RISKS AND MATERIALITY
HOW GOLD FIELDS MANAGES RISK
The approach to assessing risk in Gold Fields is a collective effort by Group, regional and mine management of the risks facing the business. The assessments of the risks and their mitigating actions are a critical internal management tool, which reduce the identified risks significantly. Risk mitigations are included in the annual Group performance scorecard and cascaded down to the performance scorecard of management employees at regional and operational levels. The formal risk review process starts during management's annual strategic planning sessions where strategic risks and macro-trends are analysed as part of developing the Company's risk register and mitigating actions. These are reviewed and updated quarterly, and presented to the Board's Risk Committee twice a year for verification.
We have used this basis to publish risk tables and heat maps in our IAR for the last 10 years. In addition to these risks, Gold Fields also recognises longer-term strategic and emerging risks to the business and adjusts its strategies accordingly. The current strategic risks - under the heading "Our operating environment" - are addressed by our CEO in his report on Introduction and overview.
Top 20 Group risks and opportunities in 2019
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A sustained lower
gold price, and
currency exchange
rate volatility |
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MITIGATING ACTIONS |
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6 |
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Safety and health of
our employees,
including occupational
illnesses |
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MITIGATING ACTIONS |
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- Business restructuring and modernisation strategies to
improve safety, efficiencies and costs
- Business plans implemented and monitored through regular
cost, capital and production reviews
- Ongoing portfolio optimisation to support cash generation
- Gold and copper production hedging in various regions
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- Established Group Safety Leadership forum
- Initiated Courageous Safety Leadership (CSL) programme
throughout the Group during 2019
- Behaviour-based safety and visible-felt leadership
programmes ongoing in all regions
- All mines (except Gruyere) certified in terms of OHSAS
18001 or ISO 45001. Remaining mines plan to convert
to ISO 45001 by March 2021
- Critical safety controls independently verified by third
parties in all regions
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| 2 |
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South Deep –
sustainability of
improvements made
during the year, and
further increases in
production to
underpin profitability |
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MITIGATING ACTIONS |
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7 |
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Attraction and
retention of skills |
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MITIGATING ACTIONS |
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- Productivity initiatives gaining traction and improving
performance metrics
- People initiatives are improving employee engagement,
with more opportunities for further improvement
- Improved fleet performance by focusing on effective
maintenance and operation of equipment
- Short-, medium- and long-term power security strategies
in place to supplement grid power
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- Fit-for-purpose regional and mine human resource (HR)
structures to meet operational requirements
- HR strategy focused on developing a high-performance
culture
- Succession planning and talent review systems in place
at mine, regional and Group levels
- Building line leader capabilities to enable strategic and
operational focus and key deliverables
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| 3 |
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Resource nationalism/
Licence to operate
– government,
regulatory, social and
environmental
imposts |
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MITIGATING ACTIONS |
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8 |
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Security of power
supply and cost of
energy |
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MITIGATING ACTIONS |
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- Enhanced engagement and lobbying through industry
bodies
- Implemented enhanced stakeholder engagement policies
and strategies
- Implementing South Deep’s 2018 – 2022 Social and
Labour Plan (SLP) after obtaining regulatory approval
- Conducted independent resource nationalism risk
assessments in Ghana and Chile
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- Implementing integrated energy and carbon management strategy
- Completed hybrid power solution at Agnew and added solar
power at Granny Smith
- South Deep solar photovoltaic (PV) project advancement
required for sustainable operation – engagement with
SA government
- Achieved energy certification in terms of ISO 50001 at
Cerro Corona, Tarkwa and Damang. All mines to be aligned
during 2020
- Commissioned dedicated gas power plants at Granny Smith,
Agnew, Gruyere, Damang and Tarkwa
- Entered into short-term oil price hedges
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| 4 |
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Replacing Resources
and Reserves in
Australia, Ghana and
Peru |
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MITIGATING ACTIONS |
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Failure to implement
climate adaptation
measures |
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MITIGATING ACTIONS |
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- Comprehensive near-mine exploration programmes yielding
favourable results
- Bedding down successful mergers and acquisitions
strategy, such as the Asanko JV in 2018
