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Gold Fields' Holland stresses importance of engaging near-mine communities - Mining Weekly

Friday, 2 November 2018

If mining companies are going to be successful and sustainable, they have to work closely with governments and especially communities, Gold Fields CEO Nick Holland told African Mining Network attendees last month.

He noted that most of the mining companies in the gold space had assets in both developed and developing economies and, as a result, their approach to mining had to be flexible and adapted to economic and geopolitical circumstances.

“We operate in four countries . . . when we formed the new Gold Fields in 1997, 100% of our production was in South Africa. Now 90% of our production is outside South Africa.”

He noted that, in Australia, which was responsible for the lion’s share of Gold Fields’ production (44%), the rural population was very small and the human development index was very high, as was the government effectiveness index. On the other hand, in Peru, South Africa and Ghana, the rural population was much bigger, and the human development and government indices were lower.

Holland noted that the extent of a country’s rural population was always significant because mines were generally located in rural and far-flung areas. As an example, Gold Fields’ Ghanaian operations were surrounded by 20 host communities, South Africa’s operations by 14 and those in Peru by 7, while Australian operations had none.

He explained that Gold Fields’ operations impacted on 450 000 people in host and surrounding communities, compared with its staff complement of only 19 000.

“Those 450 000 people are dependent on us; if we suddenly disappeared, we would be impacting on far more than just 19 000 people.”

Holland commented that, despite mining companies being some of the biggest taxpayers in developing economies, there had been “a demand for mining to give more”.

He added that mining companies also had to bear the brunt of inefficient and poor local governance. “When local governments don’t function, communities look to big business.”

As a result, conflicts between communities and the mining sector were rising. “In 2016, there were 100 mining conflicts,” he said, noting that these conflicts had increased tenfold, compared to a decade prior.

“Communities have found their voice . . . nowadays, you cannot start exploring in the area unless you’ve spoken to communities.”

In light of the increased importance of community involvement, Holland noted, Gold Fields had improved community engagement and investment. This had led to it being the top-rated South African mining company on the Dow Jones Sustainability Index.

He cited Gold Fields’ work in Ghana, noting that 68% of government revenue was derived from mining. He noted that Gold Fields was one of the top three taxpayers ($1-billion in taxes) in Ghana in 2017. Further, in its 25 years of operating in Ghana, Gold Fields had spent more than $47-million in community investment. Moreover, 90% of Gold Fields’ supplier spend was with Ghanaian suppliers, with 25% of that going to local communities.

Holland pointed to the Ghanaian operations as an example of mining’s ability to lift countries from their low-income status to being middle-income countries, adding that the impact on gross domestic product, employment and society should not be understated. He emphasised that, given its very real contribution, the negative perception around mining should change, but that this would only happen if mining companies were socially and environmentally responsible.

Pointing to the “gulf” of effectiveness between central and local governments in developing economies, Holland suggested that mining companies assist local governments in building capacity. “You might well say, ‘That’s not our job’, but you should try to help them to help us.”

He further suggested that companies implement progressive rehabilitation to avoid abandoning unrehabilitated mines, which harmed communities and the environment and coloured the perception of the industry for decades.

Holland stressed that the longer a mining company operated, the better it was for the local economy, as this provided more time for the economy to diversify away from mining (like Johannesburg), and introduced a variety of socioeconomic improvements. However, he noted that mining a good deposit and consistently generating revenue would not be enough to ensure the sustainability of mines – instead, it would depend on buy-in from affected communities. 

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