 4.

Focuses, resources and objectives for recruiting human capital.

Focus Recruitment and hiring

Focus Compensation and benefits

Focus Labor relations

Resource or policy

Resource or policy

Resource or policy

Our selection process gives priority to hiring local candidates or those who can demonstrate that they have lived locally for a certain length of time.

We have designed a compensation model that will attract, motivate and retain the human talent necessary to meet the organization’s objectives. Additionally, Drummond Ltd. has education, healthcare, housing, savings, recreation and well-being programs, among others, for our employees and their families.

We have a range of programs and opportunities that seek to strengthen organizational capacities for effective communication, trust building and a focus on health, safety and the environment.

Objetive To hire the right personnel, with high professional and ethical standards, who can rise to the organizational challenges and adapt to the dynamic of the employment relationship.

Objetive To generate well-being and quality of life for our employees and their families.

13. The Employee Manual is given to each employee when they join the Company, and it is shared again whenever updates are made.

14. http://www.drummondltd.com/quienes-somos/ politicas-y-compromiso/ - 96 -

Objetive To create a working environment where values such as respect, communication and tolerance, among others, take precedence through a focus on people’s conduct and behavior.

Sustainability Report - 2019

- 97 -

Integral Development

{103-3}

{405-1}

{405-1}

At Drummond Ltd., we have a mechanism that allows us to effectively monitor our work. The Internal Audit department is responsible for conducting tests to detect and identify processes that can be improved, making it possible to strengthen internal controls and mitigate the risks associated with sustainability and inherent in the operation.

At the end of 2019, we had a team of

5,137

Diversity of governance bodies and employees

DIRECT EMPLOYEES for the mining, port and administrative operations in Bogota, Valledupar and Cartagena.

TABLE 5.

Classification of employees by age and job level

Operations

Assistance

Professional

EMPLOYEES UNDER THE AGE OF 30

499

4

55

17

59

12

EMPLOYEES BETWEEN THE AGES OF 30 AND 40

1,358

21

81

15

271

46

EMPLOYEES BETWEEN THE AGES OF 40 AND 50

1,063

15

30

7

261

29

850

4

10

3

209

13

3,770

44

176

42

800

100

EMPLOYEES OVER THE AGE OF 50 TOTAL EMPLOYEES

GRAPHIC 9.

Classification of employees by age and job level

Employees, up to 30 years old Employees between 30 and 40 Employees between 40 and 50 Employees older than 50

10 30

4

850

3 7

209

29

15

1.063

81

1.358

21

499

4 Men

13

15

261 271

55

Women

17 Men

Operations (3,814)

Women

Assistance (218) - 98 -

59 Men

46 12 Women

Professional (900)

Sustainability Report - 2019

Tactical

Strategic

0

0

0

0

19

1

7

0

35

6

32

3

31

3

64

4

85

10

103

7

31

3

35

6

19 0 Men

1 0 Women

Tactical (95)

64

4

32

3

7 0 Men

0 Women

Strategic (110) - 99 -

Integral Development

TABLE 6.

Employees by age, gender and operation

Mining operations (Cesar) and office Valledupar

EMPLOYEES UNDER THE AGE OF 30

Port operations (Magdalena) and support Cartagena

Bogota

567

21

46

11

-

1

EMPLOYEES BETWEEN THE AGES OF 30 AND 40

1,527

39

208

36

1

8

EMPLOYEES BETWEEN THE AGES OF 40 AND 50

1,173

32

237

21

11

7

880

5

273

16

11

6

4,147

97

764

84

23

22

EMPLOYEES OVER THE AGE OF 50

TOTAL EMPLOYEES

BY AGE

GRAPHIC 10.

Employees by age, gender and operation

Employees under the age of 30

880

Employees between the ages of 30 and 40

1,173

Employees between the ages of 40 and 50 Employees over the age of 50

273

5 32

16

11

6

21 7

237 1,527

36

39 208

567 Men

21

46

Women

Men

Mining operations (Cesar) and office Valledupar (4,244)

11 Women

Port operations (Magdalena) and support Cartagena (848)

- 100 -

11

8

1 0

1

Men

Women

Bogota (45)

Sustainability Report - 2019

TOTAL

613

33

1,736

83

1,421

60

1,164

27

4,934

203

- 101 -

Integral Development

TABLE 7.

Employees by region, gender and operation

Mining operations (Cesar) and office Valledupar

EMPLOYEES FROM THE DEPARTMENT OF CESAR

2,670

75

EMPLOYEES FROM THE DEPARTMENT OF MAGDALENA

218

2

EMPLOYEES FROM THE CARIBBEAN REGION

794

8

EMPLOYEES FROM OTHER DEPARTMENTS IN THE COUNTRY

465

12

4,147

97

TOTAL EMPLOYEES

BY REGION

GRAPHIC 11.

Employees by region, gender and operation

Employees from the department of Cesar Employees from the department of Magdalena Employees from the Caribbean region Employees from other departments in the country

- 102 -

465 794

12 8 2

218

2,670 Men

75 Women

Mining operations (Cesar) and office Valledupar (4,244)

Sustainability Report - 2019

Port operations (Magdalena) and support Cartagena

Bogota

TOTAL

68

13

-

1

2,738

89

439

40

-

-

657

42

115

13

-

-

909

21

142

18

23

21

630

51

764

84

23

22

4,934

203

{401-1} 142

18

115

13

439 68 Men

23

21

0

1

Drummond Ltd.’s human capital is enriched in all of its areas of operation thanks to the demographic variety of those who work there, which has been shown to effectively contribute to employee well-being and sustainable development.

40 13 Women

Port operations (Magdalena) and support Cartagena (848)

Men

0

Women

Bogota (45)

- 103 -

Integral Development {401-1}

TABLE 8.

New hires by age, gender and operation

Mining operations (Cesar) and office Valledupar

NEW HIRES UNDER THE AGE OF 30

Port operations (Magdalena) and support Cartagena

Bogota

91

10

2

1

1

3

51

3

2

2

1

1

NEW HIRES BETWEEN THE AGES OF 40 AND 50

5

-

2

-

-

1

NEW HIRES OVER THE AGE OF 50

5

-

2

-

-

-

152

13

8

3

2

5

NEW HIRES BETWEEN THE AGES OF 30 AND 40

TOTAL

TABLE 9.

New hires by region, gender and operation Mining operations (Cesar) and office Valledupar

NEW HIRES FROM THE DEPARTMENT OF CESAR NEW HIRES FROM THE DEPARTMENT OF MAGDALENA

NEW HIRES FROM THE CARIBBEAN REGION

NEW HIRES FROM OTHER DEPARTMENTS IN THE COUNTRY TOTAL NEW HIRES BY REGION

Port operations (Magdalena) and support Cartagena

Bogota

96

5

1

-

-

-

6

2

2

3

-

-

27

4

1

-

-

-

23

2

4

-

2

5

152

13

8

3

2

5

- 104 -

Sustainability Report - 2019

TOTAL GRAPHIC 12.

New hires by age, gender and operation

94

14

New hires under the age of 30

5 5 51

54

6 1

7

-

162

21

New hires between the ages of 40 and 50 New hires over the age of 50

2

3 2

New hires between the ages of 30 and 40

0 1

0

0

2

1

1

1

3

Women

Men

Women

1

2 91

7

0

Men

10 Women

Mining operations (Cesar) and office Valledupar (165)

2 Men

Port operations (Magdalena) and support Cartagena (11)

Bogota (7)

TOTAL GRAPHIC 13.

New hires by region, gender and operation

97

5

New hires from the department of Cesar

23 27 6

8

5

New hires from the department of Magdalena

4

New hires from the Caribbean region

29

7

162

21

New hires from other departments in the country

4

0

4 2

1

3

2

5

0

0

0

2 96

28

2

Men

5 Women

Mining operations (Cesar) and office Valledupar (165)

- 105 -

1 Men

Women

Port operations (Magdalena) and support Cartagena (11)

Men

Women

Bogota (7)

Integral Development

TABLE 10.

Employee separations by age, gender and operation Mining operations (Cesar) and office Valledupar

EMPLOYEE SEPARATIONS UNDER THE AGE OF 30

Port operations (Magdalena) and support Cartagena

Bogota

15

4

18

-

-

-

EMPLOYEE SEPARATIONS BETWEEN THE AGES OF 30 AND 40

18

3

10

-

-

2

EMPLOYEE SEPARATIONS BETWEEN THE AGES OF 40 AND 50

14

1

7

-

-

-

EMPLOYEE SEPARATIONS OVER THE AGE OF 50

31

-

10

-

1

-

TOTAL EMPLOYEE SEPARATIONS

78

8

45

-

1

2

TABLE 11.

Employee separations by region, gender and operation Mining operations (Cesar) and office Valledupar

Port operations (Magdalena) and support Cartagena

Bogota

EMPLOYEE SEPARATIONS FROM THE DEPARTMENT OF CESAR

42

2

6

-

-

-

EMPLOYEE SEPARATIONS FROM THE DEPARTMENT OF MAGDALENA

6

2

31

-

-

-

EMPLOYEE SEPARATIONS FROM THE CARIBBEAN REGION

12

3

6

-

-

-

EMPLOYEE SEPARATIONS FROM OTHER DEPARTMENTS IN THE COUNTRY

18

1

2

-

1

2

TOTAL EMPLOYEE SEPARATIONS

78

8

45

-

1

2

- 106 -

Sustainability Report - 2019

TOTAL

GRAPHIC 14.

Employee separations by age range, gender and operation

33

4

28

5

Employee separations under the age of 30 Employee separations between the ages of 30 and 40

31

1

42

0

124

10

3

7

0 1

2

10

18

Employee separations between the ages of 40 and 50

Employee separations over the age of 50

10

14

15

21

0 1

Men

4

18

Women

Mining operations (Cesar) and office Valledupar (86)

Men

0

0

0

Women

Men

Women

Port operations (Magdalena) and support Cartagena (45)

Bogota (3)

TOTAL GRAPHIC 15.

Employee separations by region, gender and operation

48 37 18

2

Employee separations from the department of Cesar

2

Employee separations from the department of Magdalena

3

Employee separations from the Caribbean region

21

3

124

10

Employee separations from other departments in the country

18

1

2 6

12 6

3

42

2

Men

2

Women

Mining operations (Cesar) and office Valledupar (86)

- 107 -

31

6

0 Men

Women

Port operations (Magdalena) and support Cartagena(45)

1

2

0

0

Men

Women

Bogota (3)

Integral Development

{401-2}

Drummond Ltd. maintains an on-going commitment to the well-being of its employees and their families, and it reaffirms this through a variety of benefits in addition to their base compensation, including:

Hospitalization and surgery policy

College scholarships for employees

School and college assistance for children of employees

Life insurance Relocation assistance

Voluntary savings fund

Revolving home loan fund

Transportation assistance

Extra-legal bonuses

The extra-legal benefits described in the table above apply to our Company’s direct employees. The mining and port operations account for 98.97% of this population.

Additionally, the Company promotes and respects the rights of its workers when they become parents.

- 108 -

Sustainability Report - 2019

TABLE 12.

Return to Work in 2019

{401-3} Return to work and retention rates of employees that took parental leave, by gender.

Topic

Units

a. Number of employees that were due to return to work in the reporting period after parental leave ended Includes people whose leave ended between January 1 and December 31 of the reporting period. b. Number of employees that returned to work in the reporting period after parental leave ended This number reflects those who should have returned to work minus those who resigned, had their contracts terminated or were dismissed with or without just cause.

2019

2018

2017

Men

Women

Men

Women

Men

Women

Number

332

10

298

7

305

5

Number

332

10

298

7

305

5

Percentage

100 %

100 %

100 %

100 %

100 %

100 %

d. Number of employees that returned to work after parental leave in the year before the reporting period This number reflects those who should have returned to work minus those who resigned, had their contracts terminated or were dismissed with or without just cause.

Number

298

7

305

5

309

18

e. Number of employees that are still employed by the Company 12 months after their return to work after parental leave Includes those people who completed one year after returning from their parental leave between January 1 and December 31 of the reporting period.

Number

296

7

301

5

304

15

Percentage

99 %

100 %

99 %

100 %

98 %

83 %

c. Return to work rate

f. Retention rate after parental leave

- 109 -

Integral Development

Employee development training

With the aim of having a robust strategy that includes the different parts of the operations, the Training, Industrial Safety, Occupational Health, Human Resources and Environmental departments work in coordination, based on the following philosophy for the last several years:

{103-2} {404-1} {404-2}

Provide training on knowledge and skills that have an impact on our Company.

Develop a workforce with multiple skills.

Use an approach that balances the development of technical capabilities with human-related matters, which are useful in areas outside the Company and working life and, therefore, can be used after people leave.

Reinforce safety and productivity by executing work procedures.

Provide high-quality training by identifying needs and selecting qualified instructors.

TABLE 13.

Trainings in 2019 Level 1 (Operations)

Level 2 (Assistance)

Level 3 (Professional)

Level 4 (Tactical)

Level 5 (Strategic)

426,663

19,504

105,072

8,576

8,404

Average number of hours of training given to women

4,956

2,779

15,379

603

221

Total hours of training

431,619

22,283

120,451

9,179

8,625

Total number of male employees

3,770

175

800

85

103

Total number of female employees

44

43

100

10

7

3,814

218

900

95

110

Average number of hours of training given to men

Total employees

- 110 -

Sustainability Report - 2019

The activities and training sessions are varied in accordance with the range of profiles, positions and roles with regular, theoretical and field trainings and training outside the country, as well as talks at the worksite and safety campaigns, among others.

The Company has training centers, one at the mining operations and another at the port, that are in the process of being recognized as UVAEs (Spanish acronym for Business Learning Vocational Units) by the Ministry of Labor.

TABLE 14.

Average hours of training in 2019

Average number of hours of training received by men in 2019, by employee category

Average number of hours of training received by women in 2019, by employee category

Average total hours of training received by employees in 2019, by employee category

Level 1 (Operations)

113

113

113

Level 2 (Assistance)

111

65

102

Level 3 (Professional)

131

154

134

Level 4 (Tactical)

101

60

97

Level 5 (Strategic)

82

32

78

- 111 -

Integral Development

Understanding the need to maintain and strengthen the Company’s competencies, knowledge and capabilities in health and safety management, Drummond Ltd. has elements that allow it to properly manage the identification of hazards

and the assessment of risks in compliance with the requirements under the NTCOHSAS 18001 standard, 2007 version and current legislation, to maintain and consolidate the programs implemented in its operations.

TABLE 15.

Hazard identification and risk assessment elements

Occupational health and safety competencies Technical and operational competencies

Education for employees

Training outside the country

Environmental competencies

The following is a list of the different trainings held during 2019, in accordance with the plan that was submitted:

1.

OCCUPATIONAL HEALTH AND SAFETY COMPETENCIES

Of the

With the aim of improving the safety culture among workers at Drummond Ltd.’s mining operations through the various training scenarios, emphasizing the identification of hazards, risk assessment and the establishment of operational controls, during 2019 training sessions were held, in accordance with the Occupational Health and Safety Management System and current legislation.

502,975 TOTAL HOURS

of training held in 2019

107,670 HOURS

of training were logged with

52,233

ATTENDANCES RECORDED

on matters related to Occupational Health and Safety.

ILLUSTRATION 1.

Regular training cycles (2019)

CYCLES

8

DAYS

42

HOURS

270,235

ATTENDANCES RECORDED

23,016

Sustainability Report - 2019

2.

ENVIRONMENTAL COMPETENCIES Continuing with the training sessions and the dissemination of information in accordance with the Environmental Management Plan, With

23,016

77,125 HOURS WERE LOGGED

ATTENDANCES

The most noteworthy training sessions in this area were related to the ISO 14001 Environmental Management System, in which we were certified.

ILLUSTRATION 2.

Topics featured at training sessions (2019)

CYCLE 2 CYCLE 1

CYCLE 3

Air quality program Prevention and control of hydrocarbon spills

Program on saving and efficiently using water

CYCLE 4 CYCLE 8

Comprehensive waste management

Effective environmental management

CYCLE 5 CYCLE 7 CYCLE 6 Wildlife management: Wildlife Rescue Unit Revegetation, plant production and environmental compensation

- 113 -

Wastewater program

Integral Development

3.

TECHNICAL AND OPERATIONAL COMPETENCIES For the mining operations under the La Loma and El Descanso contracts, we have developed different operational and technical training courses for the employees who currently operate mining equipment or will do so in the future, as follows:

Training for novice operators:

ILLUSTRATION 3.

Number of trainings for novice operators (2019)

In 2019, training classes on operating mining trucks and caterpillar tractors were held (in-house groups).

Mining truck

Training and retraining for veteran operators: The Improvement Plan was developed based on skill and knowledge assessments.

1

Total groups during the year

Caterpillar tractor

21

Total number of apprentices

1

Total groups during the year

12

Total number of apprentices

4.

The training center located at the mining operations has simulators for mining trucks, bulldozers and electric shovels, which are used to help employees reinforce their learning theoretically and practically.

SUPPORT FOR EMPLOYEE EDUCATION Every semester, Drummond provides college scholarships for those workers pursuing an undergraduate, post-graduate or master’s degree, as a way of supporting its employees’ professional growth.

In 2019

125 EMPLOYEES

received this benefit

Scholarships are provided for specialties related to the employee’s activities and job functions at the Company, with the objective of strengthening work-related skills and competencies.

- 114 -

Sustainability Report - 2019

Performance evaluations and career development reviews

Drummond Ltd. recognizes the importance of continuous improvement and, for this reason, it carries out annual performance evaluations using the 90° methodology, in which supervisors and their subordinates determine how well the year’s objectives have been met and identify opportunities for improvement, create action plans and set new goals for the following period.

{404-3} GRAPHIC 16.

Percentage of employees who received performance evaluations

6%

83 %

10 %

96 %

Total

94 %

95 %

Total

Level 1 (Operations)

96 %

84 %

94 %

Level 3 (Professional)

55 %

43 %

- 115 -

55 %

Total

Total Level 4 (Tactical)

94 %

Total

Level 2 (Assistance)

70 %

90 %

Level 5 (Strategic)

Integral Development

GRAPHIC 17.

Percentage of employees who received performance evaluations, by position level (2017-2019)

25 %

7%

10 %

98 %

80 %

94 %

98 %

90 %

94 %

2017

2018

2019

2017

2018

2019

2017

2018

2019

Level 1 (Operations)

Level 2 (Assistance)

Level 3 (Professional)

92 %

92 %

94 %

88 %

57 %

55 %

2017

2018

2019

2017

2018

2019

Level 4 (Tactical)

Level 5 (Strategic)

{405-2}

With the goal of preserving equality and eliminating any gap associated with worker diversity, the Company follows its policy guidelines and uses a salary distribution that takes into account objective criteria to set adequate compensation for each position.

- 116 -

Sustainability Report - 2019

TABLE 16.

Salary ratio by position (men/women)

Mining operations (Cesar) and office Valledupar

Port operations (Magdalena) and support Cartagena

Bogota

OPERATIONS

0.84

0.97

1.67

ASSISTANCE

1.01

1.05

0.69

PROFESSIONAL

0.75

0.79

1.05

TACTICAL

0.88

1.05

0.95

STRATEGIC

1.36

0.96

0.48

GRAPHIC 18.

Salary ratio by position (men/women)

1.80 1.60 1.40

Mining operations (Cesar) and office Valledupar

1.20 1.00 0.80

Port operations (Magdalena) and support Cartagena

0.60 0.40 0.20 0.00

Operations

Assistance

Professional

Tactical

- 117 -

Strategic

Bogota

Integral Development

- 118 -

(

{

Sustainability Report - 2019

Milestones Six Sigma training

Greater coverage and training time

Employee diagnostic

22 leaders from different Drummond departments were certified as Yellow Belt under the Lean Six Sigma methodology, a skilled implementer of tools for continuous improvement in operational processes and resource optimization.

The main objective consisted of implementing methodologies to improve processes in order to reduce their variability and improve their quality. Part of the Company’s objectives are focused on training and educating its human resources.

For this reason, learning opportunities are created as a form of productive and competitive improvement for the quality of its operations.

the number of hours and people involved in regular training increased from

a diagnostic was conducted to understand the work environment and employee behavior, analyzing social, demographic and psychographic factors within the Company, through:

22,209

attendances

258,699

hours in 2018 to

23,016

attendances

270,235

hours of training in 2019

3,000

employees surveyed

8

days of field work by sociologists

Challenges 2020 Improve the comprehensive training program Evolution of training programs towards a comprehensive one for the entire group of employees

Improvement programs based on the employee diagnostic

Seek alternatives that promote a better organizational climate and greater well-being for employees

- 119 -

5

interviews with Company leaders

Integral Development

Workplace health and safety

For Drummond Ltd., collaborating in achieving global objectives such as the UN Sustainable Development Agenda is a mechanism that has proven to further contribute to achieving its Corporate Social Responsibility targets. From our efforts on workplace health and safety, we contribute to:

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development • Transparency and citizen oversight

• Training and promotion • Peace and social dialogue

• Institutional and community strengthening

• Coexistence and conflict resolution

Strengthen local capacities for greater efficiency in public planning and management.

CSR Strategy Contribution to capacity building

Integral Development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Environmental performance • Environmental sustainability

• Education and training • Creating opportunities

• Conservation and restoration

• Work environment

Drummond Ltd.'s contribution to achieving the Sustainable Development Goals

Strengthen the business capabilities that ensure worldclass environmental performance.

Goals • Goal 8.8: Protect labor rights and promote decent working environments, with growth opportunities, that are safe and secure for all workers.

•

- 120 -

Sustainability Report - 2019

{103-1}

OCCUPATIONAL HEALTH AND SAFETY AT DRUMMOND LTD. IS A SUBJECT OF VITAL IMPORTANCE IN ITS PHILOSOPHY AND OPERATIONS, MAKING INDUSTRIAL SAFETY PART OF ITS WAY OF LIFE. DURING THE COURSE OF THE EXPLORATION, EXTRACTION, TRANSPORTATION AND LOADING OF COAL, IN EVERY PROCESS, THE COMPANY ENSURES THAT THE ENVIRONMENT AND THE HEALTH, SAFETY AND LIVES OF ALL EMPLOYEES, CONTRACTORS, VISITORS AND RELATED COMMUNITIES ARE PROTECTED. Regulatory compliance is a critical factor in Drummond Ltd.’s OHS management. For this reason, the Company is particularly committed to working with frameworks or standards that encourage continuous improvement, and therefore its operations are certified under the following standards:

OHSAS 18001:2007 Industrial Safety and Occupational Health Management System

ISO 14001:2004 Environmental Management System

{103-2} {403-3}

Managing issues related to occupational health and safety is aimed at fulfilling one main objective: preventing accidents and occupational diseases at Drummond Ltd.

operational controls, such as: removal, replacement, engineering controls, signage, warnings, administrative controls and personal protective equipment.

To fulfill this objective, the Company has an Occupational Health and Safety Management System certified under the OHSAS 18001:2007 international standard, and makes it possible for all activities carried out by employees to be executed safely. To do so, Drummond Ltd. has identified highpriority risks in the different stages of its operations and implemented all

Complementing the entire process that is aimed at fulfilling the main objective, Drummond Ltd. has emergency preparedness and response plans, with brigades trained in each of the areas and resources such as health centers with doctors and nurses, and ambulances and fire trucks to respond effectively to any emergency situation that may arise at its locations.

- 121 -

Integral Development

{103-3}

Based on the results of the safety culture assessment conducted in 2018, the Program to Strengthen Drummond’s Safety Culture was continued through the implementation of the strategic courses of action, as specified below:

Formalize the structure for corporate health and safety guidelines

One of the notable projects in 2019 was the creation of “Rules that save lives”

Empower our employees in safety – clear responsibilities at all levels

The actions related to “Formalize the structure for corporate health and safety guidelines” were the first part of the implementation since, during 2018, a complete organizational structure was required and it continued to be consolidated in 2019. The structure consists of interdisciplinary committees and teams that seek continuous improvement in managing occupational health and safety, which receive feedback from groups called Safety Central Committees.

- 122 -

Understand and evaluate roles and abilities to improve skills and competencies

Make safety culture proactive through a leadership environment (KPIs)

The Safety Central Committees are groups made up of different workers, regardless of seniority, and are representatives of the different processes carried out at Drummond Ltd. One of the notable projects in 2019 was the creation of “Rules that save lives;” as part of this effort, the strategic committee asked the different Central Committees for their input in choosing the rules applicable to all areas of the Company, which helped to strengthen safe work habits.

Sustainability Report - 2019

For 2019, seven Central Committees are operating:

Mining Operations Committee Transportation Department Committee

Support Operations Committee

STRATEGIC HEALTH AND SAFETY COMMITTEE

Administrative Processes Committee

Fixed Equipment Maintenance Committee

Mobile Equipment Maintenance Committee

Electrical Maintenance Committee

For actions related to “Understand and evaluate middle management roles and responsibilities; improve skills and competencies,” safety mentoring sessions were held for Drummond Ltd.’s senior management, during which they worked on developing the characteristics of a persuasive leader: informing, influencing and inspiring.

Additionally, training opportunities for “Empowering our employees in safety; Clear responsibilities at all levels” were maintained, especially through regular training sessions where employees from all levels participate, explaining topics related to risk management, prevention

- 123 -

of risks and self-care, effective communication by employees and trust between work teams.