- Damang Reinvestment continues ahead of plan, and
Gruyere successfully commissioned in mid-2019
- Salares Norte project feasibility study (FS) completed,
construction approved
- Successful exploration activities at Tarkwa to replace
depleted reserves
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- Baseline Climate Change Report 2018, aligned with the TCFD
recommendations, published to improve climate disclosure
- Regional climate change risks assessed every five years an
adaptation plans updated
- Evaluating feasibility for renewable energy at Salares Norte
project in Chile
- Roll-out of renewable energy initiatives at all our mines
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Rising mining costs |
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MITIGATING ACTIONS |
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10 |
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Cybercrime/Loss of
information and
communication
technologies data |
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MITIGATING ACTIONS |
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- Mature monitoring and measuring process in place with
monthly and quarterly business reviews
- Business and productivity improvement processes and
structures at all operations
- Innovation and technology (I&T) and modernisation strategy
- Cost improvement programmes, including optimisation of
labour efficiencies
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- Achieved ISO 27001 cybersecurity certification for
corporate and regional offices, as well as all mining
operations, in 2019
- Installed operational technology (OT) cybersecurity
monitoring platform to safeguard critical infrastructure
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New risk |
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COVID-19
(Coronavirus)
pandemic |
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RISK MITIGATING ACTIONS |
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- Adherence to country-specific regulations
and protocols
- Crisis management team activated at
Group office and crisis management
protocols at all mines implemented
- South Deep mine on care and
maintenance during South African
lockdown period
- Comprehensive hygiene awareness
campaign including all preventative
measures at all offices and mines
- Imposition of travel ban for all company
employees for business travel and
self-quarantine for employees returning
from international travel holidays
- Limiting visits by international consultants
and service providers to our offices
and mines
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| 11 |
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High level of debt |
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MITIGATING ACTIONS |
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16 |
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Political/social risks
in Chile and impact
on Salares Norte |
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MITIGATING ACTIONS |
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- Ongoing business optimisation and cash generation from
operations
- Extensions for maturity dates on revolving credit facilities
and regular engagements with credit rating agencies and
financial institutions
- Completion of new bond offering
- Successful equity raise for Salares Norte project
- Refinancing Australian dollar debt
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- Independent political and social risk assessments
conducted and relevant recommendations being
implemented
- Building relationships with local governments and business
organisations in Atacama
- Prioritise employment of community members and local
procurement of goods and services
- Engagement with former Chilean Economy Minister and
constitutional expert to assess the potential magnitude of
future constitutional changes
- Prepare scenarios of potential tax and royalty impacts
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Impact on social
licence to operate
and host community
relations |
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MITIGATING ACTIONS |
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Ageing infrastructure
at older mines |
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MITIGATING ACTIONS |
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- Reviewing and enhancing artisanal and small-scale mining
(ASM) strategy
- Significant enhancements to stakeholder engagement and
community relations programmes
- Indigenous Peoples framework and strategy developed for
approval and implementation in Australia
- Ongoing community investment and Shared Value projects
in Ghana, Peru, Australia and South Africa
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- Planned maintenance and condition monitoring
programmes
- Critical and long lead time spares inventory and
maintenance of critical spares
- Insurance risk engineering surveys and remedial action
tracking
- Business continuity planning included in overall enterprise
risk management process
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Water pollution,
security and
reduction in
freshwater use |
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MITIGATING ACTIONS |
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Impacts of Ezulwini
closure on South
Deep |
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MITIGATING ACTIONS |
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- Group water management policy and strategy updated
- Three-year regional water management plans developed
and integrated with 2020 business plans
- Water recycle, reuse and conservation practices in place in
all regions, with targets achieved in 2019
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- Detailed technical and legal arguments submitted to
regulatory authority
- Host of safety and other measures to ensure the safety of
our people and to protect our asset
- Maintain contact with Sibanye-Stillwater to ensure pumping
measures are and remain in place
