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KPC HSE ANNUAL REPORT

2002

PART 1

EXECUTIVE SUMMARY

This report describes the HSE activities and performance at PT Kaltim Prima Coal
(KPC) in 2002 and planned programs and targets for 2003.
The KPC HSE management goals are contained in the sites HSE Policy. The site
operates a safety management system known as Prima Nirbhaya, based on the
NOSA safety system, and an environmental management system that is being
progressively upgraded to ISO 14001 compliance. These systems provide HSE
assurance through processes of investigation, measurement, analysis and review
providing output that is discussed at weekly Executive Committee meetings. In
addition, the Safety Improvement Committee reviews matters relating to serious
safety risks and prescribes actions to mitigate them.
Safety
The sites safety performance in 2002 and targets for 2003 are summarised as follows:
Parameter

Target 2002

Actual 2002

Target 2003

Fatalities

Potential fatalities

22

12

Lost Time Injuries

22

17

0.18

0.23

0.18

Lost Time Injury Frequency Rate


(LTIFR) per 200,000 hours.

Although KPC did not meet its LTIFR target in 2002, its LTIFR was significantly lower than in
preceding years:

LTIFR KPC & CONTRACTORS


(PER 200,000 HOURS)
0.6
0.5
0.4
0.3
0.2
0.1
0

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In 2002, KPC was awarded the Aditama Award from the Indonesian Department of Geology
and Mineral Resources for being the safest mine in Indonesia.
Regrettably in January 2002, a contractor employee was killed while conducting land
clearing using a bulldozer. This accident put into focus the urgent need to better manage the
risk of serious and fatal accidents at KPC. This became KPCs main safety objective in 2002:
New golden rules that target key fatality risks were introduced, fatality prevention standards
were developed, management of key fatality risks were extensively audited, the
measurement and investigation of potential fatalities was enhanced, and introduction of a
new contractor safety management system was commenced. Nevertheless, the frequency
with which potentially serious incidents continued to occur shows that the risk of serious
injuries or fatalities must remain the primary focus of KPCs safety effort in 2003.
Environment
Environmental performance in 2002 and targets for 2003 are summarized as follows:
Parameter

Target 2002

Actual 2002

Target 2003

Area rehabilitated

300 ha

293 ha

405 ha

Area disturbed

327 ha

630 ha

393 ha

Change in mine footprint

+36 ha

+337 ha

-12 ha

Conformance with Total Suspended


Solids (TSS) discharge target

90%

91%

90%

Conformance with pH discharge target

99%

99.5%

99%

The above plan increase in active footprint resulted mainly from bringing forward the
development of the Melawan reserves from 2003. KPCs rehabilitation progress is
summarized as follows:
Clearing and Rehabilitation at KPC December 2002
Activity
Cleared for infrastructure

Total Area (ha)


529

Cleared for mining

5,336

Rehabilitated to-date

1,875

Total active footprint

3,461

KPC is committed to reducing the active footprint progressively beginning in 2003.


An additional significant target for the site in 2003 is full implementation of ISO 14001.
In 2003,a more accurate estimate of Greenhouse gas emissions will be implemented (with
the assistance of either Rio Tinto Technical Services or a consultant). Projections will be
developed for life-of-mine. An assessment of available mitigation measures will be
conducted.

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In 2002, KPC was awarded, for the third consecutive year, a Golden Certificate for
environmental management by the Governor of East Kalimantan. KPC remains the only
coal mine in East Kalimantan to have received this award.

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PART 2

RISK MANAGEMENT, PERFORMANCE MANAGEMENT & COMPLIANCE

2.1. Key HSE Risks at KPC


The key HSE risks at KPC can be summarized as follows:
1. Lost time injuries
2. Fatal accidents (a sub-set of the above)
3. Local contractor safety performance
4. Acid mine drainage
5. Failure of site rehabilitation (biodiversity loss)
6. Impacts from sediment loss from the site
7. Hydrocarbon spills
8. Further increase in active footprint
9. GHG emissions

2.2. Managing the Key HSE Risks


2.2.1 Safety
During 2002 the approach to incident prevention at KPC has been two-fold. Effort has been
directed at improving implementation of the existing safety management system and
procedures. Additionally there have been a number of initiatives specifically aimed at
addressing the risk of fatal accidents.
Improvement of the existing safety management system
Work done in 2002 aimed at improving the performance of existing elements of KPCs safety
management system includes:
External auditing of the Prinasa (Advance Safety Auditing) program and progressive
implementation of recommendations.
External auditing of the implementation of the Prinutama (incident management
system) and progressive implementation of recommendations.
Internal auditing of Prima Nirbhaya implementation (Department by Department) and
implementation of recommendations.
Ongoing safety training, including safety leadership training.
Review at General Manager level of all significant and high potential incidents.
Addressing the Risk of Fatal Accidents
The following initiatives were implemented in 2002 to specifically address the risk of fatal
accidents.
a) Identification of Key Fatality Risks
Based on KPCs accident history and the experience of fatal accidents at other mine sites,
the site defined the Key Fatality Risks at KPC. These are the factors that are most likely to
place a person at risk of a fatal accident, namely:
Vehicle and mobile equipment safety
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Road safety and traffic interaction


