SUSTAINABILITY Government and public policy

Government and public policy

As the issuers of mining licences, developers of policy and enforcers of regulations, host governments are among Gold Fields’ most important stakeholders. First and foremost, this requires our full adherence to all relevant legislation, including the payment of taxes and other levies. We are committed to working with governments at national, regional and local levels to establish sound and transparent working relationships that benefit both the countries in which we operate and our host communities. This has been particularly relevant during the Covid-19 pandemic, where our mines and projects have actively assisted governments in managing and mitigating its impacts.

Gold Fields does not provide financial contributions to political parties unless explicitly approved by the Board of Directors in accordance with the Company’s Code of Conduct. No political donations were made during 2021.

Gold Fields’ tax strategy is to proactively manage tax obligations in a way that is transparent, responsible and sustainable, also acknowledging the different interests of our stakeholders.

Our full tax strategy and policy, which now includes tax risk and governance, can be found at www.goldfields.com/integrated-annual-reports.php

Resource Nationalism

Many governments view the mining industry an attractive source for higher taxes and other fiscal and regulatory imposts – especially during tough economic times. This was exacerbated during the Covid-19 crisis as many countries faced declining tax revenues while metal prices in general, and gold in particular, recorded healthy gains over the past two years. Gold Fields, on its own and in conjunction with its peers, seeks to address the trust gap that exists between government and mining in a number of ways, including:

  • Consistently creating between US$2bn and US$4bn in total annual value for our wide range of stakeholders, including governments and host communities
  • Actively promoting host community value creation through host community employment, procurement and socio-economic investment
  • Working with our peers in the ICMM to promote industry-wide best practice and demonstrate the benefits of a responsible and fairly regulated industry

 

We conduct independent desktop resource nationalism assessments at least every two years, which provide valuable input on how we can increase trust and confidence among governments and communities. The key proposals reinforce many of the key strategies our operations are already implementing, namely strengthened engagement with governments at all levels, community value creation and improved communication on the socio-economic benefits of mining.

The Covid-19 pandemic also served as a catalyst to work more cooperatively with governments – with Covid-19 threatening the tax income of governments, educating our workforce and communities, and rolling out vaccination campaigns, we found more common ground with them. Gold Fields and other mining companies actively supported governments by providing facilities, health resources and much-needed funding. During 2021, our mines donated well over US$2m (2020: US$3m) in medical and sanitary equipment and other goods to host communities and governments. In H2 2021, many of our mines assisted local governments, when requested, with vaccination campaigns in our host communities.

Payments to governments by Gold Fields in 2021 (US$m)

  South Deep Ghana Peru Australia
Royalties 3 54 6 46
Income tax 194 56 160
Dividends1 47
Dividend withholding tax 24 3
Total 3 319 65 206
% of profit before tax and royalties 2 53 56 28
AMERICAS REGION

Our engagement in Peru is focused at local, regional and national government levels to address operational, social and sustainability matters.

In July 2021, left-wing Pedro Castillo was sworn in as the President of Peru for the next five years. The new administration’s appointments in the Central Bank and the Ministry of Economy signalled the continuity of macro-economic stability. However, to date, Castillo’s presidency has been characterised by political instability and regular changes in key cabinet portfolios.

In the mining industry, the government attempted to make changes to the sector’s regulatory and tax framework. However, this has been without success, given that the government faces strong opposition in congress and amid sectors of civil society. Our engagement is largely carried out via the National Chamber of Mines, Oil and Energy (SNMPE), especially on regulatory matters.

The industry enjoys good working relationships with various relevant public bodies in all levels of government (national and subnational). The main challenge has been the increase in public officials’ turnover at the national level due to political instability, a situation we are monitoring closely. President Castillo’s election and pronouncements by his government generated high expectations among mining communities, and community-mine conflicts escalated – mostly in southern Peru. These have, as yet, not spread widely to the Cajamarca province, where our Cerro Corona mine is located.

We continue to build trust between Cerro Corona and the host communities through ongoing stakeholder engagement and Shared Value projects, including the rollout of comprehensive water infrastructure, among other initiatives. Our response to the Covid-19 pandemic during 2020 and 2021 in the Cajamarca region and our areas of influence helped us engage with the communities, and the positive impact thereof was reflected in our independent relationship assessment studies. The extension of Cerro Corona’s life-of-mine to 2030 will also enable more long-term community investment programmes and strategies.