- Robust legal strategy to challenge court application by
Sibanye-Stillwater
- Examining technical and commercial solutions for water usage
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Increased
geotechnical risk
underground and in
open pits |
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MITIGATING ACTIONS |
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Failure to modernise
operations |
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MITIGATING ACTIONS |
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- Significant changes to the support system made at South
Deep, including shotcrete in the de-stress ends, meshing of
the advancing face in the de-stress ends, and anchoring the
breakaways
- Ongoing implementation of the recommendations by the
Geotechnical Review Board (GRB) relating to major project
and pit cutbacks
- Real time continuous pit wall monitoring in place as the
Damang cutback is progressing
- Ground support upgraded for increasing depth and
introduction of paste backfill at our Australian underground
mines
- Extraction sequence and mine design reviews at open pits
in Australia
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- Real time monitoring solutions that track movement of
equipment, people and production
- Programme in place for co-operation between original
equipment manufacturers (OEMs), suppliers and ourselves
- Modernisation strategy implementation to work towards a
Gold Fields Mine of the Future
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| 15 |
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Underperformance of
mining contractors at
Tarkwa and Damang |
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MITIGATING ACTIONS |
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Tailings storage
facilities’ (TSFs)
failure |
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MITIGATING ACTIONS |
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- Advance capital approved to assist mining contractor with
fleet replacement
- Notice served on principal contractor at Damang
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- Our TSFs aligned with and assured against the ICMM position
statement
- Increased governance at the Company and Board level,
including the appointment of an in-house TSF specialist
- Participation and input into the new Global TSF standard
through the ICMM
- Accelerated dam break assessments, design compliances
and updated emergency response procedures implemented
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Top five risks per region in 2019 |
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Americas
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Life-of-mine extension at
Cerro Corona |
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Political and social risks in Chile
and potential impact on Salares
Norte project |
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Gold and copper price and
exchange rate volatility |
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Local social pressures,
conflicts and community
expectations ahead of elections
in Peru |
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Delay in granting sectoral
permits related to the
modification of environmental
licence |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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- Accelerate mining and
stockpiling to facilitate early
in-pit tailings
- Feasibility Study completed
during 2019, which confirmed
mine life until 2030
- Build-up of stocks to reduce risk
of ore availability
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- Engagement with key
stakeholders, particularly
government and communities
- Engaging governments directly
and indirectly through industry
associations
- Thorough due diligence and
approval process completed
ahead of project
- Independent resource
nationalism risk assessments
conducted and key
recommendations being
implemented
- Latest political decision
confirming new constitutional
process in Chile reduced
protests
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- Sound and mature performance
monitoring processes and
adjustments where required
- Business and productivity
improvement structures and
processes in place
- Gold and foreign exchange
hedges to support Salares Norte
project
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- Proactive community and
stakeholder engagement
- Crisis management plans to
address potential conflict
- Stringent follow-up and
feedback on all community
commitments
- Involvement of government
authorities in social projects
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- Environmental Impact
Assessment 8.8 approved in
December 2019
- Current 2020 business plan to
be adjusted according to the
current anticipated permit
timetable
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Australia |
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Reserve life at our Australia
mines |
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Delivery of operational plans |
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Turnover of key personnel and
impact on operational
performance |
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Native title and associated
stakeholder relations |
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Gruyere – enhance strong
production start-up |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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- Successfully completed
Gruyere commissioning
- Significant near-mine
exploration to delineate further
Reserves
- Accelerated exploration
intervention at Agnew ongoing
- Acquisition of ground near
St Ives through a joint venture
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- Annual strategic and business
planning process to generate
realistic mine plans
- Weekly, monthly and quarterly
monitoring of performance and
remediation if required
- Rescheduling production at
Granny Smith and St Ives
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- Review and improvement of