In terms of the “Make safety culture proactive/Leadership environment (control of key performance indicators – KPI), several indicators have been established to quantify the preventive activities carried out by the Company’s different areas, which can be used to visualize progress by the different Health and Safety programs, such as: safety observations, more and better reporting of near misses, records from safety trainings and managerial safety field visits, among others.

Integral Development

{103-3}

Occupational health and safety management system {403-1}

Additionally, as part of the evaluation process, the Company receives maintenance visits every six months from the Occupational Health and Safety Management System certifying entity to verify compliance with the requirements and the proper functioning of the system implemented at the operations. In July 2019, the most recent audit was completed, which, in addition to confirming compliance with the requirements of the OHSAS 18001:2007 standard, resulted in the certification of the management system under a single scope (previously, the different locations had independent certifications), confirming that health and safety management is applied in the same way throughout Drummond Ltd.’s work sites.

Finally, Hydro, one of the Company’s commercial clients, conducted an audit of the mining and port operations through an audit team from Bureau Veritas, which showed 96% compliance with a highly favorable rating (A) for all the areas audited. The audit reviewed documents (policies, permits, procedures and records) related to occupational health and safety management (trainings, risk matrices, accident statistics, assessments of work environments), environmental management (considering water use, land use, air emissions, discharges and environmental licenses), labor aspects (collective bargaining agreements, work rules, contracts), corporate ethics (including impacts on communities) and Corporate Social Responsibility.

There were no material findings and Drummond Ltd.’s robust processes across all of its operations were highlighted.

With the aim of preventing accidents and occupational diseases, Drummond Ltd. has an occupational health and safety system based on the OHSAS 18001:2007 international standard and certified for all of its operations, which means that, once the high-priority risks have been identified and the operational controls have been implemented, employees and contractors can carry out their activities safely.

To keep the system at the forefront of Drummond Ltd.’s needs, the most visible continuous improvement process that has been implemented is the one to strengthen the safety culture, complementing the certified management system, which includes continuous improvement of all processes.

The management system covers all of the Company’s direct employees, contractors and visitors at all of its sites. It is expected that, in 2020, the transition to the ISO 45001 standard will begin.

- 124 -

Sustainability Report - 2019

{403-2}

Identification of hazards, assessment of risks and investigation of incidents

{403-3}

OCCUPATIONAL HEALTH SERVICES The hazard identification process at Drummond Ltd. has multiple inputs:

The identification of all processes carried out in the operations and the related hazards.

Identification of risks or safe work analysis (SWA) that each worker performs before starting their work.

Change management: any change that occurs in terms of technology, tools and administrative decisions to change personnel.

Through the final cause analysis report, it is possible to identify hazards that had not previously been identified.

To establish the controls, the hierarchy below is followed:

1.

Level one: identify whether the risk can be eliminated.

2.

Level two: verify it if can be replaced with another risk with much lower severity.

3.

Level three: implement engineering controls (hard barriers).

Employee communication, participation, concerns and suggestions through the various meetings and spaces provided by the Company makes it possible to identify hazards.

These inputs feed the process of identifying hazards that, once identified, are evaluated to determine the risks and classify them as high, medium or low. Next, controls are established to reduce the likelihood that damage associated with accidents or diseases will be caused.

- 125 -

4.

Level four: implement administrative controls, such as procedures, signage, training, etc. (soft barriers).

5.

Level five: protection; at this point, PPE is no longer a matter of prevention, but rather of protection.

Integral Development

To generate greater trust among its workers, over the last five years the Company has been strengthening the relationship between workers and supervisors through the Person-Centered Safety program.

When establishing preventive measures or operational controls, Drummond Ltd. carries out operational planning, which consists of establishing a monitoring plan for all controls. The frequency of the monitoring depends directly on the priority of the risk.

Finally, once the risk is evaluated and it is confirmed that the controls are implemented, the analysis and evaluation of the effectiveness of the operational controls are completed. At that time, implementation of the control is verified and its effectiveness in preventing accidents and diseases is evaluated. The results of this hazard identification process makes it possible to establish other preventive measures in addition to the controls or to strengthen existing ones.

Report:

The processes for reporting hazards start with employees and contractors, who have the autonomy and authority to stop any unsafe activity, work, action or condition that they may identify, and they must report it immediately.

To generate greater trust among its workers, over the last five years the Company has been strengthening the relationship between workers and supervisors through the Person-Centered Safety program, creating a support that instills more trust in workers to share their concerns, especially those associated with identifying hazards.

Finally, to investigate all accidents and labor incidents, Drummond Ltd. uses the following process:

Evidence collection process:

when a worker reports an accident or incident, if it is a personal injury, they are transferred to the health center, which is open 24/7 with doctors, paramedics and all the tools necessary for their care. If the worker needs to be transferred to the nearest hospital, the Company has the resources to use an ambulance to do so.

through a procedure established and developed with personnel trained as investigators, the Company gathers evidence related to people, the work method, working conditions, machinery and tools. Once collected, they are processed and, using the TapRooT methodology, which makes it possible to create a root cause tree diagram, the Company establishes which of these caused the accident and define the corrective actions to prevent it from reoccurring.

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Sustainability Report - 2019

{403-4}

Worker participation, questions and communication on occupational health and safety

{403-3}

OCCUPATIONAL HEALTH SERVICES The processes so that workers can participate and also report hazards or occupational risk situations at Drummond Ltd. are carried out through various options for communication and consultation on occupational health and safety matters, such as:

Quarterly meetings held by the president of mining with all workers.

Direct communication between the employee and their supervisor.

Transportation committees at the port and rail operations.

Central Committees at each operation (7).

Weekly safety meetings for leaders.

Regular training sessions.

The Joint Committee on Occupational Health and Safety (COPASST) is the mechanism that ensures that employees are represented and protected; through its establishment, Drummond Ltd. complies with Colombian regulations.

This committee has representatives from

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Joint Committee on Occupational Health and Safety (COPASST, in Spanish)

360° safety talks.

different areas and levels of the company.

Its objective is to ensure the safety and health of all work groups through actions to monitor compliance with the rules, standards and procedures established in the Occupational Health and Safety Management Systems.

Integral Development

Drummond Ltd.’s senior management supports COPASST by holding regular meetings with the committee. There, feedback is provided on the different occupational health and safety actions taken at the Company, including:

Investigations of workplace incidents.

Promotion of training activities and communication of health and safety policies and guidelines.

Safety inspections.

Worker training on occupational health and safety {403-5}

Another mechanism that Drummond Ltd. has established is the Strategic Health and Safety Committee, made up of members of the Company’s senior management, whose mission is to guide and direct the development of policies and standards that make it possible to continue to improve the proactive health and safety culture.

All of this indicates that there are no obstacles at Drummond Ltd. for worker participation in topics related to health and safety, due to the fact that there are different mechanisms and opportunities that promote worker participation.

During 2019, regular training sessions reinforced industrial health and safety topics that provide workers with tools for growth in their personal development, accident prevention and improving their quality of life.

applicable legal requirements.

After identifying these needs, a training program is established that meets the requirements to develop skills and abilities on the topics identified.

Some of the topics covered are aimed at improving risk perception, hazard identification, preventing cardiovascular risk and sexually transmitted diseases, ergonomics, techniques for coping with stress and how to handle chemicals, among others.

It is important to note that all Company workers receive training, which is provided in the appropriate language (Spanish or English) to guarantee understanding and improvement. Like all of the training and educational courses that the Company offers, they are free and held during working hours.

Training needs are identified based on an analysis of the processes, objectives and goals that the Company seeks to achieve.

Additionally, they take into account concerns expressed by workers, accident rate outcomes and the provisions of

Finally, to evaluate the effectiveness of the training, there is a process involving supervisors and the industrial safety group to verify that the worker implements in the field what they learned in the classroom.

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Sustainability Report - 2019

Work covered by an occupational health and safety management system {403-8}

Both the mining operations and the transportation department and the Company’s other locations in Bogota, Valledupar and Cartagena are covered by the OHS-MS, covering 100% of the Company:

5,156

4,044 Workers**

Employees*

that are covered by the OHS system.

who are not employees but whose work or workplace is controlled by the Company and who are covered by the OHS system.

Employees that are covered by the OHS system that has been audited internally.

100 %

100 %

100 %

4,044

5,156

4,044

Direct employees*

Employees* Internal audits Workers** at Drummond who are not employees but that are covered by work or workplace is the OHS system that Ltd. are defined whose controlled by the Company has been audited or certified by a by an internal and who are covered by OHS system that has third party. procedure the been audited internally. based on the ISO 19011 100 % standard. 100 %

5,156

Workers**

who are not employees but whose work or workplace is controlled by the Company and who are covered by the OHS system that has been audited or certified by a third party.

100 %

* Direct employees include Drummond Ltd. workers and workers hired by temporary agencies. ** Workers who are not employees are Drummond Ltd. contractors.

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Integral Development

Injuries from work-related accidents {403-9}

Employees:

Injuries from work-related accidents

15,535,109

0

Contractors:

Injuries from work-related accidents

16,086,247

0

Occupational diseases

Mechanical

Transit

• • • •

• Installation of seat belts for each seat in equipment/vehicles • Backup alarms • Buggy Whip in light vehicles • Preventive maintenance program • Pre-operational inspection • Application of the SG-PCO-SST-015 road safety procedure • Safe driving policy • Random drug and alcohol testing by shift

NUMBER OF HOURS worked by direct employees

NUMBER OF HOURS worked by workers who are not employees but whose activities or workplaces are controlled by the Company

{403-10} The occupational hazards at Drummond Ltd. that present a risk of injury from an accident with major consequences are traffic, electrical, mechanical and geological accidents, established by applying the Company’s identification processes, which requires classifying procedures, activities and tasks to be able to describe the type of contact and source. To prevent them from occurring, engineering and administrative controls and the use of PPE are applied.

These controls are described in more detail below for each type of hazard:

DEATHS resulting from an injury in a work-related accident

DEATHS resulting from an injury in a work-related accident

• • • • • • • • • •

0

INJURIES from a work-related accident with major consequences (not including deaths)

0

INJURIES from a work-related accident with major consequences (not including deaths)

Guards for moving system Emergency stopping system Mechanical aids for handling cargo Design and manufacture of tools for disassembling and assembling components Design and manufacture of screens as a protection barrier around components Tools and support equipment with appropriate technology for each task Verbal reporting of unsafe conditions Preventive and corrective maintenance on equipment in the maintenance areas Random drug and alcohol testing by shift Maintenance of tools and equipment Risk checklist Communication during simultaneous work on the same equipment or component Procedures for high risk tasks Operating Control Procedures (OCP)

Work-related hazards Measures taken to eliminate these hazards and minimize risks using a hierarchy of control

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21

INJURIES from recordable work-related accidents

38

INJURIES from recordable work-related accidents

Sustainability Report - 2019

Injury rate from work-related accidents

0

DEATHS resulting from an injury in a work-related accident

0

INJURIES from a work-related accident with major consequences (not including deaths)

0.27

To manage all the data collected, Drummond Ltd. has implemented an information management system through TRASA (for TRAining – SAfety), where statistical information is stored.

Additionally, there is documented information that includes reports and investigations into workrelated accidents, among other data that is collected through capturing information using information technology systems.

INJURIES Injuries from recordable work-related accidents

Injury rate from work-related accidents

0

DEATHS resulting from an injury in a work-related accident

0

INJURIES from a work-related accident with major consequences (not including deaths)

0.47

INJURIES from recordable work-related accidents

Location

Electrical

Physical

• Design of stairs, platforms with handrails, lifelines, fall protection equipment • Planned and supervised work • Reporting of unsafe conditions • Limited exposure time • Start-of-shift meetings to organize work • Signage • Order and cleanliness • Possibility of changing position and work rotation • Basic PPE: helmet / safety glasses / safety boots / engineering-type gloves / inserted hearing protectors / N-95 masks.

• Use and maintenance of appropriate tools, cables and equipment • Use of cables that provide for reporting of unsafe conditions • Restricted access control to electric power generation, transformation and distribution areas • Design of surge protection system • Equipment grounding • Basic PPE: helmet / safety glasses / safety boots / gloves

• The equipment is enclosed and hermetically sealed • The equipment has a pressurization system in the cabin, which makes it possible to isolate outside noise • Reporting of unsafe conditions • Preventive maintenance of equipment and vehicles • Use of inserted hearing protectors, with double protection if the noise level increases

Psychosocial

Ergonomic

• Labor, wage, human resource management and well-being policies • Work plans • Other risks are controlled to reduce stress load • Reporting of unsafe conditions

• Use of shock absorbers and ergonomic seats for vehicles and equipment, ergonomic chairs for offices • Reporting of unsafe conditions • Breaks and pauses during the day • Possibility of changing position • Postural hygiene

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Integral Development

When an accident occurs, there are two main actions taken in response: strengthening skills and identification of hazards, and establishing controls. Finally, taking these hazards into account, during 2019 at Drummond Ltd. they have caused or contributed to the occurrence of certain events involving employees and contractors:

DRUMMOND EMPLOYEES

0

MEN

0

WOMEN

0

TOTAL

Deaths resulting from an occupational disease

25 0 MEN

WOMEN

25

TOTAL

Cases of recordable occupational diseases

CONTRACTORS

0

MEN

0

WOMEN

0

TOTAL

Deaths resulting from an occupational disease

19 0 MEN

WOMEN

19

TOTAL

Cases of recordable occupational diseases

The occupational diseases identified during 2019 in employees and contractors were:

DRUMMOND EMPLOYEES

CONTRACTORS

• Musculoskeletal or connective tissue diseases • Diseases of the ear or mastoid process

• • • • • • • •

Occupational disease Carpal tunnel syndrome Hearing loss Discopathy Epicondylitis Rotator cuff syndrome Ankle, shoulder bursitis Shoulder and hand musculoskeletal disorders • Chronic low back pain

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Sustainability Report - 2019

(

MILESTONES In 2019, Drummond Ltd. was able to meet its objective of reducing by 30% the rate of accidents classified as having major consequences (incapacitating, medical treatment, higher cost property damage) in all of its operations, achieving a total reduction of 36%.

The transition plan from the OHSAS 18001:2007 standard to the ISO 45001:2018 standard for the occupational health and safety management system was established, with the goal of receiving certification under the new standard in 2020.

In line with proactive safety, the Company continued to strengthen the Safety Observations program and proactive indicators were formalized, which are being monitored by Drummond Ltd.’s Strategic Health and Safety Committee.

2019 health milestones: we were able to reduce the occupational exposure index (EI) to crystalline silica below 0.5 (the level that requires action) with the use of personal protective equipment (PPE) in 2019.

{

Since 2017, the Program to Strengthen Drummond’s Safety Culture has been in place. In 2019, the Company continued to make progress with various achievements, including: •

Improving the skills and competencies of middle management through Safety Mentoring sessions, during which they worked on developing the characteristics of a persuasive leader: informing, influencing and inspiring.

•

Maintaining and improving training opportunities, seeking to empower employees in safety / provide clear responsibilities at all levels, mainly through regular training opportunities that continue to strengthen risk management, prevent risky acts and promote self-care.

Challenges 2020 Industrial safety Zero fatalities at Drummond Ltd.’s operations

YEAR: 2020

Health Reduce the accident rate throughout Drummond Ltd.’s operations by 20%, and the accident rate for contractors by 30%.

YEAR: 2020

Receive OHS-MS certification under the ISO 45001:2018 standard

YEAR: Second half of 2019 to be completed in 2020

Continue to strengthen the program on Observations for Safe Behavior, as a fundamental basis for the growth of a preventive safety culture.

YEAR: 2018-2024

Continue to improve the program to strengthen the safety culture at Drummond, making progress in the execution of different activities, with the results of the improvement visible both in the statistics and in the work environment in the operations. To do so, mentoring sessions in Spanish are planned for Drummond Ltd.’s middle management.

YEAR: 2024

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Keep the occupational exposure index (EI) to crystalline silica below 0.5 (the level that requires action) with the use of personal protective equipment (PPE) as of 2020.

YEAR: 2020

Integral Development

Relationships

unions

with

For Drummond Ltd., collaborating in achieving global objectives such as the UN Sustainable Development Agenda is a mechanism that has proven to further contribute to achieving its Corporate Social Responsibility targets. From our relationships with unions, we contribute to:

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development • Transparency and citizen oversight

• Training and promotion • Peace and social dialogue

• Institutional and community strengthening

• Coexistence and conflict resolution

Strengthen local capacities for greater efficiency in public planning and management.

CSR Strategy Contribution to capacity building

Integral Development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Environmental performance • Environmental sustainability

• Education and training • Creating opportunities

• Conservation and restoration

• Work environment

Drummond Ltd.'s contribution to achieving the Sustainable Development Goals

Strengthen the business capabilities that ensure worldclass environmental performance.

Goals Goal 8.8: Protect labor rights and promote decent working environments, with growth opportunities, that are safe and secure for all workers.

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Sustainability Report - 2019

{103-1}

ONE OF THE COMPANY’S OBJECTIVES WITH REGARDS TO UNIONS IS TO CONTINUE TO STRENGTHEN OUR RELATIONSHIPS, NOT ONLY WITH ALL UNION ACTORS, BUT ALSO WITH THEIR MEMBERS AND OTHER ORGANIZATIONS, SUCH AS FEDERATIONS OR ALLIANCES.

Fulfillment of this objective requires respect for the freedom of association and right to collective bargaining as integral parts of the right of association established in the Colombian Constitution.

It is important to Drummond Ltd. to effectively manage labor relations since it represents an opportunity for the operations to minimize risks that could affect all of our stakeholders, our objectives and, obviously, our corporate reputation

{103-2} {103-3}

As part of its labor relations management, Drummond Ltd. has opportunities for social dialogue as a mechanism for interacting with our employees and their representatives, ensuring an appropriate work environment that allows us to conduct assessments and monitor issues of interest to workers.

Compliance with the agreements with the various unions and, in general, with all employees is a fundamental part of effectively managing labor relations. To do so, we have the following mechanisms that allow for direct communication with these actors:

Open meetings with our employees, led by the Vice Presidents of Operations and Human Resources.

Regular meetings with our unions within the framework of the Collective Bargaining Agreement.

Visits to work sites with representatives of the trade union organizations.

Possible meetings requested by union organizations with senior management (president, vice presidents, management, superintendents).

Meetings of the Special Committee for Monitoring and Recommendations to optimize services under the Hospitalization and Surgery insurance policy.

Open meetings with our employees led

by Industrial Safety and operational area managers (360º).

Visits from external stakeholders (clients, NGOs, international unions).

Participation on the Food and Transportation Committee.

Participation in the labor relations network with other companies in the industry.

Recreation Committee.

Activating all of these mechanisms makes it easier for Drummond Ltd. to properly manage risks and allows it to prevent the operations from being affected, for example, by strikes arising from collective disputes and judicial and/or administrative cases that could harm the Company’s corporate reputation and its sustainability.

{MM4}

During 2019, there were no strikes or closings lasting longer than one week.

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Integral Development

Finally, and as a complement to all the social dialogue mechanisms, Drummond Ltd. workers and other stakeholders can use a Complaints Channel to file complaints, concerns and/or claims on labor matters, guaranteeing absolute confidentiality.

This channel has been set up and developed as a result of the Business Ethics Program and to supplement the corporate policies on Human Resources, Human Rights and Conflicts of Interest and the Code of Conduct.

{402-1}

Minimum notice periods for operational changes

This mechanism can be accessed in the following ways:

Drummond Ltd., in accordance with its mechanisms for social dialogue, holds meetings with workers and their representatives to explain any operational change that may affect them. The Company does not have minimum periods to report operational changes; each change is analyzed independently and according to its complexity.

Written report mailed to

Additionally, to reinforce the communication of significant operational changes, we have corporate communications such as:

Calle 72 No. 10-07 Suite 1302 Bogotá D.C.

• emails • memos • newsletters

External ethics line

• announcements

018000 919161

• billboards • press releases • magazines

Internal extension 8499

Direct phone number 57 (5) 5719499

It is important to mention that during 2019, there were no significant changes that would lead to this type of meeting or the use of internal communications to disclose related information.

Email address

denuncias@drummondltd.com

All communications submitted using these mechanisms are handled and answered by a committee that includes members of Drummond Ltd.’s senior management, in order to guarantee the transparency and confidentiality of the information provided using this channel.

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Sustainability Report - 2019

{407-1}

Freedom of association and collective bargaining

Drummond Ltd. is a company that fully respects human rights and this, naturally, includes the freedom of association and the right to collective bargaining. In order to ensure these rights, we have not only made this respect, protection and promotion official in our Code of Conduct and other policies, but we also strive to fully comply with them in our everyday actions, which allows us to state that there is no risk of activities or actions that violate the right of any worker to form unions, join or leave them, or to present a list of demands to begin a collective bargaining process.

Currently, Drummond Ltd. has nine labor union organizations.

Along these same lines, the Company has the appropriate means to communicate the steps that it has taken to promote and protect this right in all of our operations, such as:

Human rights training sessions

Corporate employee onboarding

Corporate communications

(

Delivery of the Employee Manual

Institutional presentations to our stakeholders

If there are any complaints, concerns or claims regarding respect for these rights, in addition to the mechanisms provided under Colombian labor law, we also have the measures that we have mentioned above.

{

Milestones During 2019, six collective bargaining agreements were signed during the direct agreement stage, under which 75% of our employees benefit. These collective bargaining agreements continue to maintain some of the best working and benefits conditions in our industry and throughout the country. This is very important, since it is reflected in the wellbeing of our families and local, regional and national development.

- 137 -

Challenges 2020 Carry out the commitments acquired in the different collective bargaining agreements and continue working to maintain good working relationships that make it possible to achieve the company’s objectives, while encouraging the personal and professional development of its employees.

Integral Development

Relationships

with communities

For Drummond Ltd., collaborating in achieving global objectives such as the UN Sustainable Development Agenda is a mechanism that has proven to further contribute to achieving its Corporate Social Responsibility targets. From our relationships with the communities, we contribute to:

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development • Transparency and citizen oversight

• Training and promotion • Peace and social dialogue

• Institutional and community strengthening

• Coexistence and conflict resolution

Strengthen local capacities for greater efficiency in public planning and management.

CSR Strategy Contribution to capacity building

Integral Development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Environmental performance • Environmental sustainability

• Education and training • Creating opportunities

• Conservation and restoration

• Work environment

17 2

16

15

4

Drummond Ltd.'s contribution to achieving the Sustainable Development Goals 6

12

11

9

- 138 -

8

Strengthen the business capabilities that ensure worldclass environmental performance.

Sustainability Report - 2019

Goals • Goal 2.a: Increase investment in rural areas to improve agricultural productivity.

• Goal 2.3: Double agricultural productivity and incomes through secure and equal access to land, productive resources and inputs, knowledge, financial services, markets and opportunities.

• Goal 2.4: Ensure the sustainability of food production systems and implement resilient agricultural practices that increase productivity and production.

• Goal 4.1: Help the girls and boys in the area of influence of Drummond Ltd.’s operations to have a quality education that enables them to have relevant and effective learning outcomes.

• Goal 4.2: Ensure that all girls and boys have access to quality early childhood care and development and preprimary education so that they are ready for primary education.

• Goal 4.3: Ensure that all men and women in the area of influence of Drummond Ltd.’s operations have opportunities to access quality technical, vocational and tertiary education, including university.

• Goal 4.6: Help all youth and at least a substantial proportion of adults, both men and women, in Drummond Ltd.’s area of influence, have reading, writing and numeracy skills.

• Goal 4.c: Contribute to the training and qualification of the educational practices of the teachers in Drummond Ltd.’s area of influence.

• Goal 6.b: Support and strengthen the participation of local communities for improving water and sanitation management.

• Goal 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage formalization and growth of micro-, small- and medium-sized enterprises including through access to financial services.

• Goal 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional infrastructure, to support economic development and human well-being.

• Goal 16.1: Significantly reduce all forms of violence and human rights violations at the Company’s various locations and among its stakeholders.

• Goal 17.17: Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.

• Goal 4.a: Build and upgrade education facilities that are child, disability and gender sensitive, and that provide safe, non-violent, inclusive and effective learning environments for all residents of the communities in Drummond Ltd.’s areas of influence.

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Integral Development

{103-1}

FOR DRUMMOND LTD., IT IS CRITICAL TO ESTABLISH GOOD RELATIONSHIPS WITH THE COMMUNITIES PRESENT IN THE AREAS OF INFLUENCE OF THE MINING AND PORT OPERATIONS. The Company’s objective is to develop local capabilities and positive impacts, which makes it possible to transform socioeconomic aspects of these communities to achieve sustainable development, starting from an understanding of the needs and expectations of both parties, maintaining trusting relationships based on dialogue, respect and co-responsibility.

The result of a positive relationship with the communities will be reflected in the Company’s reputation and strengthening of its Social License. Using this as a basic rule, Drummond Ltd. develops its operations, understanding that it is of vital importance to mitigate the impacts that its operations could cause. In order to manage relevant issues efficiently and effectively, Drummond Ltd. conducts a thorough exercise to identify its various stakeholders, applying the following criteria:

ILLUSTRATION 4.

Criteria for identifying the stakeholders that are directly or indirectly linked to Drummond Ltd.’s operations

Dependence

Influence Stakeholders who influence (or could influence) the development of an activity or its limitation.