In Chile, most political and social stakeholders welcomed our decision to proceed with the construction of the Salares Norte mine in the northern part of the country. Albeit in a low investment environment impacted by Covid-19, Salares Norte was one of Chile’s largest investment projects during 2020 and 2021, and was identified by the government as a key project for economic upturn in the Atacama region. The project is governed by a stability agreement with the Chilean government.

During 2021, our engagements in Chile focused on supporting communities in coordination with regional and local governments to scope the economic and social impact of the pandemic. It also included the implementation of a tight permitting plan for Salares Norte. We were able to obtain all the permits required for construction of the mine as planned, and no delays were registered.

The political situation in the country increased the uncertainty surrounding the regulatory framework for the mining sector on two fronts. Firstly, left-wing Gabriel Boric won the presidential election and took office on 11 March 2022. His government’s ability to implement its manifesto will be limited as he will have to negotiate and establish alliances in the senate, where his party does not have a majority. President Boric appointed a respected economist as Minister of Finance, which signals the continuity of macro-economic stability.

Secondly, Chile is developing a new constitution, and several proposals put forward to date suggest a far more stringent regulatory regime for the mining sector. However, there is still a long way to go before a final draft of a new constitution is agreed to and put to a popular vote, which is scheduled for September 2022. Meanwhile, the construction phase of Salares Norte will continue as planned and we expect to start operating in Q1 2023.

As lawmakers develop the new constitution, we want to urge them to consider the benefits of responsible mining and how a well governed sector, with stable regulation and a competitive tax regime, can create sustainable socio-economic benefits for all stakeholders in the country.

AUSTRALIA REGION

The incumbent Labor Government in Western Australia (WA) significantly increased its majority during the state elections held in March 2021. While public health and economic issues arising from the pandemic dominated the political agenda in 2021 and into 2022, the government also made progress on key legislative reforms that commenced in its first term.

The implementation of the new Work Health and Safety (WHS) Act, which replaces the existing parallel regimes for general workplaces and mine sites, was deferred to early 2022. This Act delivers on key election promises to streamline the regulation of health and safety across all sectors, requires a greater focus on the mental health and wellbeing of workers, and introduces higher penalties for companies and officers who breach the obligations under the Act.

Following a series of disturbing media reports regarding sexual assaults and harassment against women engaged in the WA mining industry, the WA parliament announced a bipartisan inquiry into the issue in 2021. This inquiry received submissions from a large number of affected individuals, mining companies, the Chamber of Minerals and Energy (CME), as well as the state government. Although the findings from the inquiry are not expected to be published until at least May 2022, it is anticipated that the new WHS Act will be used to more closely manage this issue due to the serious physical and psychological safety implications. Gold Fields participates in the CME’s Safe and Respectful Behaviours working group, and also conducts its own engagements with the government on this issue.

Following the intense scrutiny of the WA Aboriginal Heritage Act in the wake of the Juukan Gorge incident in 2020, the state government passed the Aboriginal Cultural Heritage Act in late-2021, which will completely replace the existing legislative regime. The new legislation fundamentally shifts the approach to Aboriginal cultural heritage management by introducing a risk-based approach of engagement, consultation and approvals for activities that may harm cultural heritage values. The range of offences and penalties for any breaches also expanded significantly. The WA government is expected to undertake a 12 – 18-month process of co-designing the underlying regulations and codes of practice which will support the new Act, after which it will be implemented. We are actively involved in this consultation via the CME.

GHANA

Gold Fields Ghana’s investments in the country are covered by the 2016 Development Agreement (DA) with the government for both the Tarkwa and Damang mines. Under the agreement, Gold Fields is expected to spend US$500m at each mine – over an 11-year period for Tarkwa and a nine-year period for Damang – and includes a reduction in the corporate tax rate from 35% to 32.5%, as well as a sliding scale royalty tax based on the gold price. The government also holds a 10% interest in the entities controlling the Tarkwa, Damang and Asanko mines.

