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JSE- and NYSE-listed Gold Fields on Monday released its inaugural climate-related financial disclosure (CFD) report for 2018.
The company is the first mining company in South Africa to publicly endorse the Financial Services Board’s Task Force on CFD, which is an industry-led, voluntary disclosure platform developed as a partnership between industry and financial institutions, investors and stock exchanges.
So far, about 800 organisations and 400 investor groups worldwide are supporting it.
Gold Fields CEO Nick Holland said during a media presentation that the decision to publish a climate change cost report came on the back of engagements with environmental, social and governance (ESG) investors, who regard ESG issues as increasingly important.
Of the top 12 issues that the company is managing, four of these are directly related to ESG-type factors.
“The management of climate change impacts and our transition to a low-carbon environment is a key component of environmental stewardship at all our operations and projects. Compared to other metals, such as steel, coal and aluminium, gold mining’s carbon emission intensity per unit value is among the lowest in the sector.
“However, as a mining business, Gold Fields is cognisant of the fact that we have a material impact on the surrounding environment and the communities with whom we share this environment,” Holland stated.
He added that the company was starting to understand the cost of inaction and the importance of including climate scenarios in its long-term planning.
Internally, Gold Fields has recently reviewed and updated a number of policy statements and guidelines, reflecting its environmental priorities. They cover the areas of responsibility in the company including energy and carbon management, environmental management, water management, tailings management, mine closure and climate change.
Gold Fields’ carbon emissions are primarily from diesel consumed by haulage trucks and electricity consumption in mining and gold processing.
“Energy has become a proxy for us in addressing our carbon footprint and reducing our emissions,” said Holland.
The company spent $302-million on energy in 2018, which is 22% of its operational expenditure and 15% of all-in sustaining costs.
In South Africa, the company forecasts that energy costs will continue to increase, as will grid unreliability, and Gold Fields is therefore planning on installing a 40 MW solar farm at the South Deep gold mine.
Gold Fields recently commissioned a 4 MW solar farm at its Agnew mine in Australia, and is building a 7 MW solar gas plant at the Granny Smith gold mine, in Australia. Holland highlighted that 10% of the energy mix at the Australian operations would consist of renewables in 2020.
The company consumed 11 629 TJ of energy in 2018, mostly consisting of diesel haulage at 54%, and for electricity, gas consisted of 26%, coal almost 12% and hydropower 3.7%.
Gold Fields was moving towards switching from diesel to gas power for fuel at the Australian operations, with help from a 275-km-long gas pipeline underground.
To date, the company had installed about 150 MW of gas engines or turbines across its existing operations in South Africa, Ghana, Peru and Australia, while a further 18 MW of wind power and 6 MW of battery storage was under construction at Agnew.
Gold Fields aims to reduce its cumulative emissions by 800 000 t of carbon dioxide equivalent emissions per ounce between 2017 and 2020.
Gold Fields also highlighted its strategy related to water use such as closed-loop systems, retreating water and using a more catchment-based approach.
In 2018, water withdrawal across Gold Fields’ operations was 21.2 gigalitres.
The company’s total water use was 66% recycled or reused water last year, owing to $32-million spent on water re-use and ancillary infrastructure.
The company is also managing its climate-related risks, which particularly considers severe weather events in the company’s operating regions, emerging regulations and taxes, and managing investor expectations to reduce emissions.
“We have to ensure that our business will not be interrupted by these adverse conditions, while protecting people against impacts,” Holland pointed out.
In Australia, the company remained prepared for mitigating the impact of severe floods and the declining availability of water, as well as surface temperature rises and its effect on thermal equipment performance and cooling costs.
In Ghana, the company was aligning its strategy to be prepared for increased dewatering and maintenance costs, heat stress on mine employees and droughts affecting long-term availability of grid power.
In Peru, Gold Fields was mitigating against water shortages in the dry season and limited capacity to send concentrate to port owing to severe weather events. This region was also at risk of mudslides and rockfalls.
In South Africa, the company highlighted rainfall intensity variables as the biggest risk, which increases operational costs for alternate water sources, as well as temperature increases and climate change-related regulatory uncertainty.
Holland noted that the most significant social development project area was the concept of local procurement and local employment; by buying goods locally, the mine can have a direct impact on people in the area.
The company spent $686-million on host communities last year, representing 25% of total spend.
Gold Fields aims to sustain its host community procurement spend at between 23% and 25% and to maintain host community employment at between 54% and 56%.
CLOSURE AND TAILINGS
Holland said the company had started looking at progressive rehabilitation before a mine gets to the end of its life.
The company had an advanced focus on progressive rehabilitation, which builds credibility with regulators and stakeholders, while reducing closure liabilities.
Gold Fields said its total mine closure cost was planned at $400-million, with $178-million budgeted for the Australian region, $100-million for Ghana, $79-million for the Americas and $42-million for South Africa.
Meanwhile, the company was drafting a new group tailings storage facilities (TSF) policy, while it started its next round of 2019/20 independent audits of all TSFs.
The company has 34 TSFs, including from joint ventures, of which 14 are active, four are being remined, seven are inactive and on care and maintenance, while nine are closed and rehabilitated.