This includes local, departmental and national authorities.

Stakeholders who depend on the organization’s activity, which includes employees, contractors and suppliers.

Representation People or organizations with regulatory, religious and cultural/ traditional structures, which include the church, cultural foundations and folklore groups.

Proximity

Responsibility

Stakeholders who have close interactions with our operations, with groups inside the company or relationships that are long-term.

Stakeholders with which we have a legal, financial or operational responsibility, in accordance with regulations, contracts, policies or practices.

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Sustainability Report - 2019

Maintaining equal conditions in its relationships with the communities is a key part of the Company’s work philosophy. Interactions take place considering various conditions that may require communications strategies that are adapted to the different stakeholders’ peculiarities.

{103-2} {102-17}

A commitment to the communities

Drummond Ltd. develops and implements mechanisms and tools that seek to continuously improve relationships with the communities that live in the areas where it operates. These relationship mechanisms are based on three main objectives:

ILLUSTRATION 5.

Community relations objectives

Community relations objectives

Objective 1

Objective 3

Guarantee and optimize conditions for coexistence and productive dialogue between the Company and the community.

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Objective 2

Promote and encourage projects that improve local skills in the area of influence.

Maintain constant communication with the community, social organizations and government institutions.

Integral Development

Fulfilling these objectives has created a challenge for Drummond Ltd., for which it has focused efforts on developing action plans to achieve the goals that it set.

To meet the first objective, the Company has developed different mechanisms to facilitate relationships with the communities in its area of influence, achieving direct communication between stakeholders and the different areas of Drummond Ltd., through: TABLE 17.

Community relations mechanisms

Community service policy

User service policy

• Sets mechanisms in place for access, information and communication with the communities in the area of influence. https://www. drummondltd.com/ social-responsibility/ community-attentionpolicy/?lang=en

• We respectfully respond to all requests, complaints or claims, suggestions and/or congratulations.

External communication • We share information through different media: social networks, press releases, radio programs and advertising and publications in newspapers and magazines.

Internal communication • Revista Drummond and the “Drummond Informs You” newsletter.

In terms of the second objective, we reaffirm our commitment to promoting and encouraging programs and projects that generate and improve local capabilities in the area of influence through our CSR pillars and the Community Strengthening, Institutional Strengthening, Peace and Reintegration and Community and Institutional Information programs.

• We provide the communities in the areas of influence of our mining and port operations with means of communication: by telephone, email or in person at our Community Service Offices in the town of La Loma, the municipalities of La Jagua de Ibirico and Valledupar, and at the Puerto Drummond facilities in Ciénaga.

In our Corporate Social Responsibility strategy we highlight the programs and projects implemented in the Comprehensive Development pillar, in the Education and Training area of action. From the start of Drummond Ltd.’s operation in Colombia, its commitment to strengthening education and promoting local human capital as a way to facilitate access to opportunities has been and remains paramount. For this reason, under this approach, the Company takes actions to benefit early childhood through higher education, including literacy programs for older adults.

• We enter all requests received into our citizen services system, which are then given a code and processed by the company until a response is given and the case is closed. https://www. drummondltd.com/ wp-content/uploads/ DTLD-CommunityServices-Manual.pdf

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Sustainability Report - 2019

In addition to actions in the education sector, we coordinate, arrange and execute projects on:

ILLUSTRATION 6.

Actions to strengthen the education sector

Improve educational infrastructure

Teacher training

Training and promotion of human rights, protective environments, peace, coexistence and reintegration.

Transparency and citizen oversight.

Improve educational quality in primary schools Scholarships for higher education

Early childhood care at educational and child development centers

Institutional and community strengthening.

Literacy for youth and older adults Institutional and community infrastructure.

Building values through sports and artistic extracurricular activities Strengthening businesses and income generation.

Training for employment for young people from the area of influence

Environmental education.

Strengthening skills for employment Social investments in relationships.

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Integral Development

Some examples of our projects are:

During 2019, we developed projects in the sections mentioned above in cooperation with local, regional and national governments, agreements with NGOs and others, managed 100% by Drummond Ltd.

Good Governance Seminar

Educational infrastructure

Community infrastructure

With the goal of helping to create and consolidate an agreement for the development of the local authorities in Drummond Ltd.’s areas of influence by strengthening skills and competencies on matters that are necessary and relevant for managing local public affairs, the Company held this event with the participation of elected governors, representatives, mayors and city council members from Cesar and Magdalena, totaling 200 attendees.

Three rural schools were updated by Drummond Ltd. in coordination with the Office of the Mayor of La Jagua de Ibirico, directly benefitting 150 families from the towns of El Zumbador, La Esmeralda and Argentina Norte.

The health center in the town of Casacará, in the municipality of Agustín Codazzi, was remodeled and properly equipped, benefitting more than 7,500 people.

Soccer with Heart

Golombiao, the game of peace

Palabrario y Numerario

Together with the Soccer with Heart organization, we helped develop human capital, developing values and skills in children from the fishing community in Ciénaga.

Promoting sports and recreation while building values, we continued to have an impact on students and teachers at six public schools in Ciénaga.

We also strengthened family ties and made environments more protective to safeguard the rights of children and young people through an environment of coexistence and reconciliation. This work is carried out in partnership with the Agency for Reincorporation and Normalization (ARN).

Elementary school teachers were trained on pedagogical practices to develop their students’ skills in reading, writing and mathematical logical thinking in the municipalities of Agustín Codazzi, Chiriguaná, El Paso and La Jagua de Ibirico, with the participation of 215 teachers and 5,609 students from 7 public schools distributed across 18 locations.

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Sustainability Report - 2019

Maintenance of institutional and community infrastructure

Alfabetízate

At Drummond Ltd., we not only build infrastructure projects, we also ensure that they are maintained. We have benefitted more than 30,000 people through donations of paint and materials for building and maintaining schools, churches, healthcare centers and sports and recreation venues, as well as the machinery for maintaining urban roads in the different municipalities in our area of influence.

We continued with the objective of reducing the illiteracy rate in the municipalities of Agustín Codazzi, Becerril, Chiriguaná, El Paso and La Jagua de Ibirico, to facilitate access to education and have a positive social impact on the quality of life of these populations. As of 2019, 1,000 young people and adults have participated in this project.

Development of local producers

De Origen

A food supply model was developed, focusing on small producers from the municipalities of Agustín Codazzi, Becerril and La Jagua de Ibirico. Through a gradual process and “supplier development” technical assistance, 40,000 kilos of agricultural products were purchased from 46 locales producers, with an income of approximately US $25,896 in direct payments.

Cacao del Cesar: this pilot project was developed in 2019 to connect cacao producers with the value chain for sustainable businesses.

From signing a marketing agreement, they received payments up to 36% higher than the market price for each kilo purchased. As a result, the first chocolate bar from the Department of Cesar with premium cacao was produced.

The product came out of a partnership between Agrobiz, its Chuculat brand and the Association of Cacao Growers of La Jagua de Ibirico.

Protective Environments Project for a new peace-building generation We are certain that the proper use of free time and practicing sports, recreation and cultural activities contributes to building a generation committed to peace and reintegration.

For this reason in 2019, in partnership with the ARN, we continued to strengthen the United for Peace Sports Club in the Primero la Gente neighborhood in La Loma, in the municipality of El Paso.

The Company participated in and strengthened two local initiatives with this project in the town of La Palmita, in the municipality of La Jagua de Ibirico, benefitting 200 children from the La Palmita Soccer School and the Bonko Malinke folk dance group, in addition to conducting an assessment for its implementation in the municipality of Becerril.

Through constant communication with public agencies, private companies and the communities, the projects were completed on time and with joint commitments.

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Integral Development

Citizen Services System

RESPONSE TO REQUESTS, COMPLAINTS OR CLAIMS, SUGGESTIONS AND CONGRATULATIONS. For Drummond Ltd., it is very important to listen to and respond to all stakeholder requests, always seeking continuous improvement and ways to make its activities more efficient. For this reason, in 2019, it began the process of implementing improvements to the Citizen Services System for handling requests, complaints or claims, suggestions and congratulations, with the following objectives:

1.

Offering an online portal for the public that makes it possible to systematically and anonymously record cases by category related to specific topics, making this work more efficient.

Centralizing information from all cases received by the community services offices and via email, guaranteeing a high level of security and confidentiality for their handling.

3.

4.

Comprehensively and transparently managing cases through the online portal, receiving feedback and measuring effectiveness in responding to requests.

The last audit conducted by Bettercoal in January (2019) made the following findings regarding the Company’s citizen services system:

2.

• The system for requests, complaints or claims, suggestions and congratulations from all stakeholders should be improved, including the processes, software and roles and responsibilities in the current organizational structure.

• There is no comprehensive mechanism for giving feedback on the effectiveness of the reporting mechanism.

- 146 -

Automatically generating reports by category, location, response and type of case for auditing, monitoring and measuring results.

• The majority of employees and contractors sampled in interviews stated that they are unfamiliar with the citizen services system.

• Although Drummond Ltd. receives and processes complaints in accordance with the established procedure, it is not clear what specific mechanisms are available to effectively remedy those whose human rights are adversely affected.

• Drummond Ltd.’s citizen services system does not show a category related to human rights that makes it possible to disaggregate data related to this topic.

Sustainability Report - 2019

In response, and as part of the Continuous Improvement Plan implemented by the Vice President of Risk and Corporate Social Responsibility, Drummond Ltd. began the search for software that would allow it to address these findings. Finally, and after testing and meetings with different suppliers, Borealis was selected to implement this software to monitor and track all citizen services cases submitted to the Company.

cases, and the implementation of software is the best alternative.

It should be noted that this tool will not replace any of the existing physical or personnel mechanisms. The aim of the system is to systematize the citizen services cases and allow the Company to have a more effective alternative in responding, following-up, and tracking and responding to requests. Drummond Ltd. must have the capability to systematically demonstrate due diligence in responding to the citizen services

The online portal for managing citizen services cases, integrated into the Borealis software, contributes to the systematization of Drummond Ltd.’s Citizen Services System, which, according to its guidelines on human rights and following international standards, uses a case management flow based on five processes that allow the Company to carry out the corresponding internal procedures and build relationships with the public.

These processes are defined as follows:

Additionally, in light of this, Ardura, the Company’s advisor on human rights issues, analyzed how the Citizen Services System should be implemented, following international standards, as described by CREER-IHRB, PRNU, PV, ISO 26000, ICMM and AA 1000. Based on these recommendations, the Borealis software was selected.

Complaints/ claims processes

Stakeholder dialogue sub-process Requests sub-process

In 2020, the Company expects to train the platform administrators, who will be the representatives of from each of the Company’s areas, in addition to launching the online portal for use by various stakeholders.

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Suggestions sub-process

Congratulations sub-process

Integral Development

Response to requests, complaints or claims, suggestions and congratulations from the communities

With respect to the third objective, we have the Community Services Manual,15 which is a tool that documents the process that takes place with the requests, complaints or claims, suggestions and congratulations that are submitted by the communities and other stakeholders in the area of influence.

The requests received during 2019 were referred to the following areas of the Company:

ADMINISTRATIVE

COMMUNICATIONS

LEGAL

CSR

ENVIRONMENTAL

FOREST COMPENSATION

CONTRACTS

COMMUNITIES

MIS- HELP DESK

PHYSICAL SECURITY

OPERATIONS

INDUSTRIAL SAFETY

To address issues related to communities, Drummond Ltd. has the dedicated email addresses atencionalusuario@drummondltd.com and atencionalusuariop@drummondltd.com as exclusive channels for these stakeholders, and in-person at the Community Services Office in the town of La Loma, the municipalities of La Jagua de Ibirico and Valledupar, and at Puerto Drummond in Ciénaga.

- 148 -

PURCHASING AND MATERIALS

HYDROCARBONS

HUMAN RIGHTS

LANDS

15. Drummond’s Community Services Manual can be accessed at: https://www. drummondltd.com/wpcontent/uploads/DTLDCommunity-ServicesManual.pdf

Sustainability Report - 2019

The status of the requests submitted can be checked at the Community Services Offices or by telephone

The timely response indicator during 2019 at Drummond Ltd.’s Community Services Office was 79%, which, compared to the indicator for the previous year (82%), did not represent a significant difference.

Drummond Ltd. reiterates its commitment to ensuring and implementing mechanisms that guarantee world-class performance.

TABLE 18.

Number of applications by municipality of origin

AGUSTÍN CODAZI

BARRANQUILLA

requests

requests

77 10 %

3%

BUCARAMANGA

6

1%

requests

SANTA MARTA

49

27

requests

6%

41

BOGOTA

44

requests

5%

CHIRIGUANÁ

69 requests 9%

VALLEDUPAR

53

BECERRIL

requests

7%

BOSCONIA

12 requests

requests

6%

CIÉNAGA

EL PASO

18 requests

172

2%

22 %

OTHERS*

145

2%

requests

19 %

LA JAGUA DE IBIRICO

requests

TOTAL

781 requests 100 %

68 requests 9%

* (67 municipalities with 5 requests or less)

GRAPHIC 19.

Percentage of requests by municipality of origin

10 % Agustín Codazi

Ciénaga

Barranquilla

El paso

Becerril

La Jagua de Ibirico

Bogota

Santa Marta

Bosconia

Valledupar

Bucaramanga

Others*

19 %

5% 6% 2% 1% 9% 2%

7% 6% 9%

Chiriguaná

22 %

* (67 municipalities with 5 requests or less)

- 149 -

3%

Integral Development

TABLE 19.

Status of requests

CANCELED

10

1.28 %

CLOSED

IN PROCESS

750

2

NO OPINION

WITHDRAWN

96.3 %

16

2.05 %

0.26 %

3

0.38 %

TOTAL

781 100 %

GRAPHIC 20.

Status of requests

16 2%

3

1%

10 1% Voided Closed In progress No opinion Desisted

750 96 %

2

0%

- 150 -

The reason why some requests are still in process is that the response requires special review or they are issues related to the allocation of resources or inclusion on investment plans. In terms of the requests with no opinion, this is because the area responsible for issuing a response has not yet generated any follow-up to the case.

Sustainability Report - 2019

TABLE 20.

Distribution of requests by filing office

LA LOMA

646

Requests

PORT

TABLE 21.

Requests distributed by timely response

TOTAL

135

781

Requests

Requests

YES

NO

618

163

Requests

GRAPHIC 21.

Distribution of requests by filing office

TOTAL

781

Requests

Requests

GRAPHIC 22.

Requests distributed by timely response

135

163

17 %

20.87 %

618

79.13 %

646 83 %

La loma

YES

Port

NO

- 151 -

Integral Development

{103-3}

To ensure that these mechanisms are applied properly at Drummond Ltd. and that it uses best management practices, the following steps are taken:

DIAGRAM 1.

Best management practices

External audits

Opinion surveys conducted in the communities each year Feedback mechanism for continuous improvement in the processes and intervention in the communities.

Some strategic partners

•

Reported to the competent authorities annually through Environmental Compliance Reports to the National Environmental Licensing Authority (ANLA).

•

Regional Development and Communities Report, National Mining Agency (ANM).

•

Audits by international customers to evaluate social, environmental and ethical practices in the coal supply chain.

Work in coordination with different institutions, foundations and companies Replicate best practices to adapt them to the context and unique characteristics of the area of influence.

• Municipal and departmental administrations

• Community business associations

• Amigos Forjando Futuro Foundation

• United States Agency for International Development (USAID)

• NATIONAL AUTHORITY OF AQUACULTURE AND FISHERIES (AUNAP in Spanish)

• Proceder Siglo XXI Foundation

• Agency for Reincorporation and Normalization (ARN)

• Comfacesar

• Association of Banana Growers of Magdalena and La Guajira (Asbama) • Association of Municipal Boards, Association of Community Action Boards, Community Action Boards

• Comulbanano

• ProSierra Nevada de Santa Marta Foundation • Soydoy Foundation

• CSIR

• Universitaria del Area Andina Foundation

• CREER

• Fundeban

• National Army of Colombia

• Fundemicromag

• FCC – Soccer with Heart

• Genesis Foundation

• Funaco

• ICBF

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Sustainability Report - 2019

Operations with local community engagement, impact assessments and development programs {413-1}

IN 2019, 100% OF THE MINING AND PORT OPERATIONS HAD DEVELOPMENT PROGRAMS, IMPACT ASSESSMENTS AND LOCAL COMMUNITY ENGAGEMENT.

With the aim of properly managing human rights, each year meetings are held with people who are unemployed and contractors to include the local population in the supply chains for goods and services. Additionally, opinion surveys are conducted regarding compliance with the Environmental Management Plan (which includes the socioeconomic aspects identified in the impact assessment), as well as activities that make it possible to identify the communities’ needs and expectations for the mining and port projects, better orienting our actions

within the Corporate Social Responsibility (CSR) program.

For Drummond Ltd., it is important to be clear about the different social factors that may be affected by its operations and, to accurately identify them, it takes into account various characteristics of the mining projects, for example: duration, location of populated areas relative to the project areas and the expansion plans for the mines. To assess the impacts, the following factors are taken into consideration:

Characteristics of the population in the area of influence (location and population growth rate, among others).

This population’s access to education, healthcare and recreation.

Programs proposed in the Municipal Development Plans.

The local government’s capacity to generate production chains and job opportunities in other economic sectors.

• Public schools in the municipalities in the area of influence • Lagendijk Brothers Holding - LBH Ingenieros • Department for Social Prosperity • National Learning Service (SENA) • Universidad del Magdalena • Unit for Comprehensive Victim Support and Reparation • Agrobiz • Corporación Vital Vital Corporation

- 153 -

Integral Development

These factors are analyzed on a regular basis to develop projects that are executed based on the CSR pillars and the following programs:

DIAGRAM 2.

Programs in which social factors are applied

Local community engagement and development programs

Community building

Institutional strengthening

Investments in the areas of education and culture, health and nutrition, recreation and sports, infrastructure and improvements to the landscape.

Activities, seminars, workshops and certificate courses organized to strengthen the administrative skills of civil society and local governments.

Peacebuilding and reintegration

Community and institutional information

Development of projects that reaffirm the Company’s commitment to work as facilitators in reintegrating into society (post-conflict) and building values through sports.

Communication of the EMP, guided visits to mine and port operations, assistance to communities at community services offices and receipt and management of the system for reporting requests, complaints and claims.

For Drummond Ltd., it is important to have tools that make it possible to guide its efforts to work on the current needs of the communities. This work starts from the effective identification of those needs through a two-way evaluation:

{203-1}

ENDOGENOUS:

EXOGENOUS:

From within the Company

From the community

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Sustainability Report - 2019

When initiatives are actually identified and proposed, Drummond Ltd. evaluates their feasibility and the scope of its participation in them. To strengthen this understanding of needs, in 2019, it took the following actions:

DIAGRAM 3.

Activities to strengthen understanding of needs

Arenas for interaction through field visits to the municipalities in the area of influence or through the Community Services Offices.

These arenas help to align the investment and project objectives with the strategies in the Municipal Development Plans, thereby contributing to fulling the local government’s goals, designing and implementing programs for the development and benefit of the communities.

Investment in infrastructure and support for services

A core concept in Drummond Ltd.’s operations is harmony in its relations with the community present in the areas where operations are conducted. The positive impact that the Company seeks to have at the local and national levels,

Training for representatives of the local authorities from the communities in the municipalities in the Company’s area of influence regarding human rights and project formulation.

aimed at creating value, requires the use of resources in projects that guarantee sustainable development.

Below is a summary table of the work executed in 2019:

TABLE 22.

Investment in infrastructure and support for services Summary table – total executed in 2019

Amount (US$)

Other contributions to the sector

Total 2019 (US$)

Education and culture

323,634

1,069,208

1,392,842

Recreation and promotion of sports

161,764

161,764

Childhood health and nutrition

105,059

105,059

Sector

Maintenance of physical infrastructure and roads

53,926

Maintenance of church infrastructure

29,181

29,181

170,484

170,484

Productive development * Contributions to investment in managing community information and educational visits to the mining and port operations.

206,435

260,361

Institutional strengthening

79,793

79,793

Peace and reintegration program

20,262

20,262

Other donations* Total (US$)

- 155 -

-

67,471

67,471

944,104

1,343,114

2,287,218

Integral Development

Identification of risks and impacts on the population {413-2} {203-2}

WHILE CARRYING OUT THE OPERATIONS (COAL MINING AND TRANSPORTATION), MAJOR OPPORTUNITIES FOR GROWTH ARE CREATED FOR THE REGIONS SURROUNDING DRUMMOND LTD. AND FOR THE COUNTRY AS A WHOLE. However, it must also be understood that any activity can have risks and negative impacts, even with established management plans, and they can materialize in the local communities in the area of influence where the Company operates.

TABLE 23.

Main indirect negative economic and social impacts on the community

• Increased cost of living in the municipalities in the mine’s area of influence due to the presence of Drummond Ltd. in the region.

• Large floating population from outside the area that settles in the towns because of the mining operations. This can generate shortfalls in the provision of public utilities for households and pressure on land holdings, especially for communal use.

• Cultural changes in the local population.

• Increased insecurity in the surrounding areas.

• Higher taxes in the municipalities in the area of influence.

TABLE 24.

Main indirect positive economic and social impacts on the community

• Generation of direct and indirect Jobs associated with the mining operation.

• Generation of local capacities in activities other than mining, through entrepreneurship and training.

• Generation of income related to the strengthening of the commercial, financial, hotel, catering food and service providing sectors in general.

• Reduction of the risk of inappropriate use of free time, in children and young people, by supporting education, culture and sports.

• Increase in taxation in the municipalities of the areas of influence due to the dynamization of mining in the territory.

- 156 -

• Linking small and mediumsized companies in the areas of influence to the supply chain, which comply with all the specifications and conditions to provide goods, materials and services.

Sustainability Report - 2019

By segmenting the risks and impacts that could affect the population, it is possible to clearly identify the best practices that could reduce the likelihood of these risks occurring in all stages of the operation:

ILLUSTRATION 7.

Best practices for risk reduction

Before entering a community

A baseline study is performed through the Environmental and Social Impact Assessment

When leaving the community

During operations with the community

Throughout the project, modifications are made at the socio-environmental level and the status of the impact study is updated.

Thus, different plans are generated, such as saving and efficient use of water, use of water resources, less use of natural resources, among others. In addition, natural environments are strengthened for the conservation and reproduction of species.

Closure plans {MM10}

The mining and port operations have licenses granted by the environmental authorities that include the approval of the closure plan for each project.

Some phases of the closure plans are executed simultaneously with the mining, such as the ecological recovery of the dumping areas or the perimeter areas of the port; others, such as the dismantling and/or demolition of the facilities and buildings, and the physical and chemical stabilization of the areas that were disturbed or the morphological reshaping of the land, will only be carried out after the mining ends. For this reason, it is necessary to periodically - 157 -

A closure plan is made and management and monitoring measures are projected. These plans include information programs on the closure of the project and the measures of restoration or compensation measures for the territory that may apply.

review the proposed activities and adjust them in accordance with modifications to the project and changes in the country’s social, economic, legal and environmental conditions.

Since the closure plan basically corresponds to the proposal for alternative uses for the land after the mining, they must be communicated and approved by the environmental authorities, local public institutions and community organizations, so that stakeholders are in agreement with the proposal and take it into account when preparing planning instruments such as land use plans.

Integral Development

TABLE 25.

Operations with closure plans Finally, it is important to note that the company has a budget provision for the closure plans for each of its operations, which is updated annually to ensure the resources necessary for their execution.

3 3

Drummond Ltd. has taken actions to generate socio-economic modernization processes in the region

Total number of Drummond Ltd. operations

Company operations with approved closure plans

As part of the Corporate Responsibility Strategy, through the Comprehensive Development pillar, the Company has been working on strengthening local capacities for the well-being and prosperity of the communities in the area of influence. With this strategy, it seeks to create opportunities to contribute to the sustainable development of the local communities, beyond mining activities.

To this extent, one of the strategic guidelines of the Social Management Plan is strengthening businesses and support for income generation, through which projects and actions are implemented to increase the positive impact of the mining project, along lines such as the management of local suppliers, the promotion of regional productive development and the generation of local employment.

Specifically, related to regional productive development, during 2019:

8

SPECIFIC INITIATIVES were carried out in the different municipalities in the Company’s area of influence

- 158 -

Reaching an investment of:

$180,111

US$

Sustainability Report - 2019

Local Producers Development Project

De Origen Project Cacao del Cesar

Donation of equipment to clothing manufacturers

Promotes a food supply model, improving marketing channels for small producers in DLTD’s area of influence in the department of Cesar.

Project to connect cocoa producers with the sustainable business value chain.

Optimization of the industrial manufacturing business unit by providing industrial equipment in the municipality of La Jagua de Ibirico.

Beneficiaries

180

Beneficiaries

109

Beneficiaries

115

participants from the Cocoa Growers Association of La Jagua de Ibirico

women

local producers

Assistance and Social Entrepreneurship Center of Boquerón (CAES Boquerón) Construction and adaptation of the physical infrastructure for the operation of the Entrepreneurship Center for the benefit of the community of Boquerón – La Jagua de Ibirico.

Beneficiaries Approximately

1,000

habitantes del corregimiento de Boquerón

Palmita Recycles Project

“Sowing the Future” Project

Construction of a solid waste plant to reduce the impact caused by its improper handling, and to encourage this line of business as an opportunity to generate income for the community of La Palmita.