Isolation and lockout
Electrical safety
Working at heights
Confined spaces
Lifting and supporting loads
Working near blasting areas
Working near pit walls
Working near water

With the identification of these Key Fatality Risks, the site is better able to develop and
implement programs and measures that will reduce the risk of fatalities.
b) New Golden Rules
Golden safety rules are found at many mine-sites and usually are simple rules aimed at
protecting workers from key safety risks. In December 2002, KPC implemented a new set of
twelve Golden Rules that specifically target the Key Fatality Risks. In addition to being
focused only on these risks, each rule is supported by clear disciplinary sanctions, in some
cases, termination of employment. All people working at KPC must obey these rules.
c) Fatality Prevention Standards
A series of 11 fatality prevention standards were developed in 2003. The purpose of these
standards is to effectively address the Key Fatality Risks identified for the site. The
standards have clear accountabilities for fulfilling requirements, and will be supported by
guidelines and working documents that describe how requirements can be achieved.
Resources have been dedicated to upgrade and implement training and awareness
programmes to support these standards.
d) Auditing of Management of Key Fatality Risks
In 2002, KPC implemented a new safety auditing program that targets only the Key Fatality
Risks. By the close of 2002, all our site contractors and 14 selected KPC Departments had
been audited under this program and had been issued with action plans for improvement.
The audits are done in a manner that allows numerical ratings to be given to each contractor
or Department; this provides a means to measure performance and improvement. Significant
improvements to safety management have resulted from the program, which will be ongoing
2003 and in subsequent years.
e) Improved Measurement
In previous years KPC has relied on the measurement of Significant Incidents and Lost Time
Injuries to gauge our safety management performance. In 2002, KPC introduced an
additional parameter known as Potential Fatalities. By measuring the number of potential
fatalities occurring in our workplace the site can assess the effectiveness of measures aimed
at reducing the risk of fatal accidents.
f)

Improved Co-ordination

The large number of safety initiatives and programs being implemented in 2002 highlighted
the need to better coordinate and prioritize safety management. To address this, a Safety
Improvement Committee has been created. It deals with and manages all safety
improvement projects.

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g) Improved Contractor Safety Management System


During 2002, a program was developed that will lead to the implementation of a Contractor
Management System for the site by mid 2003. This will ensure uniform and high standards
of HSE management within the contractor community (managed via an Intranet-based
database).
g) Cultural Awareness Workshop
A cultural awareness workshop was implemented in August to assist in identifying cultural
constraints to implementing change in the safety culture at KPC.
Program for 2003
The safety effort in 2003 will be focused on implementation of the initiatives introduced in
2002 to address the Key Fatality Risks, in particular:

Enforcement of the Golden Rules.

Implementation of the new Prima Nirbhaya elements including supporting Codes of


Practice.

Continuation of the Key Fatality Risk audit program.

In 2003 a Contractor Safety Management System will be implemented. This will assist in
ensuring uniform and high standards of safety management within KPCs large contractor
community.
A further initiative to be developed and implemented in 2003 will be a program to manage
fatigue in the workplace. Fatigue is known to be a contributing factor in many accidents at
KPC. This program will include communitybased awareness programs.
The Prinasa audit program will continue in 2003. The effectiveness of this program will be
improved by establishing individual targets for each trained auditor, and by improving the
quality of these audits.
Further studies will be carried out on the influence of cultural factors on safety behavior to
seek more effective ways of influencing the safety behavior of the local workforce.

2.2.1 Environment
Improvement of the existing environmental management system
During 2002 the planned rehabilitation, monitoring and reporting programs were
implemented, as were the hydrocarbon, waste and rehabilitation internal auditing programs.
Ongoing improvements included:

Implementation of an external (BP) hydrocarbon management audit followed by an


audit action plan.

Establishment of a Liaison section, with the key purpose of improving stakeholder


awareness of environmental management at the site.

Upgrading the capacity of the environmental laboratory to process NAG testwork.

Implementation of a program to improve waste rock selective handling procedures.

Review and rationalization of the water monitoring program.


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A preliminary review of the sediment control strategy.

Key staff members received training in ISO 14001 as preparation for implementation of this
standard in 2003.
Following several years of negotiations driven by KPC, the TSS discharge limit for coal
mines in Kalimantan was raised from 200 ppm to 400 ppm with allowance for storm events.