employee development
programmes
- Flexible working arrangements
to facilitate greater work-life
balance
- Government skills import
programme relaxed
- Quarterly talent discussions held
at regional leadership level with
mid-year adjustments to critical
roles
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- Stakeholder engagement
strategies and programmes in
place
- Extend business opportunities
and job placement to Indigenous
people, where feasible
- Finalisation of a holistic strategy
for Indigenous People
Engagement
- Implementation of the approved
Reconciliation Action Plan
- Ongoing legal strategy as
back-up to engagement
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- Management team bolstered for
synchronisation and ramp up to
nameplate production
- Dedicated resources allocated to
ensure successful operation
- Business performance in line
with market guidance
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South Africa |
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South Deep: Sustainability of
improvements made in 2019,
and further increases in
production |
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Unavailability of right skills to
drive the execution of business
plan |
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The impact of rising costs on
operations and margins |
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Health and safety of our
employees |
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Security of electricity supply
and escalating costs |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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- Develop and implement effective
and productive structures
- Establish an effective and
sustainable management
operating system to drive
disciplined execution
- Frontline productivity intervention
to improve leadership level skills
- Identify business improvement
initiatives and drive
implementation thereof
- Implement strategy to further
improve fleet reliability and
utilisation
- Short-, medium- and long-term
power security strategies in
place
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- Career path development
programme (roles, responsibility
and development plans in place)
- Develop a personal development
strategy plan for each
department at South Deep,
highlighting digital skills
requirements
- Identify, develop and recruit
successors for critical roles and
manage skills gap in these rolls
- Robust talent management
system
- Training programmes developed
according to defined strategy
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- Cost reviews with suppliers
- Further focus on increasing
production and cutting
unnecessary costs
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- Initiating the behaviour-based
safety programmes (Vital
Behaviours and CSL)
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Ensure alignment with the
OHSAS 18001 management
system standard
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Mine Occupational Safety and
Health (MOSH) initiatives and
adoption of best practices
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Purposeful Visible Felt
Leadership programmes
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- Accelerate implementation of
energy efficiency initiatives
- Mine is not running at full
capacity – allows us to work
around load-shedding schedules
- Purchase of additional back-up
diesel generators
- South Deep solar PV project
advancement required for
sustainable operation –
engagement with South African
government
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West Africa |
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Resource nationalism –
fiscal and government policy
changes |
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Underperformance of mining
contractors |
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Execution of Damang
Reinvestment project |
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Reserve depletion at Tarkwa –
inadequate organic growth and
life-of-mine extension |
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Rising mining costs |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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MITIGATING ACTIONS |
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- Frequent engagement with
relevant government
departments
- Intensive engagement via the
Ghanaian Chamber of Mines
- Ensure adherence to principles
and conditions in our
Development Agreement (DA)
with the Ghana government
- Legal strategies in addition to
government engagement
- Independent resource
nationalism risk assessment
conducted with actions being
implemented
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- Advance capital approval for
procurement of additional fleet
including a third party
maintenance contract in the
long term
- Notice served on principal
contractor at Damang
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- Implementation and delivery of
milestones under the
reinvestment plan
- Fit-for-purpose organisational
structure and continuous
improvement initiatives
- Ongoing monitoring of contract
mining milestones and strategic
management of and support to
contractors
- Pit-wall control and de-risking
by continuous implementation of
geotechnical recommendations
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- Continued brownfields
exploration to test for further
potential at Tarkwa
- Modernisation programme to
improve operational and
processing efficiencies and drive
a reduction in cut-off grades
- Ensure utilisation of DA benefits
for long-term exploration
potential
- Bringing the Asanko JV Mineral
Reserves ounces to account,
thus boosting the Reserves
position for the region
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- Efficiency and productivity
improvement by implementing a
multitude of business
intelligence and I&T initiatives
- Cost leadership and cost
containment programmes
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Report Selector