Seeks to help rescue the tradition and generational change-over in the banana industry in the region to have a positive impact on the communities working in this industry, using theoreticalpractical training through plans for producing and exporting bananas, and strengthening soft skills and competencies to highlight the importance of tradition, putting down roots, love of the land and building the social fabric.

Beneficiaries

1,200

residents of the community of La Palmita

Strengthening of entrepreneurship and entrepreneurship projects Support and advising from Fundemicromag to strengthen the business models for Xenza (beauty salon) and SoluTeam (outboard motor repair).

Completion of the training process (intermediateadvanced), and purchasing of equipment to implement the entrepreneurship (income generation) project.

Knowledge Transfer for Product Development Strengthening the La Jagua Productive Units project with the aim of complementing the training modules that it has been implementing with the operator Minuto de Dios: Knowledge Transfer for Product Development

Beneficiaries

115 women

Beneficiaries

23

Beneficiaries

741

young people from the fishing community of the municipality of Ciénaga

students in the Prado Sevilla district of the municipality of Zona Bananera

- 159 -

Integral Development

The closure of Drummond Ltd.’s projects and their communication

Land use {MM6} {MM7}

Year after year, the Company has been holding communication sessions with the communities in its area of influence on the progress made in the projects’ Environmental Management Plans, as well as the different special projects executed to benefit the communities. As part of the progressive closure plan, the Company has taken the communities to the recovered areas that it has developed over the years, which focus on the recovery of the areas released by the mining operations.

In these areas, it has been possible to see first-hand the steps the Company has taken to define possible later uses. As in other areas that have been disturbed, the Company has implemented an ecological recovery protocol that uses species such as sorghum, pigeon peas, beans and rice, due to their rapid growth and nitrogen

supply, which have shown positive results and been well-received by the communities.

Drummond Ltd. responds to land restitution cases, in the administrative and judicial stages, filed by individuals who request that the State return properties that they sold in the past to third parties who, years later, sold them to Drummond Ltd., complying with all legal requirements, as well as the obligations and requirements established by the

environmental authorities to conduct the Company’s mining operations. In these cases, Drummond Ltd. continues to exercise its right of defense, opposing restitution in its capacity as a third party purchaser in good faith, and pointing out the material and legal impossibility of restitution. During 2019, no additional requests for land restitution were filed.

The La Loma project will be operational until 2032. After that, it will enter into a 5-year closure phase and two additional years of post-closure, which correspond to monitoring the closure plan. As the mining project progresses, the areas that have been disturbed are released, in such a way that progress has been made on the implementation of the progressive closure plan since the beginning of the project.

In the case of the El Descanso project, it will be operational until 2063, contemplating closure and monitoring periods like those described for the La Loma project.

In 2019, there were no disputes with local communities or indigenous peoples associated with land use.

- 160 -

(

Sustainability Report - 2019

Milestones With an investment of

US$

2,287,227

the Company’s social management plan was executed.

With a purchase of 40,000,000 kilos of agricultural products from 46 local producers from the municipalities of Agustín Codazzi, Becerril and La Jagua de Ibirico, the Company began implementation of the food supply model under the “Development of Local Producers” project.

{

The Good Governance Seminar was held with the participation of 200 public officials: governors, representatives, mayors and city council members from the municipalities in the area of influence of the mining and port operations.

The Company supported the creation of the first premium chocolate exclusively from La Jagua de Ibirico in the department of Cesar.

The Company reduced illiteracy by 500 people in five municipalities in the area of influence in the department of Cesar.

The Company supported training on pedagogical practices for 215 teachers from its area of influence in the department of Cesar.

Drummond Ltd. helped start two productive inclusion and incomegenerating ventures in the fishing zone of its area of influence in Magdalena: SoluTeam, specializing in outboard motor repair, and Xenza, specializing in hairdressing and beauty services.

Challenges 2020 Approval and communication of the Social Management System Manual, as a framework for the planning, implementation and continuous improvement of the Company’s social management, in accordance with the recommendations on best international practices, especially those included in the Bettercoal code.

Strengthen the follow-up and monitoring system for the Company’s social and environmental work.

Generate income for small farmers in the Company’s area of influence in the department of Cesar.

Strengthen the educational quality of the public schools in the department of Cesar.

- 161 -

Design and implement 100% of the Company’s Social Investment Plan for 2020, based on a detailed analysis of the context to maximize the support that the local communities require to mitigate these effects and promote a safe economic reactivation process.

Promote the coordination of joint efforts with contractors and other partners in the area of influence that enhance the Company’s positive impact on local development.

Consolidate opportunities for dialogue with internal and external stakeholders, in order to ensure that the initiatives and projects implemented as part of the Social Investment Plan remain relevant.

Integral Development

Supplier and

contractor management

For Drummond Ltd., collaborating in achieving global objectives such as the UN Sustainable Development Agenda is a mechanism that has proven to contribute more to achieving its Corporate Social Responsibility targets. From our supplier and contractor management, we contribute to: Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development • Transparency and citizen oversight

• Training and promotion • Peace and social dialogue

• Institutional and community strengthening

• Coexistence and conflict resolution

Strengthen local capacities for greater efficiency in public planning and management.

CSR Strategy Contribution to capacity building

Integral Development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Environmental performance • Environmental sustainability

• Education and training • Creating opportunities

• Conservation and restoration

• Work environment

Drummond Ltd.'s contribution to achieving the Sustainable Development Goals

- 162 -

Strengthen the business capabilities that ensure worldclass environmental performance.

Sustainability Report - 2019

Goals • Goal 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage formalization and growth of micro-, small- and medium-sized enterprises including through access to financial services.

• Goal 8.5: Achieve full and productive employment and decent work for all men and women, including youth and people with disabilities, as well as equal pay for work of equal value.

• Goal 16.2: Contribute to the abolition of abuse, exploitation, trafficking, torture and all forms of violence against children at the Company’s various locations and among its stakeholders.

• Goal 16.10: Ensure that all direct employees and contractors of Drummond Ltd. have access to information and training on human rights, for the promotion and for the protection of their fundamental freedoms.

• Goal 8.6: Reduce the proportion of young people who are not in employment, education or trainingw in the communities in the area of influence.

• Goal 8.7: Take immediate and effective measures to eradicate forced labor, end modern slavery and human trafficking. Also, contribute to the abolition of all forms of child labor at the Company’s various locations and among its stakeholders.

• Goal 8.8: Protect labor rights and promote decent working environments, with growth opportunities, that are safe and secure for all workers.

• Goal 16.1: Significantly reduce all forms of violence and human rights violations at the Company’s various locations and among its stakeholders.

- 163 -

Integral Development

{103-1}

The evaluation and selection standards are rigorous, to ensure that the required activities, such as the purchasing and hiring of goods and services, are of the highest quality.

THE SUPPLIERS AND CONTRACTORS THAT WORK WITH THE COMPANY ARE DETERMINING FACTORS IN THE LONG-TERM EFFICIENCY, EFFECTIVENESS AND SUSTAINABILITY OF OUR OPERATION.

For this reason, the evaluation and selection standards are rigorous, to ensure that the required activities, such as the purchasing and hiring of goods and services, are of the highest quality, received in a timely manner, offer competitive process and after-sales service, to promote growth and competition in an increasingly selective market.

Drummond Ltd. has four guidelines that allow usto properly select suppliers and contractors, avoiding financial, reputational, industrial safety, environmental, operational, and integrity risks:

1

2

Emphasize the hiring and development of local companies in the area of influence of the port and mining operations, bearing in mind their economic and social impact.

Ensure that both suppliers and contractors follow the standards of the Money Laundering and Terrorist Financing Risk Management System (SARLAFT, in Spanish) and are not included on the OFAC list, to comply with the national and international standards that we must follow as a company. It is important to note that, at Drummond Ltd., we conduct a SARLAFT review every three months.

4

3

Hire companies with proven experience to ensure the supply of goods and services, implementing best practices at the national and international level, following good management practices and OSHA 18001, ISO 14001 and other guidelines.

Hire solvent companies that demonstrate the traceability of the source of their capital and comply with labor, foreign exchange and tax regulations, among others.

This is how supplier management mitigates risks that, if they were to materialize, could compromise the Company’s operational, technical, financial, reputational, safety or environmental integrity.

The Company’s guidelines require it to encourage the development and contracting of local suppliers.

- 164 -

Sustainability Report - 2019

{103-2}

Since this work directly affects employers, contractors, the communities and the operation as a whole, Drummond Ltd. established controls in its hiring criteria that make it possible to minimize any negative impacts that could arise due to the improper management of a supplier or contractor.

By using people from the region directly and indirectly, risks associated with conflicts of interest with local suppliers and contractors may arise. For this reason, Drummond Ltd. has developed and shared its strict Code of Ethics internally and externally:

Declaration of Conflicts of Interest, which is reported when suppliers and contractors are registered with our Company’s Supplier Control Area Declaration of Conflicts of Interest, which is reported by our employees to the H.R. Department (during the hiring process, in the annual evaluation and when it arises).

- 165 -

Implementation of the Conflict of Interest Committee, which meets periodically and no less than once a year, to evaluate the impacts and risks associated with suppliers and the operation, as well as the establishment of controls aimed at mitigating or eliminating these impacts

Integral Development

Additionally, we have established six tools focused on controlling and ensuring proper management of our suppliers and contractors:

1

2

3

Commitments acquired in the provision of goods and services:

Policies and guidelines:

Inspections and audits on industrial safety, environment and human rights:

• Contracting using clear commercial offers in terms of responsibilities, commitments and scope of services.

• Duly signed terms and conditions.

• Dissemination of our Internal Policy on Human Rights and Conflicts of Interest.

• Requiring the issuance, dissemination and compliance with internal policies and each supplier or contractor.

• Opportunities for exchange related to compliance: periodic meetings, inspections, chats, audits and trainings.

• Irrevocable declarations.

• Dissemination of the Comprehensive Manual for the Control and Monitoring of Contractors and Suppliers.

• Checking personnel references.

4

5

6

Managerial walk-throughs:

Quarterly meetings of contractor managers:

Comprehensive Manual for the Control and Monitoring of Contractors and Suppliers:

• Sessions for direct interaction between the Company’s leadership and contractors’ supervisors and operations, performing industrial safety and environmental verifications.

• Dissemination of results related to workplace health and safety, both at our own operations and those of our contractors.

- 166 -

• The document that informs our contractors of the main responsibilities, for themselves and their subcontractors, related to physical safety, environmental, corporate social responsibility and workplace health and safety aspects during the execution of services for our Company.

Sustainability Report - 2019

{103-3}

In order to establish a chain of suppliers and contractors that is constantly growing stronger, internal audits are executed that may include ESG criteria such as personnel, OSH, human rights and environmental, and they are selected according to the criticality and amount of billings for the goods and/or services provided.

Personnel

Occupational health and safety

Human rights

• Staff competencies

• Overview of risk factors

• Conflict of interest policy

• Hiring guidelines

• Emerging Care Program

• Human rights policy

• Payment of staff salaries

• Accident indicators

• Work shifts and rotation

• Indicators of performance

• Mechanism of complaints and claims

• Delivery of uniforms and PPE

• Payment of wages

Environment

• Matrix of environmental impacts • Compliance with environmental standards • Compliance with environmental obligations

• Payments to social security • Trainings

Drummond Ltd.’s complaints and claims system functions as a tool that makes it possible to monitor and evaluate suppliers’ and contractors’ performance, since, through it, anyone can file a report anonymously or directly, notifying the Company of conflicts, anomalies, failure or deviations from its Ethics Policy and, if necessary, the report may be on a matter that may affect the operations.

As a supplement, during 2019, Drummond Ltd. conducted four audits that covered 12 contracts. The audits covered social and human rights issues.

In terms of human rights, child labor is prevented through the implementation and continuous improvement of rigorous access controls and reference-checking processes to prevent minors from entering the Company’s operations.1 The Company also periodically provides opportunities for communication designed to improve communication with suppliers and contractors, ensuring that information is up-to-date.

Lastly, on a monthly basis, random audits are conducted that verify payments to the social security, pension and severance systems for our contractors’ employees.

The Company also periodically provides opportunities for communication designed to improve communication with suppliers and contractors, ensuring that information is up-to-date - 167 -

16 https://www.drummondltd. com/wp-content/uploads/ MECHANISM-TO-REPORTIRREGULARITIES-PRESENTCLAIMS-signed.pdf

Integral Development

Percentage of local spending on suppliers during 2019

Through the implementation of Drummond Ltd.’s operational activities, which require goods and services, the Company contributes to the revitalization of the regional economy, generating both direct and indirect job opportunities that involve high standards in terms of technology, industrial safety and environmental protection, contributing to professional and business development in the municipalities in the area of influence of our activities.

{204-1}

At Drummond Ltd., a local supplier or contractor refers to a company whose headquarters are located in the Caribbean region. In 2019, purchases from them accounted for 30% of the Company’s total purchases, a percentage very similar to that of the previous year:

GRAPH 23.

Purchases made from suppliers in millions of US$ PURCHASES FROM LOCAL SUPPLIERS (GOODS AND SERVICES)

2019

242.3

2018

262.8

2017

859

0

100

760.0

518.8

189.2

At the end of 2019, Drummond Ltd. had

847.9

585.2

241.1

2016

801.8

559.5

604.9

415.8

200

300

400

500

domestic suppliers

Total purchases

that represent 90% of its total suppliers. Of these,

Purchases from suppliers (rest of the country)

Purchases from suppliers (Caribbean region)

346

are located in the Caribbean region, mainly in the departments of Atlantico, Cesar, Magdalena and Bolivar.

- 168 -

600

700

800

900

Sustainability Report - 2019

Additionally, and continuing with the policy of favoring hiring of regional labor, in 2019 we were able to improve the statistics in terms of contractor employees, as follows:

Amounts for 2019 Mine

Port

Total

Local

4,321

608

4,929

Rest of the country

366

119

485

8.9 %

23

3

26

0.5 %

4,710

730

5,440

Abroad Local Rest of the country Abroad

Total

- 169 -

90.6 %

100.0 %

Integral Development

Environmental and social assessments

{308-2} {414-2}

TABLE 26.

Negative social and environmental impacts on the supply chain

Total number of suppliers with which the Company had a relationship in 2019 whose impact has been evaluated.

ENVIRONMENTAL

SOCIAL

ENVIRONMENTAL

SOCIAL

58

0

58

0

Percentage of suppliers with whom improvements have been agreed to after the evaluation.

ENVIRONMENTAL

SOCIAL

100 % 0 %

For the 2019 period, no actual or potential negative social impacts were identified.

Number of suppliers that present significant actual or potential negative impacts.

The contractor or supplier that shows progress or growth in terms of these indicators has a better chance of maintaining its relationship with the mining project. Additionally, the request for goods and services from the contractor and its employees is considered to the extent that it increases aggregate demand.

For the 2019 period, no actual or potential negative social impacts were identified. Likewise, in no case have we been obliged to terminate the contractual relationship as a result of an evaluation related to this item.

In addition, during 2019, 111 inspections of contractor companies were carried

- 170 -

Percentage of suppliers with whom the contractual relationship has been terminated as a result of the evaluation.

ENVIRONMENTAL

SOCIAL

0% 0%

out, of which 68 took place at the port operations and 43 at the mining operations. The main aspects evaluated were: waste management (recyclables, ordinary, hazardous and special waste); handling of chemical substances; hydrocarbons management; prevention and control of spills of hydrocarbons and chemical substances, and compliance with the environmental standards established in the SIG-2003 Environmental Guide for Monitoring Suppliers and Contractors.

The implementation of the Inspections Program has contributed to improving the contractors’ environmental performance and creating an organizational culture aimed at care for and protection of the environment.

Sustainability Report - 2019

(

Milestones Visits were made to all companies that represented a risk from an environmental and social point of view, ensuring that they comply with the Company’s requirements. In 2019, two chats on human rights and environmentally and socially sustainable development were held with contractors.

30 %

48.18 %

of total billings come from local companies.

{

A dual training pilot program was implemented in which the Company, contractors and the National Training Center (SENA in Spanish) trained 65 young men from the region in technical areas, offering them the opportunity to work with partners of the mining project.

of all companies that have contracts are local.

90.6 %

of the staff of companies that have contracts are from the Caribbean region.

Challenges 2020 Increase billings by local suppliers.

3%

Increase hiring of personnel from the Company’s area of influence, both suppliers and contractors.

3%

Hold awareness talks on human rights with managers and legal representatives of suppliers

2 chats - 171 -

Move forward with modifying the procedure to evaluate suppliers on social and human rights issues

ENVIRO NMENTAL PERFORMANCE

03 - 172 -

Sustainability Report - 2019

Environmental

performance STRENGTHEN THE BUSINESS CAPABILITIES THAT ENSURE WORLD-CLASS ENVIRONMENTAL PERFORMANCE.

- 173 -

ENVIRO NMENTAL PERFORMANCE

Water resource

management

For Drummond Ltd., collaborating in achieving global objectives such as the UN Sustainable Development Agenda is a mechanism that has proven to further contribute to achieving its Corporate Social Responsibility targets. From our water resource management, we contribute to:

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development • Transparency and citizen oversight

• Training and promotion • Peace and social dialogue

• Institutional and community strengthening

• Coexistence and conflict resolution

Strengthen local capacities for greater efficiency in public planning and management.

CSR Strategy Contribution to capacity building

Integral Development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Environmental performance • Environmental sustainability

• Education and training • Creating opportunities

• Conservation and restoration

• Work environment

Drummond Ltd.'s contribution to achieving the Sustainable Development Goals

- 174 -

Strengthen the business capabilities that ensure worldclass environmental performance.

Sustainability Report - 2019

Goals Goal 6.3: Improve water quality by reducing pollution.

Goal 6.4: Substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals and supply of freshwater to address water scarcity and substantially reduce the number of people suffering from water scarcity.

- 175 -

ENVIRO NMENTAL PERFORMANCE

{103-1}

DRUMMOND LTD. UNDERSTANDS THE IMPORTANCE OF WATER RESOURCES BOTH FOR NATURAL PROCESSES AND LIFE ITSELF, AND FOR THE COMPANY’S PRODUCTIVE ACTIVITIES. THIS REQUIRES MORE RESPONSIBILITY FOR ADEQUATELY MANAGING THIS IMPORTANT NATURAL RESOURCE IN THE DIFFERENT PHASES OF THE MINING PROCESS, AS WELL AS IN THE EFFICIENCY OF ITS USE FOR THE ENVIRONMENTAL CONTROL MEASURES ASSOCIATED WITH ATMOSPHERIC EMISSIONS. {103-2}

Regulatory compliance is the basis of Drummond Ltd.’s operation and environmental management.

For this reason, the Company has promoted awareness of the meteorological behavior behind climate variability and, therefore, the hydrology of the area where it operates, in order to understand how these variables interact, in order to project its availability and develop a water resource management strategy that ensures the sustainability of the business without unbalancing the environment’s ability to adequately provide eco-systemic services.

Regulatory compliance is the basis of Drummond Ltd.’s operation and environmental management. Maintaining itself as a company that abides by the law with principles established in its daily operations that allow it to reach this objective, requires pillars that determine the guidelines for proper management.

The Company has policies that cover the guidelines for the proper management of water resources, based on regulatory compliance, water conservation and sustainability:

Environmental policy https://www.drummondltd.com/ wp-content/uploads/Politica-deSostenibilidad-Ambiental-ENGFeb262020-1.pdf

Occupational health and safety and environment policy https://www.drummondltd.com/ wp-content/uploads/Health-andSafety-policy-2018.pdf

These policies provide the Company with a guiding tool to constantly identify and develop the best practices aimed at efficient water use.

Drummond Ltd.’s water resource management is based on regular environmental assessments.

- 176 -

These use the results of various monitoring activities that make it possible to collect valuable information to analyze and define improvements in the mining and operation processes, always with the aim of reducing the impact on natural resources and the communities.

Sustainability Report - 2019

Water Savings and Efficient Use plan

This is one of the Company’s main strategies to sustainably manage water resources in its various processes. It is cross-departmental and is based on a detailed understanding of the physical and biological environment in the area of operation, as well as the needs of the projects. The plan is aimed at reducing water consumption, adopting additional criteria, which focuses on complying with environmental regulations and reducing consumption, in order to contribute to preserving water resources in the region.

In the Water Savings and Efficient Use plan, the Company uses the following alternatives:

Install a collection and recirculation system for the water condensed as a result of the internal processes in the explosives and power plants, which would otherwise be lost through evaporation.

Rigorously control water leaks.

Build a network for the collection, storage, distribution, management and use of rainwater and runoff.

- 177 -

Use stored rain water for spraying roads to control particulate matter.

Promote best practices for domestic water use through awareness campaigns.

ENVIRO NMENTAL PERFORMANCE

{103-3}

To evaluate its work, the Company has different tools that allow it to assess its performance in managing water resources. Externally, through control and follow-up visits by the National Environmental Licensing Authority (ANLA in Spanish) and the Regional Autonomous Corporations (CAR in Spanish), the Company validates its compliance with environmental regulations and the commitments it has made to those institutions. Internally, it regularly evaluates management and performance indicators.

Additionally, public agencies such as the Comptroller General of the Republic, the Office of the Attorney General of the Nation and the National Mining Agency, and private institutions such as Bettercoal

or consultants hired by the company, frequently inspect Drummond Ltd.’s projects to check its work. Also, because the mining and port operations have ISO 14001:2015 certification, they are subject to constant internal and external audits that monitor its environmental management system, in order to maintain continuous improvement.

In the industry, one of the most valuable audits is the one conducted by Bettercoal, given its specialization in the coal industry. On May 20, 2019, the Company received its Public Assessment Report, which highlighted its environmental performance. Drummond Ltd.’s compliance status with the code in terms of its environmental principles is presented in the table below:

TABLE 27.

Bettercoal environmental results17 Meets

Substantially Meets

Partially Meets

Misses

ENVIRONMENT

The results show that the Company complies with principle 8.1, related to the implementation of practices that promote the sustainable and efficient use of natural resources in its operations.

17. Bettercoal Public Assessment Report: Drummond Ltd., 2019, [online]: https:// bettercoal.org/resource/drummond-ltdpublic-report/

Principle 8

8.1

Principle 9

9.3

9.1, 9.2

Principle 10

10.4, 10.7

10.1 - 10.3, 10.5, 10.6

The results show that the Company complies with principle 8.1, related to the implementation of practices that promote the sustainable and efficient use of natural resources in its operations; principles 9.1 and 9.2, which confirm its commitment to prevent pollution in its operations through the prevention, reduction and control of emissions into the water and the rehabilitation of contaminated sites;

The closure designs for the dumping areas, which include water reservoirs that improve the establishment of wildlife and biodiversity.

- 178 -

and principles 10.1 to 10.4, which require the inclusion of practices that protect and support biodiversity and the ecosystemic services affected by its operations, throughout the mine’s life cycle.

Additionally, the assessment report highlights Drummond Ltd.’s environmental management, evaluating some examples of good practices, such as:

The water use suppression system, based on the reuse or recycling of rainwater.

The Paujil reservoir water reserve, which regulates water availability for the communities during the dry season.

Sustainability Report - 2019

{303-1}

Interaction with water as a shared resource Given the nature of the mining projects, the Company interacts with water resources in different ways:

For the Company, water is an essential resource in its operations: PORT PROJECT

Rainwater

on average

it is captured in the operating areas and in external dumping areas to be stored temporarily and then conveyed through channels and pipes to treatment systems before being discharged into natural streams. Part of the stored water is used to control emissions of particulate matter through irrigation and sprinkling on roads and material loading areas.

Underground aquifers due to the excavation work done to extract the coal, a part of the aquifer units that transport the underground water is intercepted, causing infiltrations in the project’s pits. This water has a process similar to rain water, until it is returned to the environment through controlled and treated discharges.

97 %

corresponds to consumption from operational activities (receipt, handling and loading of coal), and the remaining

3%

is for domestic use and human consumption.

Additionally, in the mining operations, its use during 2019 was distributed as follows:

83 % Surface water it is captured from the Paujil reservoir, whose maximum storage capacity is 10 million cubic meters. Use of this water never exceeds the amounts approved by the environmental authorities.

It is normally for industrial use in various processes in the power plant.

Groundwater

Control of particulate matter emissions from both mining projects

13 % Industrial use

4%

Human and domestic consumption

It is worth noting that the Company does not use water resources to produce products or similar processes that transform it and affect its availability in the environment.

On the contrary, it is returned to the environment through evaporation or in treated discharges into natural streams.

captured from different deep wells at various points in the mining projects; its main use is domestic and for human consumption in the mining operations.

- 179 -

ENVIRO NMENTAL PERFORMANCE

Approach used to identify water-related impacts

The possible environmental impacts related to water resources are initially identified using the environmental impact assessment, which is conducted before operations begin and is updated when new areas or operational processes are necessary. In this environmental impact assessment, the different activities carried out by the project are reviewed, from the planning phase, through the operation’s activities and, finally, in the closure phases.

Before operation begins and while it is underway, monitoring programs are implemented to track the presence, evolution and magnitude of possible environmental effects related to water resources over time. These monitoring programs, in addition to following the effectiveness of the measures implemented to address environmental effects, also contribute to identifying new impacts.