Program for 2003


During 2003, the sites approach to managing environmental risks will largely focus on
improvement of existing systems and procedures.
This will include implementing
compliance with ISO14001. The sites management of biodiversity will be formally
documented.
Specific risks:
Acid Mine Drainage
In common with many sites, the overburden at KPC contains variable quantities of sulphides.
When exposed to oxygen and water, some of the overburden has the potential to produce
acid mine drainage. The long-term control of acid mine drainage at KPC relies on the
successful implementation of two activities:

The characterization and selective handling of waste rock based on geochemistry.

Capping of the waste dumps with an engineered cover to limit oxygen entry and
hence sulphide oxidation rate.

The strategy and procedures to address this risk have been developed during a five year
research program using external consultant and peer review. They have been assessed
during an external audit as representing international best practice. Monitoring and review of
this work is ongoing and a peer review by Rio Tinto is planned for 2003.
Rehabilitation and Biodiversity Restoration
KPC has a policy of progressive rehabilitation (rehabilitation is implemented on areas as
they become available). The general rehabilitation objective is restoration of a productive
forest ecosystem, with some pit voids remaining as water bodies.
The rehabilitation strategy and technique are based on approximately ten years of site
experience including monitoring and review by consultants. The success with which native
forest is being restored will require periodic assessment over the life-of-mine. The initial
requirement of fast site stabilization is consistently achieved.
The rehabilitation procedures and standards are defined by a set of rehabilitation
specifications. Performance against these specifications is audited routinely by the KPC
Environmental Department.
Sediment
Sediment control at KPC is achieved by means of drainage works, sediment control ponds
and minimizing as far as possible the active mine footprint.

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During 2002 the dredging capacity of the site was increased. Also, the compliance level for
TSS in site discharge was increased from 200 ppm to 400 ppm. These charges have lead to
a higher level of conformance with the target.
Independent studies have shown no impact on aquatic fauna resulting from mine operations
(the receiving waters are frequently very turbid from other sources).
Hydrocarbon Management
Waste hydrocarbons (fuel, oil and grease) are generated in more than twenty-one
workshops on the mining area. All hydrocarbons are potentially hazardous to the
environment if spilt in large quantities.
Hydrocarbon management requirements for all work at KPC are contained in the KPC
Hydrocarbon Environmental Management Handbook. The site monitors compliance with
these standards by means of an ongoing audit program. During 2002, 445 audits were
conducted.
Spill control training and auditing of spill control equipment was conducted in 2002.

COMPLIANCE WITH KPC STANDARDS (%).

HYDROCARBON AUDIT RESULTS- ALL WORKSHOPS


1999 - 2002
90
80
70
60
50
40
30
20
10
0
1999

2000

2001

2002

Active Footprint
The risk of a further increase in the active footprint is within management and shareholders
control, and is dependent on decisions to alter the present mine plan for business
performance purposes. KPC will not proceed with such an increase without full review of the
impacts and mitigation strategies and then only with approval from its shareholders.
Greenhouse Gas Emissions
Planned production increases will be associated with corresponding increases in
greenhouse gas emissions, largely due to greater fuel usage. These will be controlled by
mine scheduling which will address the need to minimize haul distances. Third-part advice
will be sought in 2003 to identify ways to mitigate emissions.

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Self-verification, Gap Identification and Continuous Improvement

The approach taken at KPC for ongoing improvement towards best-practice is based on:

Comprehensive monitoring of a wide range of HSE parameters.

Internal and external auditing and implementation of audit action plans.

External safety and health audits are carried out annually and external environmental audits
are performed at 2-year intervals. Self verification and self assessment, including
compliance with local procedures and legal requirements are achieved through a
programme of internal audits and reviews as prescribed in KPCs HSE policies. Progress on
audit action items is reported routinely to senior management. The objective is international
best practice (as stated in the HSE policy).
To summarize, the following auditing will be implemented in 2003 (full implementation of ISO
14001 in 2003 will result in an expansion of this audit schedule) and all key HSE risks will be
assess in 2003 by these audits.

Audit
Environmental General environmental audit

Safety

Type

Timing

External

Q4

Hydrocarbon management audit

Internal

Ongoing

Hydrocarbon management audit

External

Q2

Waste management audits

Internal

Ongoing

Rehabilitation audits

Internal

Ongoing

Preliminary certification audit (ISO 14001)

External

Q3

Formal document review (ISO 14001)

External

Q4

Auditing of management of key fatality risks Combined

Q2

Prima Nirbhaya audit

External

Q3

Rio Tinto safety audit

External

Q4

All serious and high potential incidents will be investigated by a team under the leadership of
a General Manager assisted by a root cause specialist. The investigation results and
recommendation will be reported to the Safety Improvement Team who will assign
responsibility for communication of the findings and implementation of the adopted
recommendations.

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