Gold Fields

Integrated
Annual Report

2018

 
 
 

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Our business

Value creation and distribution

The ultimate aim of our strategy and business model is to create value for our stakeholders

Total and national value distribution

National value distribution by region and type 2018 (US$m) Government    Business   Employees   Socio- 
economic 
spend 		   Capital providers   National value distribution  
Americas 55    156   37   6    4   258  
Australia 121    812   128   1    0   1,062  
South Africa 31   176   144   32   9   336  
West Africa 90    654   83   15    13   855  
Corporate 14    15   49   0    121   200  
Total Gold Fields 283    1,813   442   26    147   2,711  

1 South Deep does not yet pay income tax as it is in a loss-making position
2 This includes spending from the South Deep trusts and SLP commitments

Governments
Payments include

Mining royalties and land-use payments, taxes, duties and levies.

Why these stakeholders matter

Governments provide us with access to ore bodies by granting mining and other licences. They also deliver the infrastructure necessary to build and maintain our mines, including roads, electricity and water supply.

2018 Contributions:
  • We paid governments US$283m (2017: US$310m) in taxes and royalties, 10% of total value distribution (2017: 11%)
  • In addition, the Ghanaian government benefited from US$15m in declared dividends relating to its 10% shareholding in Gold Fields Ghana

Business
Payments include

Operational and capital procurements.

Why these stakeholders matter

Supply chain businesses provide the equipment and services needed to develop and maintain our operations. They comprise business partners, contractors and suppliers.

2018 Contributions:
  • We paid US$1,813m to suppliers and contractors, representing 67% of total value creation (2017: US$1,857m/65%)
  • Of the total 2018 procurement expenditure of US$1,813m, US$1,542m, or 85%, was spent on businesses based in operating countries by our mines (2017: US$1,620m/88%)
  • US$441m, or 29%¹, of total procurement by our mines was spent on suppliers and contractors from host communities (2017: US$774m/45%)
1 The % decline is due to a change in the definition of host communities by our Australian operations to only include communities in their area of influence (previously Perth was included in the definition due to the FIFO nature of our mines)

Workforce
Payments include

Salaries and wages, benefits and bonus payments (including shares and payroll taxes).

Why these stakeholders matter

The technical skills, experience and activity of our people drive the day-to-day operations of our business.

2018 Contributions:
  • We paid US$442m (2017: US$506m) to employees in terms of salaries, dividends and benefits, representing 16% of total value distribution
    (2017: 18%)
  • We also provide employees (where legislated) with additional benefits such as retirement savings, healthcare assistance, life and disability insurance, housing assistance and personal accident cover
  • We prioritise the employment of members from our host communities. At end 2018 host community employment comprised 56% of our workforce

Capital providers
Payments include

Interest and dividend payments to capital providers.

Why these stakeholders matter

Financial institutions, shareholders and bond holders invest with us, thus enabling us to fund the development, maintenance and growth of our operations and our overall business.

2018 Contributions:
  • We paid US$147m (2017: US$160m) to the providers of debt and equity capital, mainly in the form of interest and dividends
  • Net debt increased by US$309m to US$1,612m
  • We paid a total dividend of R0.40/share for the 2018 financial year

Communities

How we create value for communities
Payments include

Socio-economic development (SED) spending, including infrastructure, health and wellbeing, education and training, local environmental initiatives and donations.

Why these stakeholders matter

Host communities are the source of a significant portion of our workforce and a key component of our social licence to operate.

2018 Contributions:
  • We spent US$26m (2017: US$17m) in terms of SED investment, including contributions from the South Deep trusts
  • 56% of our workforce is drawn from host communities
  • The graph below provides an analysis of our host community employment and procurement as well as other benefits and investment in communities

Host community procurement creates community jobs and supply opportunities

  
  • Support areas where community suppliers can participate
  • Identify community suppliers with ability to supply the mine
  • Provide skills development to close capability gaps
  • Delivery long-term, enduring value
Host community employment maximises local opportunities  
  • Build skills base in community workforce through education, bursaries, etc
  • Make community the first option for hiring staff
  • Encourage contractors/suppliers to employ from the community
Community investment drives integrated investment  
  • Balanced across services (health, education), enterprise development and infrastructure
  • Matched to capacity and development needs of communities
  • Shared Value projects benefit both communities and our mines. Partnering for dual prosperity
Gold Fields’ total value creation (2018)

Why the focus on communities

We believe that our host communities are one of our most critical stakeholders as they grant us our licence to operate. Over the past few years, we devoted considerable resources to sharing the value created through our mines with the communities surrounding them. This goes beyond the direct financial investment to creating sustainable surrounding economies through community employment and procurement. During 2018, we enhanced our understanding of the value created through these programmes by quantifying the impact.

Trade-offs

We continue to balance the legitimate, and at times conflicting, needs of our stakeholders in order to create value over the short, medium and long-term. These were some of the significant trade-offs we had to make during 2018.

  1. Balancing financial viability with employment
   
  • To improve financial viability, we unfortunately had to retrench 1,082 employees and 420 contractors at South Deep to right-size the business
  • At Tarkwa mine, we retrenched 2,211 employees, of which 1,714 were re-engaged by contractors or on a contractor basis
2. Improving long-term sustainability
  • By channelling funds into growth capital we aim to secure future growth by temporarily cutting back on other stakeholder spending
  3. Managing our environmental impacts
   
  • Mining is resource intensive, but we seek to minimise our environmental impacts . During 2018, we had two Level 3 water-related environmental incidents. We responded speedily to address the causes and communicated the incidents
  4. Balancing the immediate needs of communities with long-term value creation
   
  • Our focus shifted from short-term projects to long-term value creation by creating sustainable value for host communities through employment and procurement programmes
  5. Providing long-term contributions to host governments
   
  • At the Cerro Corona mine, we reduced our taxable income in the short term to fund future growth. The investment is set to provide longer-term tax and royalty revenues to the host government