Impacts on water created by the organization

The Company does not have significant effects on water sources, which is confirmed through the implementation of the Environmental Monitoring Program, which makes it possible to verify that water is collected without affecting the natural water sources. It is necessary to analyze the physiochemical and hydrological characteristics of the bodies of water granted in concession, as well as the treated wastewater and the receiving bodies of water. This monitoring guarantees Drummond Ltd.’s capacity to respond to situations in which the quality and quantity indicators of the water resources being managed are outside of their normal ranges.

An example of the implementation of the Environmental Monitoring Program for the benefit of the ecosystems present in the Company’s area of influence is the ability to know the amounts of water captured and discharged. In the dry season, for example, the Paujil channel must maintain an ecological flow of 50 liters/

second. The monitoring activities detect when the reservoir, due to its own capacity, does not provide the flow required to care for the flora and fauna downstream, and this makes it possible to activate a pumping system that guarantees the necessary flow.

Additionally, one of the critical factors for determining that there is no significant impact is that Drummond Ltd. does not make annual withdrawals greater than 5% of the volume of water in the reservoir. The water that is collected is allowed by the environmental authorities, and at no time does it exceed the approved limits. Additionally, the mining projects are located in the lower part of the basin, while the populations closest to the project that use water resources either for agricultural or domestic consumption, are in the middle and upper parts. Therefore, when the Company makes the respective collections, they have already been affected upstream by other economic or domestic activities.

The Company does not have significant effects on water sources, which is confirmed through the implementation of the Environmental Monitoring Program, which makes it possible to verify that water is collected without affecting the natural water sources.

- 180 -

Sustainability Report - 2019

Management of waterrelated impacts

Using the environmental impact identification and assessment exercises discussed above, the magnitude and probability of occurrence of these environmental effects are determined and, based on that analysis, different management measures are set up, which may be preventive in nature, corrective or, if necessary, compensatory.

Taking into account these levels of management, the first action is to avoid possible water-related impacts; to do so, before the start of operations, the mining plan considers alternatives to avoid and reduce impacts on surface water resources, one of which is to ensure that the dumping areas or progress of the mining activities do not affect water buffer or regulation areas.

During the operation, actions are taken to reduce water consumption, prevent contamination or treat it when necessary to improve its quality before discharging it into natural streams, complying with environmental regulations on the matter.

To responsibly manage use of water resources, a monitoring plan is in place at all times, which is used to constantly evaluate the efficiency of the water treatment systems, the quality and quantity of water and compliance with the regulations on our wastewater and the main changes in the physicochemical characteristics of the waters from the natural streams found in our areas of influence. We can also monitor groundwater levels through the network of piezometers installed around the mining projects, and the amount of water used in the different operations at the mining and port projects. This environmental monitoring plan had a total of 364 stations in 2019.

It is also important to note that the company has an environmental laboratory to conduct specific water and air quality

- 181 -

tests, and which has proven useful in identifying situations that may arise in the operation, in order to make decisions for immediate implementation in response to potential impacts. This makes it possible to cover the limitation of external labs that may not have the capacity to respond in a timely manner to some specific situations.

Similarly, procedures have been put in place to respond to requests, complaints or claims that, along with the monitoring results, help us to identify possible effects and address the needs or concerns of the local communities and water users in the area. Training talks are also held for our employees and contractors to communicate different actions regarding the efficient use of water resources, so they can contribute to their implementation.

Finally, the protection of natural areas for more than 25 years has allowed for the conservation and restoration of the basins of the Sororia River, the San Antonio and Las Ă nimas creeks and the Paraluz and Garrapata streams. The continuity of both the riparian forests from this water system and from other ecosystems for all these years is reflected in water regulation, water quality and existence of habitats (food and shelter) for biodiversity, eco-systemic services that benefit users in the lower part of the basins, who have the necessary flow for their domestic and commercial activities even during the dry season, provided naturally or through pumping in the case of the San Antonio creek, where the company has a positive impact on economic activities that could be affected during the summer season.

Thanks to Drummond Ltd.’s management of water resources, as well as the forests and areas in recovery within its projects, the ecological functioning of a large portion of the region where it operates has improved significantly.

ENVIRO NMENTAL PERFORMANCE

TABLE 28.

Work with suppliers

Work with suppliers

Mine

Initiatives with suppliers to help them improve their water management practices

Number of suppliers involved

The Company has promoted and organized some of the contractors that are responsible for domestic work and food preparation in the camps into water advocacy groups.

The activities that have been agreed to with these contractors are:

4

Results of the collaboration

• Conducting educational campaigns.

• Environmental awareness campaigns about efficiency, the use of water-saving devices and changes in water consumption habits.

• During 2019, there was a cumulative savings of

m3

9,494

of water in the mining projects’ camps.

Periodic review of the status of valves and pipes, with the aim of detecting and correcting leaks that may occur within the system to supply water resources to the camps.

• Reduce and/or maintain water consumption in the camps.

1

TABLE 29.

Work plans with suppliers

PLAN

OBJETIVE

Future plans and objectives to work with suppliers and reduce water-related impacts

Environmental education and awareness campaigns on efficient water use and changes in water consumption habits.

Reduce water consumption and avoid contamination of water resources.

- 182 -

Sustainability Report - 2019

Initiatives with suppliers to help them improve their water management practices

Number of suppliers involved

Results of the collaboration

Maintain the reuse of condensed water at 10% in the power plant.

1

33,129 m

Reuse the water condensed from the cooling of machines in the emulsion plant.

1

12,523 m

Training for contractor personnel through regular training talks.

All contractors

Reduce consumption and avoid water pollution.

3

of condensed water reused.

3

of condensed water reused.

Port

23

Trainings on the efficient use of water resources.

Training of contractor company personnel.

contractor companies

PLAN

OBJETIVE

PLAN

OBJETIVE

Reuse of water condensed in the emulsion plant.

Reuse at least 90% of water condensed from the cooling of machines.

Reuse of water condensed in the power plant.

Maintain the reuse of condensed water at 10% of cumulative consumption from the Paujil reservoir.

- 183 -

ENVIRO NMENTAL PERFORMANCE

Water-related goals and objectives

The goals and objectives at Drummond Ltd. are part of the Water Savings and Efficient Use Program (PAUEA, in Spanish), which is reviewed every five years and is approved

by Corpocesar. This plan includes different actions for each of the water concessions approved for the mining projects, and it conforms to the regulatory framework established under Law 373 of 1997, considering that the program covers a set of projects and directed actions that users of water resources propose and must implement to use them efficiently.

established in the guidelines issued in 2002 and 2018 by the Ministry of Environment, Housing and Territorial Development, now the Ministry of Environment and Sustainable Development, the latter being aligned with the Sustainable Development Goals (SDGs). In this process, the Company considered, among other aspects, the local context of water demand, especially with regard to the decrease in supply in the driest months of the year, so several strategies are aimed at reducing consumption during these periods.

The program implemented by Drummond Ltd. was built based on the strategies for saving and efficiently using water

The most ambitious goals of the Water Savings and Efficient Use Program for 2020 include:

Maintain the reuse of condensed water at

Reuse a minimum of

10 %

90 %

of cumulative consumption from the Paujil reservoir.

Reduce consumption from the Paujil reservoir by

200,000 m

3

of the condensed water coming from the cooling of machines in the emulsion manufacturing plant.

during 2020; this volume will be recirculated from internal pools.

Managing impacts related to water discharges {303-2}

Drummond Ltd.’s mining and port operations both have regulatory requirements for generating discharges: Resolution 631 of 2015. To request approval of discharges by the environmental authority (ANLA), discharge assimilation models were run, as required under Sole Regulatory Decree 1076 of 2015.

Additionally, Puerto Drummond has established environmental controls for managing wastewater, in accordance with the use that was granted. In the case of industrial wastewater, it is transported

- 184 -

through perimeter channels from the coal yards to a treatment system consisting of three sedimentation pools that work in parallel. The effluent leaves the system toward the final treatment pool, called Pool number 4, where it is stored and discharged by overflow. To treat domestic wastewater, it is sent through the sewer network to the Wastewater Treatment Plant. Both industrial and domestic wastewater, after being treated, converges in Pool number 4, and from there they are discharged into the hygrophytic forest.

Sustainability Report - 2019

{303-3} {303-5}

Water extraction Water consumption Water resources at Drummond Ltd.’s mining projects are collected by pumping, and water uptake at the Company takes place mainly in the Paujil reservoir. It is important to mention that no water is consumed in areas of water stress. The Company also has meters to quantify the collections from the authorized

underground concessions. Additionally, the consumption of surface water and bilge water is estimated based on the time of use of the pumps and their measured flow rates.

Below is the historical consumption of water resources at Drummond Ltd.:

TABLE 30.

Drummond Ltd. water consumption (m3)

MINE

Surface water (m3)

Groundwater (m3)

Bilge (or mining) water (m3)

2019

1,165,838

433,177

7,866,894

9,465,909

2018

634,267

353,825

8,203,354

9,191,446

2017

860,793

414,017

7,284,550

8,559,360

2016

1,436,313

362,457

7,498,425

9,297,195

2015

1,782,860

371,044

8,970,858

11,124,762

2014

1,987,050

364,772

8,733,893

11,085,715

Rainwater, surface water and groundwater collected directly and stored by the Company Hm3 2019

26.63

2018

20.30

2017

20.15

2016

36

- 185 -

Total (m3)

ENVIRO NMENTAL PERFORMANCE

In the case of Puerto Drummond, it has a concession for surface water collected through the Nirvana creek, a channel of the Toribio River that begins in the foothills of the Sierra Nevada de Santa Marta, in the municipality of CiĂŠnaga, on the edge of the Danta at 1,500 meters above sea level and empties into the north, from east to west, in the Caribbean Sea, with Puerto Drummond Ltd. being one of the last users.

Additionally, the port has a groundwater concession that authorizes the collection of water through pumping from 15 deep wells, which alternate use to adjust to the concession granted.

Puerto Drummond has meters to quantify the collections made in the authorized concessions. Below are the historical consumption results:

TABLE 31.

Drummond Ltd. water collection

Surface water (m3)

Groundwater (m3)

2019

560,174

655,347

1,215,521

2018

464,185

621,286

1,085,471

2017

486,107

656,133

1,142,240

2016

356,574

683,788

1,040,362

- 186 -

Total (m3)

Sustainability Report - 2019

Discharges {303-4}

Drummond Ltd. has monitoring stations in the runoffs from the wastewater treatment systems at its mining projects, in order to obtain results with the reliability and timeliness that decisions on this matter require. All results are issued by laboratories duly accredited by the Institute of Hydrology, Meteorology and Environmental Studies of Colombia (IDEAM, in Spanish).

The discharge flows come from automatic level meters located near the discharge points, based on which, and with gauged sections, the output flows from the treatment systems are known at all times. Below is detailed information on the water discharges in the mining projects:

TABLE 32.

Discharges from Drummond Ltd. mining projects

GARRAPATAS STREAM: E 1054054 - N 1548316 DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

27.6

201.4

1,463.3

11,168,461

2018

46.3

312.4

1,569.7

2017

50

258.5

444.6

2016

67.9

341.4

2,400.8

PARALUZ STREAM: E 1061286 - N 1554187 DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

9.3

76.9

72.2

5,315,147

2018

18.0

99.4

75.3

2017

18.2

85.6

72.4

2016

26.5

145

825.7

- 187 -

ENVIRO NMENTAL PERFORMANCE

PAUJIL CHANNEL: E 1067239 - N 1547534 DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

0.9

8.0

2.4

549,806

2018

1.5

11.1

21.6

2017

1.1

5.5

2.7

2016

4.1

18.2

7

SAN ANTONIO CREEK NO. 4 (POOL 7): E 1062298 - N 1547956 DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

0.0

2

16

1,108,685

2018

9.4

56.6

256.7

2017

31.7

157.5

222.6

2016

24

127.9

264.1

SAN ANTONIO CREEK NO. 4 (POOL 8) *

*

The San Antonio creek number 4 (pool 8) and San Antonio creek number 4 (pool 9) points went into operation in 2019; for this reason, no previous data is presented.

DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

0.3

2.2

2.5

124,602

2018

-

-

-

2017

-

-

-

2016

-

-

-

- 188 -

Sustainability Report - 2019

SAN ANTONIO CREEK NO. 4 (POOL 9) * DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

0.6

12.4

6.1

856,915

2018

-

-

-

2017

-

-

-

2016

-

-

-

EL MOCHO STREAM: E 1053470 - N 1566304 DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

0.3

3.9

1.9

232,537

2018

-

-

-

2017

1.4

6.9

20.6

2016

3.3

14.8

8.5

EL ZORRO CREEK (D3): E 1061836 - N 1570451 DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

20.9

241.4

604.7

12,953,088

2018

16.2

120.7

1.283.1

2017

87.6

420.7

976.1

2016

71.6

368.6

2.621.1

- 189 -

ENVIRO NMENTAL PERFORMANCE

EL ZORRO CREEK (D4): E 1063333 - N 1569004 DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

4.7

50.0

80.3

3,454,445

2018

2.7

18.1

212.5

2017

6.2

30

132.5

2016

5.1

23.5

45.5

EL ZORRO CREEK (D5): E 1066368 - N 1572010 DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

1.8

12.9

22.9

846,873

2018

0.2

1.1

2.9

2017

0.2

0.9

1.1

2016

7.8

42.3

44.2

DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

79.84

638.14

2.281.84

36,610,560

2018

74.86

542.35

5.368.35

2017

221.2

1.095.3

2.110.1

2016

226.5

1.159.2

6.290.8

TOTAL

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Sustainability Report - 2019

With the information collected, it is not possible to differentiate fresh water from other water in the discharges because the concentration values of total dissolved solids are highly variable over time, since the discharges depend on the amount and frequency of precipitation. It is important to mention that the proportion of compliance with the parameters established in Article 10 of Resolution 631 of 2015 reached 98.4%, with some specific situations associated

with extreme weather conditions that required the implementation of action plans to correct for them.

In the case of Puerto Drummond, industrial and domestic wastewater, after treatment, converges in pool number 4, and from there it is discharged by overflow into the hygrophytic forest. Below is detailed information on the discharges at Puerto Drummond:

TABLE 33.

Discharges from Puerto Drummond

HYGROPHYTIC FOREST: E 985092 - N 1715645 DBO (ton/year)

DQO (ton/year)

SST (ton/year)

Surface water discharges year m3 - 2019

2019

13.5

27.2

9.4

121,522

2018

1.7

7.5

16.1

2017

0.32

1.39

1.44

2016

0.2

0.9

2.4

At Puerto Drummond, quarterly monitoring is carried out at the wastewater discharge point, in order to obtain reliable data. All results are issued by laboratories duly accredited by the Institute of Hydrology, Meteorology

{DLTD-03}

and Environmental Studies of Colombia (IDEAM, in Spanish). This data is compared to the quality criteria established in Article 72 of Decree 1594 of 1986, achieving 100% compliance with the criteria.

To execute all the strategies defined by the Environmental department related to managing water resources, during 2019 US $2,975,704 was invested in the mining projects, and US $419,380 at Puerto Drummond, and as a result there has been a positive impact on the protection of water sources and the availability of clean, high-quality water for the population.

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ENVIRO NMENTAL PERFORMANCE

Case studies The first half of 2019 was a difficult period for different communities from the city of Santa Marta due to water scarcity, which led to the declaration of a public emergency in the city through Decree 082 of April 15, 2019.

In response to this situation, Drummond Ltd. joined the efforts to support the water supply in different sectors of Santa Marta, cooperating in the managing and the loading of tankers identified and provided by the public utilities company for the district of Santa Marta, ESSMAR E.S.P., providing 7,177,000 liters of water from Puerto Drummond.

To ensure the quality of the water resource, transportation was carried out in the vehicles provided by ESSMAR E.S.P. with strict control and supervision of the cleaning and emptying of the tanker trucks by the Company’s Environmental, Industrial Safety and Security departments.

In this way, Drummond Ltd. provided the necessary support to alleviate the impacts caused by the water scarcity throughout this difficult time.

- 192 -

Sustainability Report - 2019

(

{

ďƒ˜ Milestones During 2019, 33,129 m3 of condensed water was collected and reused in our power plant, significantly exceeding the planned goal of 31,433 m3/year, and these levels are expected to be maintained in 2020.

During 2019, the Company achieved a consumption rate of 0.29 m3 of water/ton of coal exported, showing a decrease as compared to the rate from 2018 (0.30 m3/ton of coal exported).

In 2019, the Company collected and reused 12,523 m3 of condensed water in the emulsion manufacturing plant, maintaining a reuse volume in this process greater than 90%.

In 2019, Puerto Drummond only used 37% of the water granted in concession, thanks to its Water Savings and Efficient Use plan.

During 2019, as the result of a public emergency caused by the severe drought in Santa Marta, the Company donated 7,177,000 liters of water to the city, in addition to 68,137 liters to help put out the forest fires that broke out near the Sierra Nevada de Santa Marta.

Challenge 2020 By 2020, collect and reuse a volume of condensed water ≼ 31,433 m3/year at the Power Plant

Maintain the volume of water collected from the Paujil reservoir – Pribbenow mine at levels below 860,000 m3/year

- 193 -

At Puerto Drummond, keep use of the flow granted in concession below 40%.

ENVIRO NMENTAL PERFORMANCE

Air

quality

For Drummond Ltd., collaborating in achieving global objectives such as the UN Sustainable Development Agenda is a mechanism that has proven to further contribute to achieving its Corporate Social Responsibility targets. From our air quality management, we contribute to:

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development • Transparency and citizen oversight

• Training and promotion • Peace and social dialogue

• Institutional and community strengthening

• Coexistence and conflict resolution

Strengthen local capacities for greater efficiency in public planning and management.

CSR Strategy Contribution to capacity building

Integral Development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Environmental performance • Environmental sustainability

• Education and training • Creating opportunities

• Conservation and restoration

• Work environment

Strengthen the business capabilities that ensure worldclass environmental performance.

Goals Drummond Ltd.'s contribution to achieving the Sustainable Development Goals

- 194 -

Own goal: Implementing strategies for the prevention and control of air quality, which include not only technically viable options, but also ones that are environmentally effective and socially beneficial, is essential to care for the health of workers and the surrounding communities, as well as the natural environment around the projects.

Sustainability Report - 2019

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ENVIRO NMENTAL PERFORMANCE

{103-1}

OPEN-PIT MINING AS A TECHNIQUE FOR COAL PRODUCTION INVOLVES TASKS, SUCH AS THE REMOVAL OF SOIL, OVERBURDEN AND COAL AND THE MOVEMENT OF TRUCKS AND LIGHT VEHICLES, THAT ARE RESPONSIBLE FOR PRODUCING EMISSIONS OF PARTICULATE MATTER WITHIN THE COMPANY’S OPERATIONS.

Additionally, the need to use fuels and refrigerants in vehicles and machinery means that Drummond Ltd. must manage the greenhouse gas (GHG) emissions generated.

For this reason, for Drummond Ltd., the implementation of strategies to prevent and control the generation of particulate matter,

{103-2}

which include options that are not only technically viable but also environmentally effective and socially beneficial, is essential to care for the health of its workers and the surrounding communities, as well as the quality of the natural environment around the mining and port projects.

With this objective, Drummond Ltd. has developed an Air Quality Environmental Management and Monitoring Program, which identifies and evaluates the effects of each process, and establishes the mitigation and control activities, as well as the necessary follow-up activities.

Impact identified Emissions of particulate matter generated by blasting (low intensity environmental impacts).

Control and mitigation actions Implement the proper blast design and carry it out at the time when there will be the least dispersion of particulate matter.

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Impact identified Emissions of particulate matter at blasting fronts.

Control and mitigation actions Provide turbine-type mist generating equipment (fog cannons), which operate on the shovels to control emissions when loading trucks.

Sustainability Report - 2019

Impact identified Emission of particulate matter in dumping areas.

Control and mitigation actions The closed dumping areas are rehabilitated as soon as possible, implementing the plant restoration management program.

Impact identified Water consumption for spraying.

Control and mitigation actions Water reduction campaigns accompanied by the use of chemical dust suppressants (biodegradable).

Impact identified Emissions of particulate matter generated by transportation within the projects, which represents 60% of the operation’s total emissions.

Impact identified Emissions of particulate matter generated at material transfer points.

Control and mitigation actions Encapsulation of dust and coal particles through water spraying processes, using micro-sprinklers, tanker trucks and cannons.

Control and mitigation actions Reduce the amount of material to be transferred to outside dumps, increasing backfilling.

Locate soil and/or overburden storage yards closer to the areas of operation to reduce distances.

Scheduled and continuous irrigation of project roads.

Control vehicle speed.

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ENVIRO NMENTAL PERFORMANCE

Drummond Ltd. has identified and evaluated the sources of emissions in the communities to identify the contribution from the Company’s emissions and detect contributions from other sources.

Therefore, as part of its environmental responsibility strategy, Drummond Ltd. has identified and evaluated the sources of emissions in the communities to identify the contribution from the Company’s emissions and detect contributions from other sources, in order to promote public management to reduce and control them.

This has made it possible to show that there are more significant sources of emissions for the communities than those from the Company’s mining projects and, therefore, inter-institutional management in the region has been reinforced to include actions that make it possible to palpably improve air

quality in the communities and their quality of life.

For this reason, and taking into account the dynamics of the populations present in the area of influence of Drummond Ltd.’s operations, analyses are conducted to identify the activities that have a negative impact on the air quality of the communities, such as, for example, the traffic studies and emissions inventories also carried out within the town of La Loma.

Below, we present the impacts on air quality created by causes external to the Company, but that Drummond Ltd. seeks to manage:

Impact not caused by Drummond Ltd.

Traffic on urban roads

Trash burning Forest fires

Contribution to mitigation Proposals to reorganize traffic, and to pave and wash down critical roads, such as those executed in La Loma.

Contribution to mitigation Support for firefighters in the area with a tanker truck and access to water stored in the mine.

Contribution to mitigation Economic and logistical support for the implementation of an Integrated Solid Waste Management system in the town of Boquerón.

Direct and constant communication with the group of firefighters from the central region of Cesar to respond to fires outside the Company’s property.

{103-3} To determine the effectiveness of the actions and strategies established, measurements are taken in real time of the PM10 emissions originating from the mining projects, ensuring that they remain below the levels that could affect the air quality of the nearby communities, and executing control actions and contingency plans in response to events that could have an impact on them.

The mining and port projects are under the surveillance and control of the National Environmental Licensing Authority (ANLA) and the Regional Autonomous Corporations (CAR), which make periodic visits to confirm compliance with their obligations.

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Sustainability Report - 2019

Direct GHG emissions (scope 1) {305-1}

To calculate GHG emissions in the mining projects, CO2, CH4 and N2O were included. For biogenic emissions, the FECOC 2016 factors for Colombia were used, among others. The emissions caused by the use of explosives were assumed based on Australian guidelines,18 and those caused by coal seams were evaluated by assigning UPME factors.19 The consolidation approach for emissions depends on operational control.

GRAPHIC 24.

Direct GHG emissions at the mine - ton COâ‚‚eq. Scope 1 1,542,950

1,555,270

1,347,572

2017

2018

2019

1,600,000 1,500,000 1,400,000 1,300,000 1,200,000 1,100,000 1,000,000 900,000 800,000

In terms of the port, in 2019, the calculation was made through a bottom-up exercise, to directly apply the emissions factors available and parameterized for Colombia:

GRAPHIC 25.

Direct GHG emissions at the mine - ton CO2eq. Scope 1

18. National Greenhouse Accounts - NGA (2008) Factors, Australia’s Department of Climate Change, consultado [online] http://www. globalbioenergy.org/uploads/ media/0801_Australia_-_ National_Greenhouse_ Accounts__NGA__factors.pdf 19. Mining and Energy Planning Unit - UPME (2007).

Emission Factors from the Colombian National Interconnected System.

82,188

76,091

75,889

2017

2018

2019

84,000 82,000 80,000 78,000 76,000 74,000 72,000

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ENVIRO NMENTAL PERFORMANCE

Indirect GHG emissions when generating energy (scope 2) {305-2}

Part of the characteristics of the mining projects is that demand for electrical energy is met through internal generation through a plant, which is owned by the Company. For this reason, it is included in Scope 1.

In the case of the port operations, to estimate the amount of indirect GHG emissions from power generation, CO2, CH4 and N2O gases were taken into account, and the FECOC 2017 factors for Colombia were used.

The results are shown in the following graph:

GRAPHIC 26.

Indirect GHG emissions at the port - ton CO2eq. Scope 2 12,330

12,914

12,809

2017

2018

2019

13,000 12,500 12,000 11,500 11,000 10,500 10,000

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Sustainability Report - 2019

NOx, SOx and other significant atmospheric emissions20

To quantify emissions of particulate matter, AP42 factors from the United States Environmental Protection Agency (EPA)21 are used. According to the results, between 2015 and 2019, at our Pribbenow Mine, emissions of PM10 particulate matter showed a decrease compared to the previous two years; the same occurred at the El Descanso Norte mine.

{305-7} GRAPHIC 27.

