Materiality

In 2014, we undertook a combined materiality, hazard and aspect assessment to guide both our CSR reporting and our management priorities. This assessment considered the environment, health, safety and community (EHSC) issues (or aspects) that are most significant to Hudbay in terms of business impact and the degree of stakeholder interest.

Facilitated by a third party, and using our 2011 materiality review and the new GRI G4 guidelines as a starting point, the assessment involved:

• Internal and external research to identify and characterize EHSC aspects and stakeholder groups. This included:
  • Consolidating lists of stakeholder groups identified by each Hudbay location;
  • Reviewing the prioritization assigned to each stakeholder group to arrive at a consolidated prioritization of stakeholder groups, based on Hudbay’s impact on them and their impact on us;
  • Reviewing the hazards and aspects registers from the Manitoba and Peru management systems and consolidating them with the G4 aspects list;
  • Reviewing complaints and grievances received at our operating and project locations; and
  • Reviewing industry guidance, particularly components of the Mining Association of Canada’s (MAC) Toward Sustainable Mining protocols, which are shaped by a community of interest panel organized by MAC.
• Identifying stakeholder interests and potential business impacts of the identified hazards and aspects. This included:
  • Reviewing Hudbay and public materials identifying topics and interests raised by different stakeholder groups;
  • Surveying a cross-section of Hudbay personnel who work with different stakeholder groups to gather input on stakeholder rankings of topics based on their contacts; and
  • Two half-day workshops with a cross-section of Hudbay personnel (from diverse functional areas, locations and levels) to review the survey data and agree on a consolidated ranking of stakeholder interests and priority business risk areas.
• Summarizing the workshop outputs into a materiality matrix identifying priority issues from both stakeholder and business perspectives, as well as other issues that will continue to be tracked and managed.

• Review of the process and conclusions with senior management.

Materiality Matrix

Eleven priority issues were identified through the materiality assessment. The aspect boundaries apply to all Hudbay operations globally. Click on the issue in the diagram below for details on how it is being managed and 2014 performance.

This table indicates how material topics align with G4 aspects, which are reported in the GRI index:

Material topics	GRI (G4) aspects
Ethics	Ethics and integrity Anti-corruption
Human rights	Security practices Human rights grievance mechanism
Stakeholder engagement	Stakeholder engagement Environmental grievance mechanisms Grievance mechanisms for impacts on society
Aboriginal/indigenous relations	Indigenous rights
Health and safety	Occupational health and safety
Employee relations	Labour/management relations
Economic performance	Economic performance Indirect economic impacts Procurement practices
Local market presence	Employment Closure planning Resettlement
Land and biodiversity	Biodiversity
Water	Water
Tailings	Effluents and waste

Additional Managed Aspects

Additional issues were identified as relevant to Hudbay and important within Hudbay’s management framework, but not as high priorities in terms of broad stakeholder interest or specific business risk. These topics included corporate governance, energy and climate change, air emissions, and ethics and business practices. Supply chain sustainability was identified as relevant with respect to local suppliers and on-site contractors, but of lower priority with respect to major international suppliers. These issues are all included in Hudbay’s management processes, but are not emphasized in this report and, in accordance with GRI guidance, are not identified in the GRI index of this report.

Boundaries

The materiality review was conducted on the initial boundary assumption of activities and facilities within Hudbay’s management control (as described in the Our Company section of this report). Participants in the review process were then asked for cases in which boundary limits should be adjusted for specific aspects. The exceptions that were agreed to be appropriate based on stakeholder expectations and business risk are as follows:

• Safety statistics are tracked and reported for all contractor activities that are under Hudbay contracts and supervision;
• Environmental incidents related to transportation between Hudbay locations and local supplier activities are generally tracked and reviewed by Hudbay, but are not included in performance reporting in this report;
• Grievances are accepted and investigated with respect to local contractors, and are included in grievance numbers and characterization in this report; and
• Scope 2 greenhouse gas emissions are calculated and reported.