Since 2018, we have invested US$340m in Damang, which illustrates the confidence we have in Ghana’s fiscal and regulatory framework. The DA cemented our status as one of the largest contributors to the country’s fiscus. Gold Fields’ contribution to national development in 2021 totalled US$319m in the form of taxes, royalties and dividends.

In 2021, the government under President Nana Addo Dankwa Akufo-Addo took office for a further four years after a narrow election victory in late 2020. The government generally pursues stable, market-friendly policies, making Ghana one of Africa’s prime mining destinations.

In the wake of an economic slowdown following the Covid-19 pandemic, the government passed a number of regulations impacting Gold Fields and other mining companies. These include:

  • A US$5m Covid-19 levy, which Gold Fields paid without prejudice to its rights under the DA
  • Gold Fields enjoys tax exemptions on fuels and other items. Due to administrative procedures from the Ministry of Finance, these exemptions were delayed and the Company paid full tax rates, for which it has now applied to be refunded
  • The industry regulator, the Minerals Commission, granted short-term export licences for our two mines. We proposed retaining our original longer-term licences and are expecting a ruling shortly

Furthermore, we continue to engage the government through the Ghana Chamber of Mines on details to sell a portion of gold produced in Ghana to a local refinery for value-addition purposes. The Chamber, while agreeing that its members will sell a share of their production to the refinery, is discussing processes to ensure this will not be detrimental to the mining industry and impose no added costs to individual companies.

SOUTH AFRICA

From a regulatory perspective, Gold Fields’ South Deep mine is guided primarily by the Mineral and Petroleum Resources Development Act, 38 of 2002 (MPRDA). One of the key requirements of the MPRDA, which Gold Fields supports, is to facilitate meaningful and substantial participation of Historically Disadvantaged South Africans (HDSAs) in the mining industry.

To provide guidance on this open-ended requirement, the Mining Charter provides for a range of empowerment actions and community investment programmes with a corollary timeframe; all mining rights holders are required to submit an annual compliance assessment detailing progress against the annual targets in the Charter. Gold Fields continues to comply with this process.

The Department of Mineral Resources and Energy (DMRE) published Mining Charter 3 (MC3) in September 2018. The Minerals Council South Africa (MCSA), which represents the industry, considers most aspects of the Charter a framework within which the industry can operate and which encourages the growth and empowerment of the sector. There were, however, critical areas over which Gold Fields and the industry raised concerns. In particular, the Charter does not fully recognise the Black Economic Empowerment (BEE) ownership credentials of previous BEE transactions.

In March 2019, the MCSA filed an application for a judicial review and the setting aside of certain clauses in the Charter. A Supreme Court ruling in September 2021 upheld the objections by the MCSA, which the DMRE accepted.

This ruling has de facto confirmed South Deep’s current BEE ownership level of 35%, which we believe meets the principles and spirit of the Mining Charter, and has created the framework for the ongoing transformation of South Deep.

Mining Charter Scorecard

The Mineral and Petroleum Resources Development Act (MPRDA), requires the submission of five-year cyclical Social and Labour Plans (SLP) as a prerequisite for the granting of mining rights. South Deep’s Mining Right application was approved in 2010 and, currently, South Deep is in its third cycle of SLPs. A new SLP will be finalised by the end of 2022 and submitted to the DMRE for approval.

The execution of South Deep’s Mining Charter and SLP commitments have, over the last two years, been severely complicated and impacted by the Covid-19 pandemic. Despite this, we remained on track to deliver the majority of our commitments. This was made possible through sound stakeholder relations, including with organised labour, communities and relevant government departments.

Covid-19 has not only amplified existing social challenges, such as food insecurity, but also highlighted the role business needs to play in communities. South Deep worked closely with stakeholders to provide assistance in the form of, among others, distribution of protective equipment, and food security relief programmes in a number of kindergartens and primary schools. During Q4 2021, the mine was registered as an outreach vaccination site, which enabled us to administer vaccinations to our employees, their family members and surrounding community members. Monetary donations towards Covid-19 relief programmes amounted to R156m (US$10m) during 2020 and 2021.

During 2021, we spent over R14m (US$1m) on community socio-economic development projects, delivering investment that supported education and training, infrastructure development, health care, water and sanitation. A further R14m was spent through the South Deep education and community trusts. Expenditure on skills development during 2021 amounted to R44m (US$3m).