PM10 en ton/aĂąo 10,000 8,000 6,000

Pribbenow Mine El Descanso Mine

4,000

PM10 2019 Descanso Norte Mine ton/year

1,959

2,000 0

8,256

2015

2016

2017

2018

2019

PM10 2019 Pribbenow Mine ton/year

No graph of PM2.5 is presented because this pollutant only began to be analyzed in 2018. Therefore, only the data for 2018 and 2019 are reported: PM2.5 Pribbenow Mine ton/year

PM2.5 Descanso Norte Mine ton/year

369

1,074

2019

2019

357

1,123

2018

2018

At Drummond Ltd., the internal particulate matter monitoring network from the mining projects were used as support, to prevent this material from being dispersed by factors such as the wind toward the communities in our area of direct and indirect influence.

Through these networks, we have real time measurements that make it possible to detect the operational factors that could negatively influence the air quality of the surrounding communities, and take the relevant steps to address them in a timely manner and avoid affecting them through the emissions generated by the operation.

It is important to reiterate that, as of 2018, TSP emissions are no longer measured at the mining or port operations because Colombian legislation, under Resolution 2554 of November 1, 2017, does not consider them to be a pollutant.

- 201 -

20. For Drummond Ltd., NOx and SOx emissions are not significant, since measurements taken at the projects have hydrically shown values that comply with environmental regulations, even below the quantification limits used in the analysis methods.

21. Air Emissions Factors and Quantification, AP-42: Compilation of Air Emissions Factors (2009), United States Environmental Protection Agency – EPA: https://www. epa.gov/air-emissions-factorsand-quantification/ap-42compilation-air-emissions-factors

ENVIRO NMENTAL PERFORMANCE

{DLTD-05}

Climate change

Drummond Ltd.'s work has been focused on different strategies related to the air quality component, and with the aim of reducing GHG emissions from the use of fossil fuels in light equipment.

Drummond Ltd.'s work has been focused on different strategies related to the air quality component, and with the aim of reducing GHG emissions from the use of fossil fuels in light equipment. The Company has implemented a plant to convert its fleet of light vehicles to use CNG, which significantly reduced GHG emissions. At the end of 2019, of a total of 473 pieces of equipment, 239 have a CNG system, equivalent to 51% of the total fleet.

Additionally, to produce energy, the Company has a turbo-generator plant that uses mostly natural gas, for which emissions are much lower than when using another type of fossil fuel. Moreover, the diesel that the Company uses in its operations is ULSD (Ultra Low Sulphur Diesel). ULSD is a clean burning diesel, containing 97 % less sulfur than low sulfur diesel; its content is less than 10 ppm.

These actions have allowed for a significant reduction in GHG emissions in recent years.

The results of the GHG estimate identified that total emissions in 2018, including Scopes 1 and 2 for the mine and port operations, were:

ton CO2eq.

ton CO2eq.

2018

2019

1,644,740 1,436,271 13%

decrease compared to 2018 emissions

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Sustainability Report - 2019

(

Milestones The Company has 33 tanker trucks: 13 at the Pribbenow Mine, 17 at the El Descanso Mine, and 3 at the port. The Company has the largest fleet of tankers per unit of production in the country and with the largest watering capacity.

In 2019, the resources allocated to manage air quality at the mining projects totaled US $17,428,033 and US $179,581 for the port project.

There is an internal realtime air quality monitoring network for each of the mining projects, which makes it possible to have more effective operational controls.

During 2019, daily emissions of particulate material at the port were kept below 300 µg/m3.

{

Air quality management during 2019 made it possible to achieve daily emissions of PM10 particulate matter from the mining projects of less than 300 µg/m3.

Challenge 2020 To finalize the epidemiological study to determine whether there is any relationship between personal risk factors, access to healthcare and the environment, and the respiratory and dermatological health of residents of the area of influence of the coal mining operations in the center of the Cesar Department22.

22. In the event that there is a direct relationship between the health of the neighboring communities and the activities associated with the mining operations, a strategy will be designed and implemented to take the necessary measures.

- 203 -

To keep daily emissions of particulate matter at the port below 300 µg/m3.

To reduce daily emissions of PM10 particulate matter at the mining projects to less than 260 µg/m3.

ENVIRO NMENTAL PERFORMANCE

Protecting

biodiversity

For Drummond Ltd., collaborating in achieving global objectives such as the UN Sustainable Development Agenda is a mechanism that has proven to further contribute to achieving its Corporate Social Responsibility targets. From our protection of biodiversity, we contribute to:

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development • Transparency and citizen oversight

• Training and promotion • Peace and social dialogue

• Institutional and community strengthening

• Coexistence and conflict resolution

Strengthen local capacities for greater efficiency in public planning and management.

CSR Strategy Contribution to capacity building

Integral Development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Environmental performance • Environmental sustainability

• Education and training • Creating opportunities

• Conservation and restoration

• Work environment

Drummond Ltd.'s contribution to achieving the Sustainable Development Goals

- 204 -

Strengthen the business capabilities that ensure worldclass environmental performance.

Sustainability Report - 2019

Goals • Goal 15.1: Ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and the services they provide that are located within Drummond Ltd.’s operations.

• Goal 15.2: Promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests and substantially increase afforestation and reforestation at Drummond Ltd.’s operations.

• Goal 15.4: Ensure the conservation of mountain ecosystems to enhance their capacity to provide benefits that are essential for sustainable development.

• Goal 15.5: Take urgent and significant action within Drummond Ltd.’s operations to reduce the degradation of natural habitats, halt the loss of biodiversity, protect threatened species and prevent their extinction.

• Goal 15.a: Mobilize and significantly increase financial resources from all sources to conserve and sustainably use biodiversity and ecosystems.

- 205 -

ENVIRO NMENTAL PERFORMANCE

{103-1}

DRUMMOND LTD.’S MINING AND PORT OPERATIONS ARE LOCATED IN A TROPICAL DRY FOREST, ONE OF THE COUNTRY’S MOST THREATENED ECOSYSTEMS. THIS, IN ADDITION TO THE DEGREE OF INTERVENTION THAT OPEN-PIT MINING NECESSARILY INVOLVES, THAT IS, THE COMPLETE REMOVAL OF VEGETATION, SOIL AND WILDLIFE, MAKES PROTECTING ITS BIODIVERSITY ONE OF THE GREATEST CHALLENGES IN TERMS OF ENVIRONMENTAL MANAGEMENT, AND REPRESENTS A GREAT COMMITMENT TO SOCIETY FOR THE COMPANY. WE MUST USE OUR BEST TECHNICAL AND ECONOMIC EFFORTS TO AVOID, PREVENT, MITIGATE AND COMPENSATE FOR THE IMPACT CAUSED ON THE ECOSYSTEMS, AND IN THE ECOLOGICAL RECOVERY OF THE SURFACE THAT HAS BEEN DISTURBED.

Drummond Ltd. must compensate for the impacts that, because of their magnitude, have not been prevented, controlled or mitigated.

{103-2} Coordinating mining development while protecting biodiversity involves designing strict management protocols to have the least impact on biological communities. These protocols are based on exhaustive and systematic knowledge of the ecosystem’s compartments, through periodic monitoring of the areas in conservation

or that are in the ecological recovery process. All of this ensures that the management measures will be much more effective and that mining will be an opportunity for understanding and protecting the country’s biodiversity.

The actions described below make up the strategy created by the Company on this matter:

Protect, preserve and restore any natural areas that will not be disturbed (streams, forests, grasslands).

Before logging, rescue seedlings and seeds from the most ecologically important forest species.

Propagate native species from the tropical dry forest in the forest nurseries at the mine and port.

Complete a rigorous planning exercise to only disturb those areas that are strictly necessary.

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Sustainability Report - 2019

{103-3} The strategy developed

by Drummond Ltd. related to protecting biodiversity is evaluated using different mechanisms:

Recover the soil bank from the disturbed areas.

Rescue animals that are at risk or that represent a risk at the mining and port operations.

1

Internal protocols for monitoring the progress of the environmental management system’s processes and indicators, which ensure that the technical team is always in a process of self-evaluation and continuous improvement.

2

Assist in the ecological recovery process in the dumping areas and diverted riverbeds.

Make all employees, contractors and visitors aware of respecting and protecting biodiversity.

Before doing work that would disturb land or aquatic ecosystems, relocate wildlife using a displacement, rescue and release protocol.

Monitoring and control by the environmental authorities (national and regional) that, based on visits to the projects and reviews of documents, verify compliance with the obligations arising from the environmental licenses and permits for the use and exploitation of natural resources. Their opinions regarding the Company’s environmental performance are formalized through administrative orders.

3 Additionally, Drummond Ltd. must compensate for the impacts that, because of their magnitude, have not been prevented, controlled or mitigated. To do so, it has an Environmental Compensation Program designed based on three strategies: conserving fragments of natural ecosystems, restoring degraded areas, and promoting sustainable productive practices such as agroforestry and silvopasture systems. The program seeks

to create a biological corridor between the Zapatosa swamp, the Cesar river valley and the Perijá mountain range. It will be implemented on properties whose owners, occupants or holders voluntarily decide to participate in the program through an agreement that assigns them benefits for preserving, restoring and implementing sustainable agricultural production practices in strategic areas to consolidate the corridor.

- 207 -

Community visits to the mining and port operations, which make it possible for third parties to directly verify Drummond Ltd.’s environmental work, and conduct a social evaluation or validation of it.

ENVIRO NMENTAL PERFORMANCE

Habitats preserved, restored or being compensated {304-3}

Ensuring the preservation and protection of biodiversity is one of the primary objectives of the Company’s environmental management work. For this reason, Drummond Ltd. conducts periodic biotic studies to learn about and understand the status and functioning of the ecosystems where the operations take place.

Based on the results, management protocols are designed and implemented in each stage of the projects, in order to avoid, control, mitigate and compensate for the impacts on flora and fauna.

Below, tables 34 and 35 describe the areas in which some of these protocols are being implemented, both at the mines and the port:

TABLE 34.

Habitats preserved, restored or being compensated at the mine

SORORIA RIVER BASIN

Status: Compensated – Restoration DESCRIPTION Sororia River Colombia, municipality of La Jagua de Ibirico AREA: 11 ha.

The restoration process of the areas where the measures were implemented is progressing in accordance with the established goals.

Guaranteeing the conservation and protection of biodiversity is one of the objectives primordial of the environmental management of the company.

The Office of Forests, Biodiversity and Ecosystem Services of the Ministry of Environment and Sustainable Development (MADS in Spanish), as well as the National Environmental Licensing Authority (ANLA) and the Regional Autonomous Corporation of Cesar (Corpocesar) verified the project’s progress during 2019.

Status: Compensated – Preservation DESCRIPTION Sororia River Colombia, municipality of La Jagua de Ibirico AREA: 382 ha The areas remain in a good state of conservation.

The Office of Forests, Biodiversity and Ecosystem Services of the Ministry of Environment and Sustainable Development (MADS), as well as the National Environmental Licensing Authority (ANLA) and the Regional Autonomous Corporation of Cesar (Corpocesar) verified the project’s progress during 2019.

- 208 -

COMMENTS In 2019, monitoring was conducted to establish the progress of the areas undergoing restoration.

The results were positive in terms of the successional state of the vegetation and the production of the 260 water sources identified.

Currently, a project is being designed to support environmental protectors with the maintenance of the agroforestry systems that are part of the program.

Sustainability Report - 2019

NORTH DUMPING AREAS, E1 AND E2

Status: Recovery

DESCRIPTION North Dumping Areas, E1 and E2.

Colombia, municipality of La Jagua de Ibirico AREA: 205.62 ha.

COMMENTS During 2019, 194,310 native trees were planted in the North Dumping Area.

At the end of 2019, the implementation of the ecological protocol was completed in 205.62 ha of the North Dumping Area. Additionally, the land preparation phase began in the E1 and E2 dumping areas. In E1, progress was made on the morphological reconfiguration (slope leveling) of 36.86 ha, and in E2, on the construction of 0.99 ha of the water management system.

The implementation of the recovery process in the affected areas is verified by the National Environmental Licensing Authority (ANLA), the entity in charge of monitoring compliance with the legal-environmental obligations derived from the environmental licenses for the mining projects.

PAUJIL AND SAN ANTONIO CANALS Status: Recovered

DESCRIPTION Paujil and San Antonio Canals Colombia, municipality of La Jagua de Ibirico AREA: 17.7 ha.

The Paujil and San Antonio canals are the result of the diversion of the natural riverbed of the Paujil canal and the San Antonio stream, projects that were executed years ago at the La Loma – Pribbenow Mine coal project.

In 2019, the protocol for the recovery of affected areas was implemented along some sections of the banks of the canals where the expected results were not obtained. The two areas total 17.7 ha, distributed between the Paujil canal (9.55) and the San Antonio canal (8.15). In the first, the process reached the revegetation stage and, in the second, only the ground preparation stage was completed. The sowing and planting will take place in 2020.

The implementation of the recovery process in the affected areas is verified by the National Environmental Licensing Authority (ANLA), the entity in charge of monitoring compliance with the legal-environmental obligations derived from the environmental licenses for the mining projects.

- 209 -

COMMENTS During 2019, 9,025 native trees were planted in the Paujil canal.

ENVIRO NMENTAL PERFORMANCE

TABLE 35.

Habitats preserved, restored or being compensated at the port

TORIBIO RIVER BASIN

Status: Compensated – Restoration

DESCRIPTION Toribio River Basin Colombia, city of Santa Marta AREA: 26 ha.

In 2019, the floristic characterization was completed for the area where the Port Forestry Compensation Program was implemented, in order to evaluate the progress of the restoration process.

According to the analysis of the structure and composition of the plant community, it was established that the trees already planted have an average height of 6 m, with species such as Cassia fistula (golden shower), Annona muricata (soursop), Inga sapindoides (guamo), Pterocarpus acapulcensis (sangregao) and Piper aduncum (spiked pepper), standing out due to their abundance and dominance.

COMMENTS The compensation program has improved the ecological dynamics of the forest, since the diversity of flora and fauna species has increased, and the natural regeneration process has benefitted.

The compensation program is verified by the Regional Autonomous Corporation of Magdalena – Corpamag.

HYGROPHYTIC FOREST

Status: Compensated - Recovery

DESCRIPTION Colombia, municipality of Ciénaga AREA: 0.9 ha.

During 2019, the maintenance plan for the conservation areas was fulfilled.

The compensation program is verified by the Regional Autonomous Corporation of Magdalena – Corpamag.

- 210 -

COMMENTS Puerto Drummond’s hygrophytic forest continues to advance through the recovery process, becoming a habitat that offers important resources for numerous species of flora and fauna (aquatic and terrestrial).

Sustainability Report - 2019

- 211 -

ENVIRO NMENTAL PERFORMANCE

{304-4}

Number of species included on the IUCN Red List and national conservation lists with habitats located in areas affected by operations, according to the species’ level of danger of extinction.

Both the mining and port operations have areas dedicated to the conservation and restoration of natural ecosystems that are currently the habitats for different species of flora and fauna. Additionally, the dumping areas or overburden deposits, once they begin their ecological recovery processes, become a refuge for wildlife and niches for the natural regeneration of native species.

This is extremely important in ecological terms, given the way the area is disturbed by the progress of the projects, and the use of land on neighboring properties; additionally, it is an opportunity for the conservation of the flora and fauna populations included on lists of threatened species that are present in the mines or the port: TABLE 36.

Species on conservation lists at the mine

Name of plant species (scientific + common)

Critically endangered species

Endangered species

Vulnerable species

1. Bulnesia arborea (Verawood)

1. Lecythis tuyrana (Monkey pot)

2. Licania arborea (Licania)

2. Cedrela odorata (Spanish cedar)

3. Elaeis oleifera (Oil Palm)

3. Pterocarpus acapulcensis (Sangregao tree)

4. Aspidosperma polyneuron (Peroba Rosa)

Near threatened species

Least-concern species

1. Tabebuia billbergii (Kibrahacha)

5. Parinari pachyphylla (Rusby) 6. Prioria copaifera (Cativo) 7. Jatropha curcas (Barbados nut) TABLE 37.

Species on conservation lists at the port

1. Albizia niopoides (Silk tree)

1. Aspidosperma polyneuron (Peroba rosa)

2. Copernicia tectorum (Wax palm)

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Sustainability Report - 2019

Name of animal species (scientific + common)

Critically endangered species

1. Crax alberti (Blue-billed Curassow)

Endangered species

1. Chelonoidis carbonarius (Red-footed Tortoise) 2. Puma concolor (Cougar)

Vulnerable species

Near threatened species

Least-concern species

1. Trachemys callirostris (Colombian slider)

1. Vanellus chilensis (Southern lapwing)

2. Prochilodus magdalenae (bocachico)

2. Dendrocygna autumnalis (Blackbellied whistling duck) 3. Burhinus bistriatus (Double-striped thickknee) 4. Brotogeris jugularis (Orange-chinned parakeet)

1. Calidris pusilla (Sandpiper)

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ENVIRO NMENTAL PERFORMANCE

Amount of land (owned or leased, for production activities or extractive use) disturbed or rehabilitated

Drummond Ltd. has designed and implemented a recovery protocol for areas that have been disturbed, aimed at inducing plant succession processes and recovering the ecological functioning of the dumping areas and diverted riverbeds, the main areas of intervention during the operation. This protocol is developed in two main stages:

PREPARING THE LAND

{MM1}

REVEGETATION

Its objective is to improve physical conditions through morphological restructuring, incorporating the organic soil horizon and plowing or scarification.

A phase that includes sowing herbaceous and shrub species, and planting tree species.

Below is an account of the areas disturbed by the progress of the mining projects and those that have been recovered:

TABLE 38.

Land disturbed and rehabilitated23

The numbers show the progress of the mining projects in terms of the area disturbed to expand the pits, the installation of infrastructure or the construction of dumping areas. However, not all affected surfaces are recovered immediately; the majority will be restored as part of the closure plan, pending completion of the production phase.

23. During 2019, in Puerto Drummond no new areas were intervened or recovered.

Total amount of land disturbed and not rehabilitated at the beginning (A)

Total amount of land disturbed, excluding the land taken into account in the component above (B)

Total amount of land rehabilitated (C)

Total amount of land disturbed and not rehabilitated A + B – C = (D)

2019

6,302 ha.

518 ha.

98 ha.

6,722 ha.

2018

5,647 ha.

772 ha.

117 ha.

6,302 ha.

2017

5,534 ha.

256 ha.

143 ha.

5,647 ha.

2016

5,486 ha.

119 ha.

71 ha.

5,534 ha.

2015

5,228 ha.

316 ha.

58 ha.

5,486 ha.

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Sustainability Report - 2019

To date, the recovery protocol for areas that have been disturbed has been implemented on 1,245 ha of the Pribbenow and El Descanso projects, that is, nearly 20% of the total area affected by the progress of the mining operations.

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ENVIRO NMENTAL PERFORMANCE

The number and percentage of total sites identified as requiring biodiversity management plans according to stated criteria, and the number and percentage of those sites with plans in place. {MM2}

Drummond Ltd.’s projects each have Environmental Management Plans (EMPs) approved by the ANLA when the respective environmental licenses were granted. Each EMP includes a group of specific environmental management and monitoring data sheets to manage the impact that the development of the projects would have on the flora and fauna. The sheets focus on rescuing animals in the areas that would be disturbed or that are in operation, to later release them in the conservation areas. These sites are relics of natural ecosystems that offer a habitat that is appropriate for their survival and reproduction, and that have conditions equivalent to those of their original habitat. In the case of vegetation, seeds and seedlings are also rescued to propagate or keep them in forest nurseries and later plant them in areas in ecological recovery, such as dumping areas, for example.

The area where the mining and port projects are developed provide provisioning, regulating and cultural ecosystem services for the community. The provisioning services are associated with water resources and wildlife. In this sense, thanks to the efficient use and management of water in the mines and at the port, users in the middle and lower basins of the San Antonio

stream and the Toribio river have a permanent water flow, even during dry periods. Additionally, the forests and grasslands under conservation are a habitat for wildlife communities that some nearby residents hunt or fish for their livelihood.

In terms of regulation services, both the areas under conservation and those that are in the recovery process contribute to maintaining key ecological functions such as water and microclimate regulation, and the maintenance of habitats for flora and fauna. Similarly, the knowledge that is produced through the different studies that are completed periodically at the projects or the environmental education for the communities, employees, contractors and visitors constitute cultural ecosystem services.

Emerging risks {DLTD-05} The emerging risks of biodiversity management include the unsuccessful results of the recovery processes in areas affected by drought, phytosanitary problems or low soil fertility, which can cause high seedling mortality rates or low germination percentages. As for wildlife, the increase in their populations as part of the Company’s environmental management, paradoxically, attracts poachers, who represent an ongoing threat to the animals. Finally, although forest fires are part of the natural dynamic of ecosystems in the area, sometimes they are caused by poor waste disposal or by traditional agricultural processes on neighboring properties that, despite internal management of the phenomenon, jeopardize the areas in conservation or recovery.

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Sustainability Report - 2019

(

Milestones Drummond Ltd. achieved full approval by the ANLA of the Forest Compensation Program for the La Loma – Pribbenow Mine coal project.

During 2019, the Company implemented the recovery protocol for areas that have been disturbed on more than 222 ha.

Thanks to the implementation of the Environmental Management Plan, in 2019 more than 8,500 wildlife specimens (amphibians, reptiles, birds, mammals and insects) were rescued at the two mining projects, and close to 40,000 seedlings and 3,000 kg of seeds from species typical of the tropical dry forest were rescued, which produced more than 500,000 native trees.

{

Challenges 2020 Request the closure of the Forest Compensation Program for the Toribio river basin (Puerto Drummond project) from the Regional Autonomous Corporation of Magdalena – CORPAMAG.

Obtain approval from the ANLA of the Compensation Program for Biodiversity Loss from the southern expansion of the La Loma – Pribbenow Mine coal project.

Design the Forest Compensation Program for the El Descanso mining project.

Implement the recovery protocol for areas that have been disturbed on no less than 150 ha within the Pribbenow and El Descanso mines.

- 217 -

Begin execution of the Forest Compensation Program for the Pribbenow mine on at least 1,000 ha of the San Antonio stream basin.

GOVERNANCE FOR DEVELOPMENT

04 - 218 -

Sustainability Report - 2019

GOVERNANCE for

development STRENGTHEN LOCAL CAPACITIES FOR GREATER EFFICIENCY IN PUBLIC PLANNING AND MANAGEMENT.

- 219 -

GOVERNANCE FOR DEVELOPMENT

Regional

participation and relations

For Drummond Ltd., collaborating in achieving global objectives such as the UN Sustainable Development Agenda is a mechanism that has proven to further contribute to achieving its Corporate Social Responsibility targets. From our regional participation and relations, we contribute to:

Peace and human rights Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that also promotes respect for human rights.

Governance for development • Training and promotion • Peace and social dialogue • Coexistence and conflict resolution

• Transparency and citizen oversight • Institutional and community strengthening

Strengthen local capacities for greater efficiency in public planning and management.

CSR Strategy Contribution to capacity building

Integral Development Strengthen local capacities for the wellbeing and prosperity of employees and their families and the communities in our area of influence.

Environmental performance • Environmental sustainability

• Education and training • Creating opportunities

• Conservation and restoration

• Work environment

Drummond Ltd.'s contribution to achieving the Sustainable Development Goals

- 220 -

Strengthen the business capabilities that ensure worldclass environmental performance.

Sustainability Report - 2019

Goals • Goal 16.5: PPromote a culture of legality, to reduce and prevent corruption and bribery in all their forms and ethical, human rights and corporate breaches at the Company’s various locations and among its stakeholders.

• Goal 16.6: Participate in and create spaces at all levels of effective and transparent institutions that are accountable.

• Goal 17.17: Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.

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GOVERNANCE FOR DEVELOPMENT

{103-1}

DRUMMOND LTD. IS FOCUSED ON ESTABLISHING PROGRAMS AND WORK PLANS WITH A SHARED VISION OF SUSTAINABILITY FOR THE REGION, IN ORDER TO BUILD AN UNDERSTANDING OF THE RISKS AND MORE EFFECTIVELY MANAGE THE IMPACTS CAUSED BY THE MINING AND PORT OPERATIONS.

To do so, the Company acts as a liaison by building partnerships with the various stakeholders: employees and contractors, the State, the community and civic organizations and associations, both national and regional.

Similarly, considering that local institutions have some limitations in addressing and managing the needs and expectations of the communities, it is appropriate for Drummond Ltd. to be very assertive in identifying the impacts associated with political, social and economic transformations, as well as how to

{103-2} {103-3}

implement the appropriate measures to manage them and ensure the proper development of the Company’s activities. It is critical to identify and mitigate the risks associated with human rights, as well as possible citizen protests, which could impact coexistence and operational continuity.

For this reason, it is important for the Company to be involved in different relationship scenarios and multistakeholder initiatives, which represent an opportunity to encourage shared actions that help to define the future of the region in the medium term.

Drummond Ltd. manages impacts using two lines of action:

Coal and Human Rights Working Group

Extractive Industries Transparency Initiative (EITI)

External Mining Energy Committee

Corporate policies*

Committee for Monitoring and Evaluation of the Investment of Royalties in the Department of Cesar

Sustainability Committee

Internal

Complaint mechanisms

Initiative to build trust in Cesar *

- 222 -

As a result of the Bettercoal audit in 2019, all of Drummond Ltd.’s policies (not just those mentioned in this chapter) were reviewed.

