ASX Year 2000 Disclosure - 30 September 1999

Overview

On 31 March 1999 Pasminco updated the ASX on the measures it had put in place to address issues arising from the Year 2000 problem. This report provides a further update on the status of the Pasminco Year 2000 Project.
Pasminco is the world’s largest integrated producer of zinc and lead. As such, Pasminco is a global Australian business with an international customer base.
The objective of the Year 2000 program remains the same. To deliver a level of Year 2000 systems and vendor compliance across Pasminco which ensures business continuity and minimizes the impact to Pasminco operations through the Year 2000 date horizon and beyond.

The Year 2000 methodology sets down standards and guidelines for reaching a Year 2000 ready state. Following processes of risk assessment, testing and remediation the identified process, component or vendor may be assessed as Year 2000 ready. Where it is used in this report, this term reflects Pasminco’s view that it has taken all reasonable steps to assess and reduce the Year 2000 risk associated with the process, component or vendor. The term does not constitute a representation that the relevant process, component or vendor is Year 2000 compliant.

Has your company’s assessment of its overall potential exposure to the Year 2000 problem changed materially from what the market has previously been told? If it has, your response should describe the change.

No.

Has your company initiated any material action to address the Year 2000 problem beyond actions previously disclosed to the market, or does it propose to initiate any such action? If it has, your response should describe the action.

No.

Please provide details of your company’s progress in relation to its activities to address the Year 2000 problem, including the date by which your company expects to have completed those activities.

Commercial Systems

The definition of commercial systems is computer hardware, office applications, e.g. network equipment, accounting packages.

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• SAP Implementation
  The implementation of the SAP business system, which began in 1997, will largely mitigate the risks associated with the Group’s commercial systems. Y2K testing of SAP, including key system interfaces, was completed in April 1999. With the exception of the US sites and ARA, SAP has now been successfully implemented across the Pasminco Group in accordance with the schedule set in 1998. The commercial systems at the US sites and ARA are Year 2000 ready.
  
  
• Legacy Applications
  The small number of business critical commercial systems which are still in use at sites after the SAP rollout are now Year 2000 ready.
  
  
• Group System Infrastructure
  The project to ensure that all material IT infrastructure associated with the support of Pasminco’s business systems is Year 2000 ready is now complete. The project covered the compliance of PC’s, PC software and network equipment.

Technical Systems

The definition of technical systems is hardware and software used in creation of product. Areas covered include process control, laboratory systems, environmental systems and building services.

Each site has undertaken a number of risk mitigation projects. Hardware and software upgrades and complete replacement of some systems has occurred. All business critical projects are complete at this time.

Vendor Management

A detailed Vendor Management program based on vendor business criticality is in place to establish the level of compliance of Pasminco’s vendors. Work in the Vendor Management area has significantly improved Pasminco’s understanding of and confidence in its vendors level of compliance. Readiness planning is now the focus of Pasminco’s Vendor Management program and, where required, Readiness Plans have been established for business critical vendors. Monitoring of vendor Year 2000 status will continue through to the Year 2000.

Estimated Cost

In March 1999 the estimated cost of Pasminco’s Year 2000 project was $6 million. The current forecast is $5.3 million. This is less than otherwise might be expected as it does not include the cost of the SAP project. The forecast cost has reduced through reduction of contingency allowances.

Are there areas of your company’s activities where, in your company’s assessment, material Year 2000 risks will remain after the company’s activities to address the Year 2000 problem are completed?

Examples might include dependencies on third parties such as utilities. If there will be remaining risks, your response should describe them.
When the Year 2000 program activities are completed there will remain some risk from the Year 2000 problem. These risks will arise from both, internal and external sources. Some of the principal risks are stated below.

To reduce these risks Pasminco is undertaking Year 2000 Readiness Planning. This planning is being used with selected inventory and critical vendors to reduce the likelihood and impact of a Year 2000 failure. Readiness Plans to reduce the impact of any Year 2000 related events and ensure business continuity have been established at all sites. These plans are subject to final review by senior management.

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• External Entities
  Pasminco cannot be responsible for the preparedness of any external entity. However, through the Vendor Management process vendors are being assessed. Alternate vendors and readiness plans have been developed for vendors which have been assessed by Pasminco as being most at risk.
  
  
• Testing Issues
  Testing a continuous production process, such as that which occurs at some sites has particular difficulties. Where the risk has been confirmed by our review process as minimal the production process will not be tested. Readiness plans have been prepared where the business criticality justifies it.
  
  
• Legal Liability
  There is a risk to Pasminco of being held liable for loss or damage caused to a third party, breach of contract or possible negligence caused by a failure due to the Year 2000 issue. To reduce this risk Pasminco has used the Readiness Planning process to identify the key events where there is a risk and then put plans in place to cover these events.

Please describe your company’s contingency plan in relation to Year 2000 issues.

Year 2000 Readiness Planning
The Readiness Planning process aims to focus on business critical Year 2000 risk and build Readiness Plans for particular Year 2000 risk events. The knowledge of Year 2000 compliance from the equipment and Vendor inventories has been a key input to this process. It provides a guide to potential business critical risk events. Existing emergency procedures and business continuity plans have been incorporated into the overall process.

Pasminco sites have made significant progress on the Readiness Planning process commenced earlier this year to develop contingencies in relation to Year 2000 issues. Readiness Plans, which include emergency, contingency and recovery plans to reduce the impact of any Year 2000 related events and ensure business continuity have been established at all sites. The plans are subject to final review by senior management.

Implementation, training and awareness activities relating to the plans will continue through to the Year 2000.

Each site has made specific plans for the transition period. The plans focus on site services that are not directly controlled by Pasminco. These services include communications, power, gas and water utilities.

The Pasminco Year 2000 Project Office is co-ordinating company wide status reporting and intersite activity over the transition weekend. This will include monitoring Year 2000 issues at Pasminco sites during the transition period, providing support where possible and running selected tests before return to normal business on 4 January 2000.

For further information please contact:

Peter Griffin
Group Manager, Public Affairs
Telephone: (03) 9288 0463 or 0419 314 265

or

Trevor Shard
Group Manager, Investor Relations
Telephone: (03) 9288 9186 or 0419 584 515

This statement is a Year 2000 disclosure statement for the purposes of the Year 2000 Information Disclosure Act 1999. A person may be protected by that Act from liability for this statement in certain circumstances. This statement is authorised by Pasminco Limited.

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