Supplier and contractor management

2.

Supplier and contractor management

Drummond Ltd. confirms its commitment to continue working for economically viable, environmentally sustainable and socially responsible mining, through the operational management of its Corporate Social Responsibility Strategy, which contributes to meeting the Sustainable Development Goals. Through its management of suppliers and contractors, it contributes to:

CONTRIBUTION TO MEETING SUSTAINABLE DEVELOPMENT GOALS

PEACE AND HUMAN RIGHTS

Strengthen capacities among stakeholders to build a peaceful, fair and responsible society that promotes respect for human rights. • Training and promotion • Peace and social dialogue • Coexistence and conflict resolution

ENVIRONMENTAL PERFORMANCE

Strengthen business capabilities that ensure world-class environmental performance. • Environmental Sustainability • Conservation and restoration

CSR STRATEGY Contribution to capacity-building

COMPREHENSIVE DEVELOPMENT

Strengthen local capacities for the well-being and prosperity of employees and their families, and the communities in our area of influence. • Education and training

• Generation of opportunities

• Working Enviroment

GOVERNANCE FOR DEVELOPMENT

Strengthen local capacities for greater efficiency in public planning and management. • Transparency and citizen oversight • Institutional and community strengthening

"When we started working with Drummond, we had 5 assistants, then we went on to 18 workers, and today we have grown to 130, all from the area of influence. Drummond’s work with its contractors is excellent, 10/10. It is a responsible company that cares about safety and is interested in seeing its contractors grow and improve their standards, implementing all of their policies and receiving quality certifications.”

MILCIADES CASTAÑEZ ORTA CEO Contractor Company Villa Loly

A work team from the contractor Villa Loly

TARGETS

Target 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.

Target 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.

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

Target 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.

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

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

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

HAVING A SUPPLY CHAIN THAT GUARANTEES THE COMPANY’S LONG-TERM OPERATION IS A CRITICAL NEED FOR THE SUSTAINABILITY OF DRUMMOND LTD.’S WORK.

For this reason, the various suppliers and contractors that support the operation undergo rigorous evaluation and selection processes, in order to ensure that the purchasing and hiring of goods and services provide the necessary level of equality, offer competitive process, are delivered in a timely manner and guarantee after-sales service, which ultimately generates growth and competition in the market.

13. At Drummond Ltd., local suppliers or contractors are understood to be those companies whose headquarters are located in the Caribbean Region. [GRI 204-1]

Percentage of spending on local suppliers

Direct interaction with Drummond Ltd.’s local suppliers13 of goods and services generates significant regional economic dynamics and a substantial number of direct and indirect job opportunities with high standards in terms of technology, industrial safety and environmental protection, and contributes to the professional and business development of the municipalities in the area of influence of the mining and port operations.

2021

2020

Graphic 9. Purchases made from domestic suppliers in millions of USD

279.5

221.4

2019

2018 242.3

262.8

Total purchases Supplier purchases (Caribbean region) Supplier purchases (rest of the country) 581.1

447.8

559.5

585.2 860.5

669.3

801.8

847.9

DURING 2021, DRUMMOND LTD. HAD COMMERCIAL RELATIONSHIPS WITH 756 SUPPLIERS, WITH BILLINGS OF USD

1,214,255,869. OF THESE SUPPLIERS, 696 ARE DOMESTIC (92 %), AND THEY GENERATED BILLINGS OF USD 860,542,490 (71 %). OF THE DOMESTIC SUPPLIERS, 290 ARE LOCATED IN THE CARIBBEAN REGION, AND THEIR BILLINGS WERE USD 279,484,208, EQUIVALENT TO 32 %.

Local labor14

Additionally, continuing with the policy of favoring hiring of regional labor, in 2021 there was an increase of 6.88 % in local hiring compared to 2020.

Table 5. Local, national and international hiring of suppliers and contractors in 2021

0.34%

ABROAD

TOTAL

Mining operations Port operations

20 15 5

90.97%

LOCAL

TOTAL

5,382 Mining operations 4,701 Port operations 681

8.69%

REST OF THE COUNTRY

TOTAL

Mining operations Port operations

514 417 97

In 2021, the percentage of contractor employees born in the municipalities in the area of influence increased. Hiring of these people in the mining operations increased from 1,462 to 1,488, and at the port it went from 113 to 144 employees. Both figures represent an increase of more than 3.62 %.

14. At Drummond Ltd., the departments understood to be local include Atlántico,

Cesar, Magdalena, Bolívar and

Guajira.

MINING OPERATIONS

5,133

PORT OPERATIONS

783

TOTAL

5,916

5,290 626

This is the result of the inclusion in the standard contract of a clause that establishes that the contractor must hire as many local employees as possible, and the parameters that must be taken into account to do so.

[GRI 308-2]

[GRI 414-2]

Negative environmental impacts in the supply chain and actions taken Negative social impacts in the supply chain and actions taken

Table 6. Results of the social and environmental assessment of suppliers

Total number of suppliers and contractors with which the Company had a relationship in 2021, whose impact has been evaluated

Number of suppliers and contractors that present significant actual or potential negative impacts

Percentage of suppliers and contractors with which improvements have been agreed to after the evaluation

Percentage of suppliers and contractors with which the contractual relationship has been terminated as a result of the evaluation

Environmental Social

73 0

73 0

100 %

0 % 0

0 %

The contractor or supplier that shows progress or growth in terms of these indicators has a better chance of maintaining its ties to 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 2021 period, no actual or potential negative social impacts were identified. Likewise, in no case has the Company been obliged to terminate a contractual relationship as a result of an evaluation related to this item. On environmental matters, during 2021 the Company conducted

258 64 194

inspections of contractor companies took place at the port operations at the mining operations

An additional 14 environmental compliance audits were conducted of suppliers of critical environmental services. The main aspects evaluated were:

1. Waste management (recyclables, ordinary, hazardous and special waste) 2. Handling of chemical substances; hydrocarbons management 3. Prevention and control of spills of hydrocarbons and chemical substances 4. 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.

MILESTONES CHALLENGES

• Billings by local suppliers increased by 7 %, exceeding the goal by 4 %, as an increase of 3 % was expected. • There was an increase of 3.62 % in hiring of personnel from the area of influence, both by suppliers and contractors. • A human rights awareness talk was held with the managers and legal representatives of the

Company’s suppliers and contractors. • Progress was made in modifying the procedure for evaluating suppliers on social and human rights issues. • Increase billings by local suppliers by 3.5 %. • Increase hiring of personnel from the area of influence by 3.5 %. • Provide 60 openings in developing a dual training program with employees who are all from the area of influence. • Hold a human rights awareness talk was held with the managers and legal representatives of the Company’s suppliers and contractors. • Increase the amount of food provided by local suppliers in the supply chain by 40 tons, to generate more economic growth and high-quality jobs. • Carry out an organizational strengthening program for ten community associations and local businesses to reduce the risks associated with local hiring and strengthen business management practices in the cooperatives, foundations and small businesses that operate in the area of influence.