Sustainability Report - 2019

Proper internal management of impacts is based on corporate sustainability, environmental and human rights policies for communities and resettlements, which make it possible to establish specific work objectives. Based on this, Drummond Ltd.’s Sustainability Committee holds quarterly meetings at which, in light of operational needs, it identifies, analyzes and evaluates the business challenges regarding relationships, identifying the related risks and impacts, as well as strategies to manage them. An example of this is the review and updating of all the Company’s corporate policies, incorporating elements that strengthen them and align them with the challenges identified by the Committee.

{415-1}

Drummond Ltd. does not make donations or contributions to political parties and/ or their members.

This action is expressly prohibited by the Company’s Code of Conduct.

Externally, this work involves active participation in each initiative in which we are involved, as follows: in the case of the Coal and Human Rights Working Group and the Mining Energy Committee on Security and Human Rights, in workshops where an analysis and evaluation is conducted each month of the initiatives undertaken within the framework of the Company’s role in them. Additionally, Drummond Ltd. is part of the Sustainability, Environmental, Human Rights and Communications Committees of trade associations such as the Colombian Mining Association (ACM),

the National Association of Entrepreneurs (ANDI) and the Council of American Companies (CEA).

For the Extractive Industries Transparency Initiative (EITI), the Company contributes through the participation and publication of the report specific to Colombia. In the case of Drummond Ltd., no differences were found between the figures that we reported and those submitted by the Colombian government. Likewise, Drummond Ltd. continues to support the Committee for Monitoring and Evaluation of the Investment of Royalties in the Department of Cesar (CSIR), participating in the preparation of the work plan that was agreed to and the annual monitoring meetings that are documented in an activity report prepared by the Fundación Universitaria del Área Andina, the initiative’s Technical Secretary.

It is worth highlighting the Company’s participation in the Initiative to Build Trust in Cesar, an effort led by the Regional Center for Responsible Companies and Entrepreneurs (CREER), with the support of the Embassy of the Netherlands, which aims to promote and facilitate dialogue among civil society, businesses and local, regional and national institutions. In the case of Drummond Ltd., continuous participation by its officials in the initiative’s activities have led to closer relationships with each of the participants, in a framework of community dialogue in which, as a first step, the roles and responsibilities of each one in society were clarified. This has brought the communities closer together and has improved understandings and relationships. The Company’s support includes a significant annual financial contribution to ensure the sustainability of the project.

Finally, having the vision and participation of internal and external actors to enrich the way impacts and risks are managed is important; for this reason, the Company’s complaint and grievances mechanisms are a tool that help to build and improve how they are handled.

- 223 -

GOVERNANCE FOR DEVELOPMENT

Bettercoal {DLTD-04}

Drummond Ltd. is committed to maintaining a path to continuous improvement. For this reason, during 2019, its mining and port operations were independently evaluated under the Bettercoal Code.

The main purpose of Bettercoal and its evaluation process is to promote improvements in the socio-economic performance of the coal supply chain, through each supplier that is evaluated. Therefore, the findings metric, in principle, is the most effective way for Drummond Ltd. to show progress over time, as actions are taken to address these findings.

Drummond Ltd. is committed to maintaining a path to continuous improvement.

It should be noted that Drummond Ltd. was the first company to be audited under the Bettercoal Code worldwide. The code consists of 10 principles and 31 provisions with ethical, environmental and social focuses.

The first audit was completed in April 2014, and the scope at that time covered the mining operations (Pribbenow and El Descanso); the port and rail operations, contractors and suppliers were not included. These were the results obtained in 2014:

2014 RESULTS

General implementaciรณn expectations

Businness ethics

Excellent

Satisfactory Needs improvement

Human rights and social performance

Environment

Principles 6.3, 6.8

Principles 2.3

Principle 3.1, 4.1

Principle 1.1, Principles 2.1, 2.2

Unsatisfactory

- 224 -

Principle 5.1. 5.2, 5.3 Principles 6.1, 6.2, 6.6, 6.7 Principle 7.1

Principles 9.1. 9.2, 9.3 Principles 10.1, 10.2, 10.5, 10.6, 10.7

Principles 6.4, 6.5, 6.9

Principle 8.1

Sustainability Report - 2019

The initial cycle served to close the gaps that the Company had in some processes, helped to formalize corporate policies, and led to the creation of the Corporate Social Responsibility and Communications departments. At the same time, it helped strengthen its direct relationship with clients and international stakeholders.

As a result, over four years, Drummond Ltd. implemented the Continuous Improvement Plan, which was developed to take on the challenge of being audited again in 2019 under the Code’s guidelines. The Company’s objective in this second cycle is to achieve full compliance with all indicators. The results obtained during the audit are as follows:

According to this information, Drummond Ltd. has achieved significant results that have allowed it to identify and validate the continuous improvement in its processes in recent years. The performance evaluated based on the principles of the Bettercoal Code and its related terms shows the Company’s satisfactory process from ethical, environmental and social perspectives, and it is permanently committed to continue working to achieve high performance. Based on the Continuous Improvement Plan adopted as a result of this assessment, which includes short-, medium- and long-term actions, Drummond Ltd. will continue to work to keep its operations in Colombia a worldclass benchmark.

More information on the results of this process can be found in the public report: https://bettercoal.org/wp-content/ uploads/2019/05/Public-ReportDrummond.pdf

2019 [24] RESULTS

Excellent

Satisfactory

Human rights and social performance

General implementación expectations

Businness ethics

Principle 1.1

Principle 3.1

Principles 5.3, 5.4 Principles 6.1-6.7

Principle 8.1 Principle 9.3 Principles 10.4, 10.7

Principles 2.1, 2.2, 2.3

Principle 4.1

Principle 5.1 Principles 6.8, 6.9 Principle 7.1

Principles 9.1, 9.2 Principles 10.1-10.3, 10.5, 10.6

Environment

Needs improvement Unsatisfactory

24 It is important to note that the Bettercoal evaluation and ratings process changed in 2018, and the 2014 evaluation was not conducted under the same guidelines as the reevaluation. Still, these results show overall progress by Drummond Ltd. with respect to the Bettercoal Code.

- 225 -

GOVERNANCE FOR DEVELOPMENT

(

{

Milestones Drummond Ltd. completed the entire Bettercoal audit cycle for a second time, achieving an outstanding rating in all areas evaluated.

The Company joined and participated on the Board of Directors of the Mining Energy Committee in Security and Human Rights (CME in Spanish), influencing the issuance of recommendations such as security and human rights protocols.

During 2019, the CHRWG implemented the protocol that it developed for managing threats to the physical integrity of people in the area of influence, including workers and communities.

During 2019, all of the Company’s corporate policies were reviewed and adjusted.

From the Coal and Human Rights Working Group (CHRWG), the Company was able to have an impact on the Initiative to Build Trust in Cesar.

The CHRWG also created recommendations and an initial version of a protocol for managing the risk of dispossession.

The protocol formulated in 2018 for the protection of the life and integrity of people was implemented.

During 2019, the Company provided the relevant information for the preparation of the EITI Colombia Report.

Through support and assistance to CSIR, it was able to strengthen its communications strategy, achieving broader communication of the activities it conducts.

Challenges 2020

To implement 100% of the annual commitments contained in the Continuous Improvement Plan developed with Bettercoal.

To continue to participate on the Board of Directors of the MEC.

Implementation of the Continuous Improvement Plan began in 2019, including short- and mediumterm commitments, and it must be completed within five years, when a new certification cycle will begin.

In 2020, the Company aims to have greater participation in two ways: presiding over the MEC’s Annual Assembly, and through advising on the effective communication of its activities.

To share from the CHRWG* the document with recommendations for managing the risk of dispossession with the judicial branch.

In 2020, our challenge is to share this with members of the judicial branch (judges) to delve into a discussion of proving good faith without blame.

To continue to provide relevant information to prepare the EITI Colombia Report.

Maintain participation in the initiative to define a regional strategy that makes it possible to take the information from this document to the producing regions.

Continue supporting the CSIR. *

Technical Group on Human Rights and Coal.

- 226 -

Sustainability Report - 2019

- 227 -

GOVERNANCE FOR DEVELOPMENT

Resettlement

work

{103-1}

THE COMPREHENSIVE RISK MANAGEMENT THAT DRUMMOND LTD. CONDUCTS STARTS FROM AN UNDERSTANDING OF SOCIAL, ENVIRONMENTAL, ECONOMIC AND REPUTATIONAL IMPACTS.

Its Resettlement work is not unrelated to this understanding and it requires the proper execution of the Company’s actions and efforts, so that in the end, the impacts generated are positive for the communities and Drummond Ltd. is able to operate sustainably.

Given the importance of a comprehensive approach, in a joint effort with the companies Prodeco and CNR, and Socya as the resettlement operator, we are carrying out a dialogue and coordination process with the communities aimed at structuring and implementing a Resettlement Action Plan (RAP) with each community. The RAP will be developed through three independent processes: Plan Bonito, El Hatillo and Boquerón, all under the supervision of the audit conducted by ERM in order to ensure compliance with international standards and norms regarding resettlement.

{103-2}

The structuring of each RAP is the result of a participatory process, with support and monitoring by the National Environmental Licensing Authority (ANLA in Spanish), the participation of local and regional governments, and the presence of entities to protect human rights, such as the Office of the Ombudsman.

The objective of this participatory process is to mediate and build agreements jointly with the stakeholders on how to carry out the resettlement of the community. The talks between the companies’ spokespersons and representatives and the communities take place through Agreement Committees facilitated and moderated by the operator with expertise in involuntary resettlements. Currently, the status of the three resettlement processes is as follows:

The objective of this participatory process is to mediate and build agreements jointly with the stakeholders on how to carry out the resettlement of the community.

Plan Bonito is in the closing phase

El Hatillo is in the implementation phase

- 228 -

Boquerón in the diagnostic phase

Sustainability Report - 2019 {103-3}

The process includes a mechanism to respond to petitions, complaints, claims and requests (PQRS, in Spanish) through a procedure aimed at the communities and stakeholders involved, administered

by Socya in its capacity as operator, which establishes the formalities and steps to follow in order to receive and respond within a certain timeframe.

Community Service Offices – CSO SOCYA

The operator of the resettlement process has Community Service Offices (CSO) located in La Loma, El Hatillo and BoquerĂłn. These offices receive, file, classify, direct, deliver responses and implement methods for monitoring the PQRS system using a mechanism shared by the companies and the auditing firm.

Professional CSO Leader SOCYA

Contractors and Partners

Mining companies Resettlement department

Start Response to PQRS Verbal submission Receipt and filing of PQRS in accordance with Article 15 of Law 1755 of 2015 Fill out form Written submission Proper means for transferring data During family care visits Receipt and filing of PQRS in accordance with Article 15 of Law 1755 of 2015. Record PQRS by type.

Is the complaint appropriate?

NO Response to PQRS

YES

Technical and conceptual support and effect of the response

Submit to SOCYA Review the quality of the response Written response delivered to the user, with proof of receipt and assistance Response Certificate NO Satisfaction with response YES File archived Close

Flowchart of the PQRS Process implemented

by SOCYA.

Follow up and Monitoring Information system

- 229 -

Review the quality of the response Response to PQRS

GOVERNANCE FOR DEVELOPMENT

In 2019, 532 PQRS were received and 590 had been closed as of December 31:

EL HATILLO

349

BOQUERĂ“N

352

2019

2018

PQRS received

8

2018

PQRS In process

421*

2019

2018

2

10

2019

266

2018

2018

166

2019

15

2019

6

2018

PQRS received

PQRS In process

PQRS closed

*

2019

42

PQRS received

86

2019

168

PLAN BONITO

7

2019

0

2018

PQRS In process

32 2018

PQRS closed

3

2019

6

2018

PQRS closed

Some of the requests closed during 2019 correspond to the previous year.

The most frequent issues from the PQRS included the following:

Requests for individual and collective support for higher education, recreational events, infrastructure improvements.

Objections to valuations, to the applicable compensation framework.

Reports of social changes (births, marriages, divorces).

- 230 -

{MM9}

El Hatillo

Below are the results of the resettlement plans and the processes, activities and progress achieved during 2019:

In November 2018, the mining companies and community representatives signed the Resettlement Action Plan (RAP). This is being implemented and the transfer of all families is planned for 2023, and the Livelihood Restoration Plan is to be completed in 2028. As a result of the family-byfamily information and consultation process that was implemented:

83

175

COLLECTIVE RESIDENT FAMILY contracts transaction contracts were signed

The first individual resettlement of a family to the city of Valledupar was completed.

82

INDIVIDUAL contracts

At the same time, the mining companies moved forward with the release of land, 163 from non-resident families and one from a resident family.

Regarding the acquisition of the land required to relocate the families, in terms of individual resettlement, the operator has been working with a real estate company to maintain options for the various families, while for collective resettlement, in cooperation with the communities, the land where the process will take place has been identified and selected.

Simultaneously, during 2019, in a joint project with the mining companies, actions were taken to improve the families’ quality of life through agreements with the Mayor’s Office and the El Paso Hospital to provide healthcare, recreation, cultural and sporting opportunities, and services for senior citizens, children and adolescents.

Finally, through the Higher Education Fund, support was provided to cover the cost of tuition and a living stipend, reaching 40 beneficiaries. Likewise, support was also maintained for the Emergency Fund and the Food Bank.

- 231 -

112 CONTRACTS

were signed with non-residents

GOVERNANCE FOR DEVELOPMENT

Boquerón

Currently, the settlement process in Boquerón is in the diagnostic phases, after the execution of the topographic survey conducted in 2016 and 2017, which determined the total number of properties involved. In 2019, the instrument for the socioeconomic census with a differential approach was selected and the operation to capture the information was carried out, which is expected to be validated, verified and refined in 2020.

With regards to improving the community’s living conditions, the mining companies maintain agreements with the municipality and the La Jagua de Ibirico Hospital to support and strengthen healthcare, recreation, cultural and sporting opportunities, services for children and adolescents, education and care for senior citizens. They also continue to sponsor the “Boquerón Recycles” project,

Plan Bonito

475 PEOPLE

89

STUDENTS BENEFITTED

of whom

4

have completed their studies

In 2019, 12 new beneficiaries entered the program. This fund will run through November 2024.

Additionally, the mining companies provided 300 school kits to the elementary student population and supported a food program for senior citizens for 45 days while the municipality conducted the contracting process.

Drummond Ltd. completed the expansion and improvement of the Child Development Center (CDI in Spanish), began construction of the Community Entrepreneurship Center and Common Room, donated an electric pump and performed maintenance on the electrical system at the water treatment plant.

During 2019, the mining companies continued with the implementation of the Livelihood Restoration Program for the families relocated in 2015. It focuses on education, entrepreneurship, social inclusion and access to basic services, including:

healthcare for the

With the High Education Fund’s strategy:

which allows for the proper treatment of solid waste, improving the environmental conditions in the community by eliminating trash burning, in addition to generating income for participants.

that make up the

98

RESIDENT FAMILIES

The closure plan for this process is expected to be complete in December 2020.

For the entrepreneurship or income generation program: of the

33

of the 98 families that had economic sustainability and autonomy in their homes directly received seed capital to strengthen ongoing incomeproducing projects

- 232 -

65

REMAINING FAMILIES that implemented business units, 37 are still active, representing a sustainability rate of 58%.

From the Microcredit component, 51 families have benefitted from 66 loans granted.

(

Sustainability Report - 2019

Milestones In the communities involved in the resettlement process, in terms of employability, we have seen the following results:

Regarding direct and indirect contracting within our operations: El Hatillo

Boquer贸n

Plan Bonito

62

people employed

50

people employed

52

18

employed directly

23

8

27

44

employed directly

44

employed indirectly by contractors One of the most important steps in the resettlement processes was the implementation of the census operation in the community of Boquer贸n.

{

employed indirectly by contractors

people employed

employed directly

employed indirectly by contractors

For the resettlement process for El Hatillo, 175 transaction contracts were signed with residents and 112 with non-residents and, additionally, the full projection of the Exceptional Modification to the Urban Planning Regulations, communicated and arranged by Corpocesar, was established.

The first individual settlement from the community was completed in the city of Valledupar.

Challenges 2020 Continue strengthening the income generated by the communities involved in the resettlement process.

Complete at least 40 individual resettlements in El Hatillo.

Finish the construction, furnishing and launch of the Community Entrepreneurship Center in Boquer贸n.

Move forward with the process of finalizing the Livelihood Restoration Plan for Plan Bonito.

Complete the Exceptional Modification to the Urban Planning Regulations for El Paso, in order to have the Rural Planning Unit required to develop the new settlement from El Hatillo.

Move forward with the purchase of land for the collective resettlement from El Hatillo.

Carry out the prior consultation process with Potrerillo as a receiving community.

Complete the diagnostic stage for Boquer贸n, which includes a census, ethnographic study and possession study.

- 233 -

GRI Content Index

05 - 234 -

Sustainability Report - 2019

GRI Content

Index

- 235 -

GRI Content Index

GRI

Content Index

{102-55}

For the Materiality Disclosures Service, GRI Services has reviewed that the GRI content index is clearly presented and the references for content 102-40 to 102-49 are aligned with the appropriate sections in the body of the report. The Service was performed on the spanish version of the report.

GRI Content Index General content GRI Standard

Content

Page / URL / Comment

Omission

Verification

GRI 101: 2016 Foundations Organizational profile GRI 102: 2016 General Content

102-1

Name of the organization

p. 14.

YES

102-2

Activities, brands, products and services

p. 14.

YES

102-3

Location of headquarters

Bogotรก, D.C. p. 14.

YES

102-4

Location of operations

p. 14.

YES

102-5

Ownership and legal form

Branch of a foreign private corporation. p. 14

YES

102-6

Markets served

p. 14.

YES

102-7

Size of the organization

p. 14.

YES

102-8

Information on employees and other workers

p. 16, p. 17.

YES

102-9

Supply chain

p. 36, p. 48.

YES

Significant changes in the organization and its supply chain

There were no significant events during 2019 at Drummond Ltd. p. 48.

YES

102-10

- 236 -

Sustainable Development Goal (SDG)

Sustainability Report - 2019

GRI Content Index General content GRI Standard

GRI 102: 2016 General Content

Content

Page / URL / Comment

Omission

102-11

Precautionary principle or approach

The Company's position regarding the precautionary principle is to refrain from conducting operations when it could supposedly cause serious risk to public health or the environment, even without definitive scientific evidence of that risk. In all other cases, the measures described in the Environmental Performance chapter are taken.

102-12

External initiatives

p. 64.

102-13

Membership in associations

p. 65.

Verification

Sustainable Development Goal (SDG)

YES

Strategy 102-14

Statement from the most senior decision-maker of the organization

p. 24.

YES

102-15

Key impacts, risks and opportunities

p. 24.

YES

Ethics and Integrity 102-16

Values, principles, standards and norms of behavior

https://www. drummondltd. com/about-us/ourcommitment/?lang=en p. 32.

YES

102-17

Mechanisms for advice and concerns about ethics

p. 32, p. 141.

YES

102-18

Governance structure

p. 30.

YES

102-19

Delegation of authority

p. 31.

YES

102-20

Executive-level responsibility for economic, environmental and social topics

p. 30.

YES

102-26

Role of the highest governance body in selecting objectives, values and strategies

p. 30.

YES

Governance

- 237 -

Goal 16: Peace, justice and strong institutions

16.6 Develop effective, accountable and transparent institutions at all levels

GRI Content Index

GRI Content Index General content GRI Standard

GRI 102: 2016 General Content

Content

Page / URL / Comment

Omission

Verification

102-32

Role of the highest governance body in preparing sustainability reports

p. 20.

YES

102-33

Communication of critical concerns

p. 31.

YES

102-34

Report the nature and total number of critical concerns that were communicated to the highest governance body and the mechanism(s) used to address and resolve them.

p. 30.

YES

Sustainable Development Goal (SDG)

Stakeholder Engagement 102-40

List of stakeholder groups engaged by the organization.

p. 68.

YES

102-41

Collective bargaining agreements.

p. 67.

YES

102-42

Identification and selection of stakeholders

p. 67.

YES

102-43

Approach to stakeholder engagement

p. 68.

YES

102-44

Key topics and concerns mentioned

p. 68.

YES

Practices for Preparing Reports 102-45

Entities included in the organization’s consolidated financial statements

Companies included in the sustainability report: Drummond Ltd., Drummond Coal Mining L.L.C., Transport Services L.L.C., American Port Company Inc., Coal Resources Colombia Ltd. C.I., Drummond USA Inc.

102-46

Defining the report content and Aspect Boundaries

p. 70.

YES

- 238 -

Goal 8: Decent work and economic growth

8.8. Protect labor rights and promote safe and secure working environments for all workers

Sustainability Report - 2019

GRI Content Index General content GRI Standard

GRI 102: 2016 General Content

Content

Page / URL / Comment

Omission

Verification

102-47

List of material aspects

p. 70.

YES

102-48

Restatement of information

There were no restatements in this 2019 report.

YES

102-49

Changes in report preparation

In preparing the 2019 report, the Company updated the Materiality Analysis, which did not show significant changes in the material issues that have been covered since 2018.

YES

Drummond Ltd.'s 2019 report includes the updates to the GRI 303 Water and Effluents and GRI 403 Health and Safety at Work standards, from the 2016 version to the 2018 version.

102-50

Reporting period

p. 20.

YES

102-51

Date of most recent report

p. 20.

YES

102-52

Reporting cycle

p. 20.

YES

102-53

Contact point for questions regarding the report

p. 20.

YES

102-54

Claim of reporting in accordance with the GRI Standards

p. 20.

YES

102-55

GRI Content Index

p. 236.

YES

102-56

External verification

p. 20, p. 255.

YES

- 239 -

Sustainable Development Goal (SDG)

GRI Content Index

GRI Content Index Thematic content Thematic content

Page / URL / Comments

Omission

Verification

Sustainable Development Goal (SDG)

SDGs

Economic performance GRI 103: Management approach 2016

GRI 201: Economic performance 2016

103-1

Explanation of the material topic and its boundary

p. 38.

YES

103-2

The management approach and its components

p. 38.

YES

103-3

Evaluation of the management approach

p. 40.

YES

201-1

Direct economic value generated and distributed

p. 41.

YES

201-2

Financial implications and other risks and opportunities due to climate change

p. 43.

YES

201-3

Defined benefit plan obligations and other retirement plans

p. 45.

YES

103-1

Explanation of the material topic and its boundary

p. 38.

YES

103-2

The management approach and its components

p. 38.

YES

103-3

Evaluation of the management approach

p. 40.

YES

202-1

Ratios of standard entry level wage by gender compared to local minimum wageÂ

p. 45.

YES

202-2

Proportion of senior management hired from the local communityÂ

p. 47.

YES

103-1

Explanation of the material topic and its boundary

p. 140.

YES

103-2

The management approach and its components

p. 141.

YES

103-3

Evaluation of the management approach

p. 152.

YES

Market presence GRI 103: Management approach 2016

GRI 202: Market presence 2016

Indirect economic impacts GRI 103: Management approach 2016

- 240 -

Goal 8: Decent work and economic growth

8.5 Achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.

Sustainability Report - 2019

GRI Content Index Thematic content Thematic content

GRI 203:

203-1

Indirect economic impacts 2016

Infrastructure investments and services supported

Page / URL / Comments

Omission

Verification

p. 154.

YES

Sustainable Development Goal (SDG) Goal 2: Zero hunger Goal 4: Quality education Goal 6: Clean water and sanitation Goal 8: Decent work and economic growth Goal 9: Industry, innovation and infrastructure Goal 16: Peace, justice and strong institutions Goal 17: Partnerships for the goals

203-2

Significant indirect economic impacts

p. 156.

YES

- 241 -

SDGs

2.a. Increase investment in rural areas to improve agricultural production.

2.3. Double agricultural productivity and incomes through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets and opportunities.

2.4. Ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production.

4.a. Build and upgrade education facilities that are child, disability and gender sensitive and provide safe, non-violent, inclusive and effective learning environments for all in the communities in Drummond Ltd.'s areas of influence.

4.c. Substantially increase the supply of qualified teachers through teacher training in in the communities in Drummond Ltd.'s areas of influence.

4.1. Ensure that the girls and boys from the area of influence of Drummond Ltd.'s operations receive high quality education for relevant and effective learning outcomes.

4.2. Ensure that all girls and boys have access to quality early childhood development, care and pre‑primary education so that they are ready for primary education.

4.3. Ensure equal access for women and men in the areas of influence of Drummond Ltd.'s operations to affordable and quality technical, vocational and tertiary education, including university.

4.4. Substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship.

4.6. Ensure that all youth and a substantial proportion of adults, both men and women, from Drummond Ltd.'s areas of influence achieve literacy and numeracy.

6.b. Support and strengthen the participation of local communities in improving water and sanitation management.

8.3. Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services.

8.5 Achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.

8.6. Substantially reduce the proportion of youth not in employment, education or training in the communities in the area of influence.

9.1. Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being.

16.1. Significantly reduce all forms of violence and violations of human rights at the Company's locations and among its stakeholders.

17.17. Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.

GRI Content Index

GRI Content Index Thematic content Thematic content

Page / URL / Comments

Omission

Verification

Sustainable Development Goal (SDG)

SDGs

Procurement practices GRI 103: Management approach 2016

GRI 204: Procurement practices 2016

103-1

Explanation of the material topic and its boundary

p. 164.

YES

103-2

The management approach and its components

p. 165.

YES

103-3

Evaluation of the management approach

p. 167.

