Clarifications on the sanction imposed by the Ministry of Labor for alleged improper labor outsourcing

Bogotá, October 31, 2016

The Ministry of Labor decided, as part of an administrative investigation, that there was alleged improper labor outsourcing by several companies from the mining sector and their contractors. For this reason it decided to sanction Drummond Ltd., a decision that is not yet final, and therefore, it is still not enforceable and is being disputed.

Drummond Ltd., exercising its rights, filed an appeal against the Ministry’s decision because, contrary to the Ministry’s interpretation, the company understands that Colombian labor law does not prohibit the use of contractors. It is a legitimate practice that is internationally accepted in all industries.

Drummond Ltd. is a company that respects Colombian regulations and, as such, conducts all of its mining activities under its corporate purpose with its own personnel. The great majority of these contracts are indefinite term contracts (97.5% of all workers), under a compensation scheme that is very competitive at the national level that benefits the employees and their families.

It should be noted that the company’s contractors and suppliers perform tasks that are not inherent in our corporate purpose, including specialized maintenance, transportation and food and cleaning services. These are recognized companies with broad experience that have direct employment contracts with their employees and meet all of the requirements set out in Colombia’s labor regulations. No services are being provided under the system of worker cooperatives.

Finally, all operations are conducted under the highest industrial safety, environmental and human rights standards, with all labor and freedom of association protections, which are mandatory for each and every one of our suppliers and their employees.

For these reasons, in the absence of improper labor outsourcing, Drummond Ltd. is confident that the issue will be cleared up and the sanction will be rectified.