South Deep recently entered into a People With Disabilities (PWD) learnership agreement with an independent service provider, in terms of which 82 learnerships have been onboarded. These learnerships have raised PWD representation to 3.3% at the mine.

South Deep MC3 2021 Scorecard

        Year (2020) target1   
Element  Description  Compliance target  Five-year implementation plan requirement  Target Gold Fields
target
Measure  Year (2020) progress
Ownership  Representation of HDPs  26%  Meaningful 35% 
Full shareholder
Inclusive procurement  Inclusive procurement  70% of mining goods' procurement spend must be on South African manufactured goods (60% local value = South African manufactured goods) Yes  10% (local content verification not required for years 1-3) 20%  The total mining goods procurement budget must be spent on South African manufactured goods produced by the following categories, per defined percentage: 
    21% on HDSA-owned and controlled company  40% 
    5% on women or youth-owned and controlled company  10% 
    44% on BEE compliant company  54% 
  80% of service procurement spend must be sourced from South African-based companies      70% 80%  The total services budget must be spent on services supplied by following categories, per defined percentage: 
    50% by HDPs  69% 
    15% by women-owned and controlled company  26% 
    5% by youth-owned and controlled company  0% 
    10% by BEE compliant company  90% 
  Research and 90% development (R&D)     Minimum of 70% of the total R&D budget to be spent on South African-based R&D entities 100%
(R409,552)
  Sample analysis across the mining value chain     Utilise South African-based facilities or companies for the analysis of 100% of all mineral samples  99.99%
(40,241 samples)
Employment equity  Board  % Black persons  Yes  67%  50%  67% 
% Black women    33%  20%  33% 
Executive management  % Black persons    67%  50%  67% 
% Black women    33%  20%  33% 
Senior management  % Black persons    47%  60%  32% 
% Black women    12%  25%  5% 
Middle management  % Black persons    64%  60%  62% 
% Black women    25%  25%  17% 
Junior management  % Black persons    67%  70%  71% 
% Black women    18%  30%  16% 
Employees with disabilities  1.5% of all employees    1.3%  1.5%  0.6% 
Core and critical skills  HDPs represented in core and critical skills pool    77%  60%  79% 
Human resources development (HRD)2  HRD expenditure as % of total annual leviable amount (excluding mandatory skills development levy) 5% leviable amount  Invest percentage of leviable amount as defined in the HRD element in proportion to applicable demographics  In 2021, South Deep spent 3% of its annual payroll on skills development programmes. This spend related to the provision of training and development initiatives for employees (permanent and contractors) and members of the South Deep host communities. HRD spend was curtailed due to Covid-19.
Mine community development (MCD) Meaningful contribution towards MCD with bias towards mine communities both in terms of impact, and in keeping with the principles of the social licence to operate  100% compliance with approved SLP MCD commitments  Yes  N/A  Publish the SLP in two languages (dominant community language and English) Yes 
Mine community development (MCD)     Implement all approved commitments in the SLP3 

During 2021, South Deep continued developing the following projects, which are at various stages of implementation:

  • Provision of land and construction of Hillshaven Clinic (host community)
  • Refurbishment of sports complex (host community)
  • Construction of Westonaria TVET (host community)
  • Construction of Zuurbekom Library (host community)
  • Building and equipping of a science lab at TM Letlhake Secondary School (host community)
  • Farmer support project – Jachfontein (host community)
  • SMME funding and business hub, Westonaria (host community)
  • Construction of a transport hub in Flagstaff, Eastern Cape (labour-sending community)
Housing and living conditions2  Improvement of the standard of housing and living conditions of mine employees  100% compliance with commitments per the H&LCS  Mine to submit a Housing and Living Conditions Plan, in terms of Section 4 of the new H&LCS for the mining industry. 1:1 person to room ratio  Implement all commitments per the H&LCS  The occupancy rate for 2021 was 0.32. South Deep still maintains one person per room, which is monitored regularly.
BEE – Black Economic Empowerment
HDP – Historically Disadvantaged Person
H&LCS = Housing and Living Condition Standard
1 The column records the mining rights holder's performance against the Mining Charter scorecard targets
2 The element has not been assured externally
3 Only the number of Community Development Commitments and its progress are externally assured