YES

204-1

Proportion of spending on local suppliersÂ

p. 168.

YES

103-1

Explanation of the material topic and its boundary

p. 176.

YES

103-2

The management approach and its components

p. 176.

YES

103-3

Evaluation of the management approach

p. 178.

YES

303-1

Interactions with water as a shared resource

p. 179.

YES

303-2

Management of water dischargerelated impacts

p. 184.

YES

303-3

Water withdrawal

p. 185.

YES

303-4

Water discharge

p. 187.

YES

303-5

Water consumption

p. 185.

YES

103-1

Explanation of the material topic and its boundary

p. 206.

YES

103-2

The management approach and its components

p. 206.

YES

103-3

Evaluation of the management approach

p. 207.

YES

Goal 8: Decent work and economic growth

8.3. Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services.

Goal 6: Clean water and sanitation

6.3. Improve water quality by reducing pollution.

6.4. Substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals and supply of freshwater to address water scarcity and substantially reduce the number of people suffering from water scarcity.

Water GRI 103: Management approach 2016

GRI 303: Water 2018

Biodiversity GRI 103: Management approach 2016

- 242 -

Sustainability Report - 2019

GRI Content Index Thematic content Thematic content

GRI 304: Biodiversity 2016

Page / URL / Comments

Omission

Verification

Sustainable Development Goal (SDG)

SDGs

304-1

Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

Drummond Ltd. does not have operating facilities that are owned, leased or managed that are adjacent to, contain or are located in protected areas and areas of high biodiversity value outside protected areas.

YES

304-2

Significant impacts of activities, products, and services on biodiversity

Drummond Ltd. does not generate significant impacts on the biodiversity of protected areas or areas of high biodiversity value arising from its activities, products and services.

YES

304-3

Habitats protected or restored

p. 208.

YES

Goal 15: Life on land

15.1. Ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and the services they provide within Drummond Ltd.'s operations.

15.2. Promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests and substantially increase afforestation and reforestation at Drummond Ltd.'s operations.

15.4. Ensure the conservation of mountain ecosystems, including their biodiversity, in order to enhance their capacity to provide benefits that are essential for sustainable development.

304-4

IUCN Red List species and national conservation list species with habitats in areas affected by operations

p. 212.

YES

Goal 15: Life on land

15.5. Take urgent and significant action within Drummond Ltd.'s operations to reduce the degradation of natural habitats, halt the loss of biodiversity, and protect and prevent the extinction of threatened species.

- 243 -

GRI Content Index

GRI Content Index Thematic content Thematic content

Page / URL / Comments

Omission

Verification

GRI Supplements Mining sector and metals

MM1

Amount of land (owned or leased, and managed for production activities or extractive use) disturbed or rehabilitated.

p. 214.

YES

GRI Supplements Mining sector and metals

MM2

The number and percentage of total sites identified as requiring biodiversity management plans, and the number (percentage) of those sites with plans in place.

p. 216.

YES

103-1

Explanation of the material topic and its boundary

p. 196.

YES

103-2

The management approach and its components

p. 196.

YES

103-3

Evaluation of the management approach

p. 198.

YES

305-1

Direct (Scope 1) GHG emissions

p. 199.

YES

305-2

Energy indirect (Scope 2) GHG emissions

p. 200.

YES

305-6

Emissions of ozone-depleting substances (SAO)

Drummond Ltd. does not produce, import or export ozone-depleting substances.

YES

305-7

Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions

p. 201.

Sustainable Development Goal (SDG)

SDGs

Goal 15: Life on land

15.1. Ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and the services they provide within Drummond Ltd.'s operations.

15.2. Promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests and substantially increase afforestation and reforestation at Drummond Ltd.'s operations.

15.4. Ensure the conservation of mountain ecosystems, including their biodiversity, in order to enhance their capacity to provide benefits that are essential for sustainable development.

Goal 12: Responsible production and consumption

Own goal. Implementing strategies for the prevention and control of air quality, which includes not only technically viable options but also those that are environmentally effective and socially beneficial, is essential to caring for the health of workers and the surrounding communities, as well as the quality of the projects' natural environments.

Goal 12: Responsible production and consumption

Own goal. Implementing strategies for the prevention and control of air quality, which includes not only technically viable options but also those that are environmentally effective and socially beneficial, is essential to caring for the health of workers and the surrounding communities, as well as the quality of the projects' natural environments.

Emissions GRI 103: Management approach 2016

GRI 305: Emissions 2016

The air quality information does not include other components that are not particulate matter since this is the pollution criterion that Drummond Ltd. considers to be a determining factor in its operations.

YES

- 244 -

Sustainability Report - 2019

GRI Content Index Thematic content Thematic content

Page / URL / Comments

Omission

Verification

Sustainable Development Goal (SDG)

SDGs

Environmental compliance GRI 103: Management approach 2016

GRI 307: Environmental compliance 2016

103-1

Explanation of the material topic and its boundary

p. 176, p. 206, p. 196.

103-2

The management approach and its components

p. 176, p. 206, p. 196.

103-3

Evaluation of the management approach

p. 178, p. 207, p. 198.

307-1

Non-compliance with environmental laws and regulations

The company was not involved in breaches of laws or regulations on environmental matters related to managing water resources, air quality and biodiversity protection.

Goal 16: Peace, justice and strong institutions

Supplier environmental assessment GRI 103: Management approach 2016

GRI 308: Supplier environmental assessment 2016

103-1

Explanation of the material topic and its boundary

p. 164.

YES

103-2

The management approach and its components

p. 165.

YES

103-3

Evaluation of the management approach

p. 167.

YES

308-1

New suppliers that were screened using environmental criteria

Drummond Ltd. did not evaluate new suppliers based on environmental criteria.

YES

308-2

Negative environmental impacts in the supply chain and actions taken

p. 170.

YES

103-1

Explanation of the material topic and its boundary

p. 96.

YES

103-2

The management approach and its components

p. 96.

YES

103-3

Evaluation of the management approach

p. 98.

YES

Employment GRI 103: Management approach 2016

- 245 -

16.6. Develop effective, accountable and transparent institutions at all levels.

GRI Content Index

GRI Content Index Thematic content Thematic content

GRI 401:

Page / URL / Comments

Omission

Verification

Drummond Ltd does not report its new hire rate because it is not representative in relation to the total number of employees.

YES

Goal 8: Decent work and economic growth

8.5 Achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.

8.6. Substantially reduce the proportion of youth not in employment, education or training in the communities in the area of influence.

Goal 8: Decent work and economic growth

8.5 Achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.

8.8. Protect labor rights and promote safe and secure working environments for all workers, with opportunities for growth.

Goal 8: Decent work and economic growth

8.8. Protect labor rights and promote safe and secure working environments for all workers, with opportunities for growth.

401-1

New employee hires and employee turnover

p. 103, p. 104.

401-2

Benefits provided to full-time employees that are not provided to temporary or parttime employees

p. 108.

YES

401-3

Parental leave

p. 109.

YES

Employment 2016

Sustainable Development Goal (SDG)

SDGs

Labor/Management relations GRI 103: Management approach 2016

GRI 402:

103-1

Explanation of the material topic and its boundary

p. 135.

YES

103-2

The management approach and its components

p. 135.

YES

103-3

Evaluation of the management approach

p. 135.

YES

402-1

Minimum notice p. 136. periods regarding operational changes

YES

MM4

Number of strikes and lock-outs exceeding one week’s duration, by country.

During 2019 there were no strikes or closures of the operations. p. 135.

YES

Labor/ Management relations 2016 GRI Supplements Mining sector and metals

Occupational health and safety GRI 103: Management approach 2016

103-1

Explanation of the material topic and its boundary

p. 121.

YES

103-2

The management approach and its components

p. 121.

YES

103-3

Evaluation of the management approach

p. 122, p. 124.

YES

- 246 -

Sustainability Report - 2019

GRI Content Index Thematic content Thematic content

GRI 403:

Page / URL / Comments

Omission

Verification

403-1

Occupational health and safety management system

p. 124.

YES

403-2

Hazard identification, risk assessment, and incident investigation

p. 125.

YES

403-3

Occupational health services

p. 121, p. 127, p. 125.

YES

403-4

Worker participation, consultation, and communication on occupational health and safety

p. 127.

YES

403-5

Worker training on occupational health and safety

p. 128.

YES

403-6

Promotion of worker health

Drummond Ltd. offers workers and their immediate families, as an extralegal benefit, the option to join the Hospitalization and Surgery Policy, whose cost is fully covered by the Company and offers them the ability to access general and specialized medical consultations and medications, among other services, for its more than 18,500 beneficiaries.

YES

403-8

Workers covered by an occupational health and safety management system

p. 129.

YES

403-9

Work-related injuries

p. 130.

YES

403-10

Work-related ill health

p. 130.

Si

Occupational health and safety 2018

- 247 -

Sustainable Development Goal (SDG) Goal 8: Decent work and economic growth

SDGs

8.8. Protect labor rights and promote safe and secure working environments for all workers, with opportunities for growth.

GRI Content Index

GRI Content Index Thematic content Thematic content

Page / URL / Comments

Omission

Verification

Sustainable Development Goal (SDG)

SDGs

Training and education GRI 103: Management approach 2016

GRI 404: Training and education 2016

103-1

Explanation of the material topic and its boundary

p. 96.

YES

103-2

The management approach and its components

p. 96. p. 110.

YES

103-3

Evaluation of the management approach

p. 98.

YES

404-1

Average hours of training per year per employee

p. 110.

YES

Goal 4: Quality education Goal 8: Decent work and economic growth

4.4. Substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship.

8.8. Protect labor rights and promote safe and secure working environments for all workers, with opportunities for growth.

404-2

Programs for upgrading employee skills and transition assistance programs

p. 110.

Partially reported: Drummond Ltd. does not have assistance programs to facilitate the adaptation and management of the end of the professional careers of the organization’s employees.

YES

Goal 8: Decent work and economic growth

8.8. Protect labor rights and promote safe and secure working environments for all workers, with opportunities for growth.

404-3

Percentage of employees receiving regular performance and career development reviews

p. 115.

Partially reported: only salaried employees are considered, whose performance is assessed regularly.

Hourly employees receive regular feedback from their leader.

YES

Diversity and equal opportunity GRI 103: Management approach 2016

103-1

Explanation of the material topic and its boundary

p. 96.

YES

103-2

The management approach and its components

p. 96, p. 110.

YES

103-3

Evaluation of the management approach

p. 98

YES

- 248 -

Sustainability Report - 2019

GRI Content Index Thematic content Thematic content

GRI 405: Diversity and equal opportunity 2016

Page / URL / Comments

Omission

Verification

405-1

Diversity of governance bodies and employees

p. 98.

Partially reported: the information from the entire workforce is broken down, omitting information from the organization’s governance bodies.

YES

405-2

Ratio of basic salary and remuneration of women to men

p. 116.

Drummond Ltd., does not report its employees’ base salaries since it is sensitive and confidential information.

YES

103-1

Explanation of the material topic and its boundary

p. 78.

YES

103-2

The management approach and its components

p. 80.

YES

103-3

Evaluation of the management approach

p. 80.

YES

406-1

Incidents of discrimination and corrective actions taken

p. 84.

YES

Sustainable Development Goal (SDG)

SDGs

Goal 8: Decent work and economic growth

8.5 Achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.

Goal 8: Decent work and economic growth Goal 16: Peace, justice and strong institutions

8.8. Protect labor rights and promote safe and secure working environments for all workers, with opportunities for growth.

16.1 Significantly reduce all forms of violence and violations of human rights at the Company's locations and among its stakeholders.

Goal 8: Decent work and economic growth

8.8. Protect labor rights and promote safe and secure working environments for all workers, with opportunities for growth.

Non-discrimination GRI 103: Management approach 2016

GRI 406: Nondiscrimination 2016

Freedom of association and collective bargaining GRI 103: Management approach 2016

GRI 407: Freedom of association and collective bargaining 2016

103-1

Explanation of the material topic and its boundary

p. 135.

YES

103-2

The management approach and its components

p. 135.

YES

103-3

Evaluation of the management approach

p. 135.

YES

407-1

Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk

p. 137.

YES

- 249 -

GRI Content Index

GRI Content Index Thematic content Thematic content

Page / URL / Comments

Omission

Verification

Sustainable Development Goal (SDG)

SDGs

Goal 8: Decent work and economic growth Goal 16: Peace, justice and strong institutions

8.7 Take immediate and effective measures to eradicate forced labor, end modern slavery and human trafficking. Contribute to the elimination of child labor in all forms at the Company's locations and among its stakeholders.

16.2 End abuse, exploitation, trafficking and all forms of violence against and torture of children at the Company's locations and among its stakeholders.

Goal 8: Decent work and economic growth

8.7 Take immediate and effective measures to eradicate forced labor, end modern slavery and human trafficking. Contribute to the elimination of child labor in all forms at the Company's locations and among its stakeholders.

Goal 8: Decent work and economic growth

8.7 Take immediate and effective measures to eradicate forced labor, end modern slavery and human trafficking. Contribute to the elimination of child labor in all forms at the Company's locations and among its stakeholders.

Child labor GRI 103: Management approach 2016

GRI 408:

103-1

Explanation of the material topic and its boundary

p. 78.

YES

103-2

The management approach and its components

p. 80.

YES

103-3

Evaluation of the management approach

p. 80.

YES

408-1

Operations and suppliers at significant risk for incidents of child laborÂ

p. 84.

YES

103-1

Explanation of the material topic and its boundary

p. 78.

YES

103-2

The management approach and its components

p. 80.

YES

103-3

Evaluation of the management approach

p. 80.

YES

409-1

Operations and p. 84. suppliers at significant risk for incidents of forced or compulsory laborÂ

YES

103-1

Explanation of the material topic and its boundary

p. 78.

YES

103-2

The management approach and its components

p. 80.

YES

103-3

Evaluation of the management approach

p. 80.

YES

410-1

Operations and p. 86. suppliers at significant risk for incidents of forced or compulsory laborÂ

YES

Child labor 2016

Forced or compulsory labor GRI 103: Management approach 2016

GRI 409: Forced or compulsory labor 2016 Security practices GRI 103: Management approach 2016

GRI 410: Forced or compulsory labor 2016

- 250 -

Sustainability Report - 2019

GRI Content Index Thematic content Thematic content

Page / URL / Comments

Omission

Verification

Sustainable Development Goal (SDG)

SDGs

Rights of indigenous peoples GRI 103: Management approach 2016

GRI 411:

103-1

Explanation of the material topic and its boundary

p. 78.

103-2

The management approach and its components

p. 80.

103-3

Evaluation of the management approach

p. 80.

411-1

Incidents of violations involving rights of indigenous peoples

Drummond’s operations are not performed in areas with the indigenous presence, so there have been no violations of this population’s human rights.

103-1

Explanation of the material topic and its boundary

p. 78.

YES

103-2

The management approach and its components

p. 80.

YES

103-3

Evaluation of the management approach

p. 80.

YES

412-1

Operations that have been subject to human rights reviews or impact assessments

p. 88.

YES

412-2

Employee training on human rights policies or procedures

p. 90.

YES

412-3

Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening

p. 90.

YES

Rights of indigenous peoples 2016

Human rights assessment GRI 103: Management approach 2016

GRI 412: Human rights assessment 2016

- 251 -

Goal 16: Peace, justice and strong institutions

16.10 Ensure that Drummond Ltd.'s direct employees and contractors have access to information and training related to human rights and the promotion and protection of fundamental freedoms.

GRI Content Index

GRI Content Index Thematic content Thematic content

GRI Supplements Mining sector and metals

Page / URL / Comments

Omission

Verification

MM5

Total number of operations taking place in or adjacent to Indigenous Peoples' territories, and number and percentage of operations or sites where there are formal agreements with Indigenous Peoples' communities

Drummond’s operations are not performed in areas with the indigenous presence, so there have been no violations of this population’s human rights.

103-1

Explanation of the material topic and its boundary

p. 140.

YES

103-2

The management approach and its components

p. 141.

YES

103-3

Evaluation of the management approach

p. 152.

YES

413-1

Operations with local community engagement, impact assessments, and development programs

p. 153.

YES

413-2

Operations with significant actual and potential negative impacts on local communities

p. 156.

YES

MM6

Number and description of significant disputes relating to land use, customary rights of local communities and Indigenous Peoples

p. 160.

YES

MM7

The extent to which grievance mechanisms were used to resolve disputes relating to land use, customary rights of local communities and Indigenous Peoples, and the outcomes

p. 160.

YES

Local communities GRI 103: Management approach 2016

GRI 413: Local communities 2016

GRI Supplements Mining sector and metals

GRI Supplements Mining sector and metals

- 252 -

Sustainable Development Goal (SDG)

SDGs

Sustainability Report - 2019

GRI Content Index Thematic content Thematic content

GRI Supplements

Page / URL / Comments

Omission

Verification

Number and percentage of operations with closure plans

Due to Company policies, the global financial provision data for the closure plans cannot be published.

103-1

Explanation of the material topic and its boundary

p. 164.

YES

103-2

The management approach and its components

p. 165.

YES

103-3

Evaluation of the management approach

p. 167.

YES

414-1

New suppliers that were screened using social criteria

Drummond Ltd. did not evaluate new suppliers in 2019 based on social criteria.

YES

414-2

Negative social impacts in the supply chain and actions taken

p. 170.

YES

103-1

Explanation of the material topic and its boundary

p. 222.

YES

103-2

The management approach and its components

p. 222.

YES

103-3

Evaluation of the management approach

p. 222.

YES

415-1

Political contributions

Drummond Ltd. does not make contributions to political parties.

YES

MM10

Mining sector and metals

Sustainable Development Goal (SDG)

SDGs

Goal 16: Peace, justice and strong institutions

16.1. Significantly reduce all forms of violence and violations of human rights at the Company's locations and among its stakeholders.

Goal 16: Peace, justice and strong institutions

16.5. Promote a culture of legality to substantially reduce corruption and bribery in all their forms, and ethical, human rights and corporate breaches at the Company's locations and among its stakeholders.

16.6. Develop effective, accountable and transparent institutions at all levels.

Supplier social assessment GRI 103: Management approach 2016

GRI 414: Supplier social assessment 2016

Public policy GRI 103: Management approach 2016

GRI 415: Public policy 2016

p. 223.

- 253 -

GRI Content Index

GRI Content Index Thematic content Thematic content

Page / URL / Comments

Omission

Verification

Sustainable Development Goal (SDG)

SDGs

Socioeconomic compliance GRI 103: Management approach 2016

GRI 419: Socioeconomic compliance 2016

103-1

Explanation of the material topic and its boundary

p. 38, p. 140.

103-2

The management approach and its components

p. 38, p. 141.

103-3

Evaluation of the management approach

p. 40, p. 152.

419-1

Non-compliance with laws and regulations in the social and economic areaÂ

During 2019 Drummond Ltd. had no cases of non-compliance with laws or regulations associated with the social or economic area.

103-1

Explanation of the material topic and its boundary

p. 228.

YES

103-2

The management approach and its components

p. 228.

YES

103-3

Evaluation of the management approach

p. 229.

YES

MM9

Sites where resettlements took place, the number of households resettled in each, and how their livelihoods were affected in the process.

p. 231.

YES

Goal 16: Peace, justice and strong institutions

Resettlement GRI 103: Management approach 2016

GRI Supplements Mining sector and metals

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16.6. Develop effective, accountable and transparent institutions at all levels.

Sustainability Report - 2019

As s urance S ta tement

B o g ota D.C. September 25th , 2020

Co mpliance w ith G RI S t andards I n d ependent A ssurance R eport of 2 019 S u stai nabil ity R eport of D rummond L td.

Methodology BSD Consulting assurance process included:

BSD Consulting has conducted the External Assurance of the 2019 Sustainability Report of Drummond Ltd. The external assurance aims to assess and provide independent conclusions upon: • •

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The use of the GRI Standards Content and Quality principles in the preparation of the report.

The compliance with the Standards regarding the criteria and disclosure requirements of to the inaccordance option selected by the company.

• •

Independency

•

BSD Consulting works independently and guaranty that no member of its team holds consulting contracts or other commercial o familiar ties with Drummond Ltd.

Review of the materiality process assessment.

Interviews with employees of key areas responsible of sustainability management and reporting of material topics.

Review of quality and reliability of selected information, through verification visits to the mine and Bogota’s offices.

Review of articles in media and publications of independent organizations where the company is mentioned.

Critical reading of the final draft of the report, review of data samples and request of adjustments and clarifications.

G e neral Fi nding s a nd Concl usions

Proficiency

Based on the work performed by BSD Consulting, nothing has aroused to suggest that the information and data contained in this report does not come from reliable sources or systems, or that the assumptions used for calculations and analysis are inappropriate.

BSD Consulting is a global consultancy company that provides knowledge and solutions for sustainable development. The company has proven experience developing sustainability reports, external verification and certified training.

This assurance has been conducted by experienced professionals with expertise and training in sustainability reporting according with GRI Standards, stakeholder engagement and external assurance.

BSD concluded that the 2019 Drummond Ltd. Sustainability Report complies with the content and quality principles established by the GRI Standards.

The following are particularly observations and opportunities for improvement on the application of the principles.

Drummond Ltd. and BSD Consulting responsibilities

C o ntent P rin ciples Stakeholder Inclusiveness

The reporting, stakeholder engagement and materiality processes are responsibility of Drummond. The Report’s evaluation based on the adherence to GRI Standards principles, disclosures and the confirmation of the “in accordance” option are BSD’s responsibilities.

The company receive timely information on what is important for stakeholders, thanks to the permanent relationship lead by the Communications department, with relationship channels that operate according to the needs and characteristics of the target audiences.

Scope and limitations

Sustainability Context

The scope of this assurance corresponds to the nonfinancial information of Drummond Sustainability Report 2019. The process of assurance was Type 1, moderate level.

The company demonstrates its understanding of sustainable development within the framework of its operations and describes the management of its value chain on social, environmental and economic matters, through objective information and metrics that correspond to the context of the sector and the geographic region of its operations.

The application of the GRI content and quality principles for the preparation of the report was verified, as well as the disclosure of all reporting requirements of General, Management Approach and selected Topic-specific Standards.

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GRI Content Index

As s urance S ta tement

Co mpliance w ith G RI S t andards However, it is recommended that, within the sustainability framework aligned with business continuity, the company must include a broader vision of strategic actions to be taken, to face the increasingly demanding challenges in global markets, for the mining sector and the transition to a low-carbon economy.

performance of material topics, even if they are not explicitly related to a specific disclosure.

Clarity and Accuracy The report presents information in a clear language accessible to different audiences. The qualitative information is presented in a concise manner, reporting the performance indicators and explaining the measured data and calculations.

Materiality • In the first quarter of 2020 and supported by a third party, Drummond Ltd reviewed and validated the material topics.

• The review started with the material topics identified in the assessment carried out in 2018, which was based on international standards such as GRI, Global Compact and SASB; as well as the company's Corporate Social Responsibility and Human Rights strategies.

• Internal interviews were also conducted to understand the company's perspective. Also, it was carried out a press analysis of Drummond news and of the mining sector in Colombia.

• A qualitative evaluation was carried out on the 13 material topics and the indicators to be reported, in terms of impacts, understanding and importance.

• The 13 topics are kept as relevant matters and no additional topics were identified that were no longer covered by such materiality, nor were topics withdrawn.

• The 13 material topics continue to reflect the most significant impacts of the company on the economy, the environment and society.

Comparability The report presents quantitative information from the last three years, that allows comparing the company´s performance between these periods.

Reliability During the interviews with the reporting areas, information of management systems, formats and records managed by the company was shown to continuously monitor the quantitative and qualitative information.

As an opportunity for improvement, it is recommended not to exclude for the reincorporation count, the number of workers who resigned, had their contract terminated or were fired with or without just cause. Although it was clarified that for this period there was no staff turnover on this issue, it is important that, for the next periods, it is not excluded from the calculation.

Timeless This report was published by the third quarter of the year. This year the preparation of the report took longer than the previous year. Although more timely preparation is expected for the coming periods, it is understood that the global situation associated with COVID-19 has also generated an impact on the organization, which caused the delay.

Completeness It was found that the report shows performance information for material topics within the framework of the coverage indicated for each one. This coverage is properly identified and disclosed.

Q u a lity p rin ciples

I n a c cordance o ption

Balance

According to the foregoing, BSD Consulting declares that the 2019 Sustainability Report of Drummond Ltd. meets the criteria corresponding to the "Core" option of the GRI Standards.

The company's main achievements during the reporting period are presented in a balanced manner, describing the milestones reached in 2019 and the challenges the company faces for the next period.

The report includes all general disclosures of the Standard GRI 102. Likewise, for all material topics, it was verified that all management approaches were adequately reported in accordance with Standard GRI 103 and that at least one topic-specific

On the other hand, it is recommended to give greater visibility to the initiatives that are being carried out in the areas, that can promote the good

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Sustainability Report - 2019

As s urance S ta tement

Co mpliance w ith G RI S t andards disclosure was disclosed in accordance with the related Topic-specific Standard.

For those material topics that do not have a related Topic-specific Standard, the company adequately reported the contents of the management approach as well as its own specific disclosure.

Marcela Romero Merino General Director BSD Consulting S.A.S Assurance leader: Jimena Lucio Giraldo Consultant BSD Consulting

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