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GOLD FIELDS LIMITED INTEGRATED ANNUAL REPORT 2021

Risks and opportunities

Gold Fields' approach to enterprise risk management is based on the requirements of King IV, the South African Corporate Governance Code of Conduct and ISO 31000, the international guideline on risk management. The Group also subscribes to the risk management requirements of the ICMM's 10 Principles.

Gold Fields' enterprise risk management (ERM) process comprises the following three pillars, which are deployed intuitively and form part of our day-to-day operations:

Strategic risk management: Developing and integrating sound, sustainable business controls that reduce the Company's exposure to material risks to an acceptable level, ensuring business and strategic objectives are achieved

Operational risk management: Continuously identifying, quantifying and mitigating operational risks to create a safe, healthy and efficient business environment and reduce business disruptions to achieve operational targets

Catastrophic risk management: Identifying potential disastrous events that may cause loss of life, extensive damage to infrastructure and prolonged production losses; implementing mitigating actions, strategies and policies to prevent or reduce the risk effect by strengthening resilience to absorb or reduce losses

Risk management is integrated and woven into all our business processes. Leadership teams at corporate, regional and mine level conduct formal risk management reviews quarterly, assessing risks to the business and tracking and monitoring progress against mitigating actions. These reviews are then presented to the Board's Risk Committee twice a year for verification.

As a global company, we continue to be shaped by the external dynamics of the regions where we operate. We discuss the impact of longer-term, emerging global trends in general and on Gold Fields in Emerging global trends.

RISK APPETITE AND TOLERANCE

During the year, we reviewed and enhanced our Risk Appetite and Tolerance (RA&T) Standard to ensure we approach risk management consistently at both Group level and regional operations. The standard provides minimum requirements and good practice principles to guide RA&T levels at strategic and operational risk management levels.

Understanding the relationship between our strategy and our approach to evaluating risks as a basis for setting RA&T is crucial. Firstly, RA&T does not relate to the risk itself, but rather the consequences of such a risk – this distinction is important to establish a practical set of RA&T positions.

We use our strategic objectives as a starting point, the achievement of which is critical for setting our RA&T levels. It follows that the consequences of the risks we are exposed to can create a variance from where we aim to be in terms of our strategic objectives. The level of variance we are willing to accept without making significant changes to the strategic objective sets the variance point for our risk appetite, while the level of variance we can accept before we need to review our risk treatment plans determines our tolerance position.

The amount of variance we can accept or tolerate is typically linear, expressed as a varying consequence of one or more risk consequences.

To support the achievement of strategic objectives and business plans, and to ensure tolerance positions are not breached, Gold Fields has a comprehensive monthly and quarterly business review and monitoring process in place. Performance is monitored and shortcomings are addressed swiftly and effectively. A colour-coding system is used during presentations to alert executives if targets are being achieved, and enables discussions around remediation measures.

Shortly after the quarterly business reviews are concluded, the Board of Directors conducts quarterly governance and oversight meetings, during which significant aspects of the business are comprehensively questioned and reviewed. Any misalignment with Company objectives or good corporate governance is discussed and remedial action requested. This is in line with our formal Approval Framework, which strictly defines decision parameters and risk tolerance.

For a more detailed assessment on how we determine our risks and materiality, see www.goldfields.com/risk-materiality.php

Top 15 Group risks in 2021

Top 15 Group risks in 2021
RISKS AND OPPORTUNITIES MITIGATING ACTIONS
1
(2020: 2)
GOLD/CURRENCIES
Gold price and currency exchange rate volatility
We design our business plans based on a conservative gold price and set FCF targets for our operations. This was reinforced by our new strategy, which stresses asset optimisation. These plans are then monitored through monthly and quarterly cost, capital and production reviews, where we discuss and implement remedial action, if required. We do not hedge metal or foreign exchange prices, unless we seek to protect cash-flows at times of significant capex, to address specific debt servicing requirements or to safeguard the viability of higher-cost operations.
Potential impact of Covid-19
The gold price traded above US$1,800/oz since the start of the pandemic. Investors turned to gold as a safe haven following the outbreak of Covid-19 and the resultant global economic uncertainty. With the pandemic abating, geopolitical risks, particularly the conflict in Ukraine, have ensured further increases in the gold price.
2
(2020: 4)
POLITICAL RISK/RESOURCE NATIONALISM
Resource nationalism, regulatory uncertainty and government imposts
Gold Fields, on its own and in conjunction with its peers, seeks to address the trust gap that often exists between governments and miners. Our government action plans, which were updated in 2021, rely on strengthened engagement with governments at all levels, continued rollout of Shared Value projects that benefit host communities, and improved communication on the socio-economic benefits of mining for host countries and host communities. Legal actions are only considered as a last resort, and even then mostly in conjunction with our peers in a country of operation. The Board is appraised of social and political risks annually through external reports.
Potential impact of Covid-19
The economic impact of the Covid-19 pandemic will likely be felt for the near future, and we expect that governments will eventually seek additional tax income from corporations. The gold industry could be a specific target, as governments perceived it to have benefited from a higher gold price.
3
(2020: 6)
INFLATION/MINING COSTS
Rising mining costs, including those relating to ESG
We have business, productivity and cost improvement processes and programmes in place at all our operations,which are supported by the implementation of our innovation and technology (I&T) strategy to reduce costsand enhance revenue generation. We conduct monthly and quarterly business cost and capital reviews to ensure spending remains in line with plans. Our mines provide cost guidance to the market at the beginning of each financial year.
Potential impact of Covid-19
Mining companies were already exposed to higher inflation prior to the pandemic, and Covid-19 may lead to additional costs.
4
(2020: 5)
MINERAL RESOURCES AND MINERAL RESERVES
Failure to replace Mineral Resources and Mineral Reserves (growth through brownfields, greenfields and mergers and acquisitions)
We continue to evaluate value-accretive opportunities to expand our business, including acquisitions, disposals, JVs, new mine builds and other strategic projects. The construction of our latest project, Salares Norte, is progressing against plan, and we have provided for additional exploration budget. Our regions all have comprehensive near-mine exploration programmes in place, and we monitor our performance against these programmes during our quarterly business reviews. Over the past 10 years, our Australian mines have consistently replaced depleted Mineral Reserves and more.
 
5
(2020: 12)
SKILLS
Unable to attract and retain diverse talent and skills
Gold Fields' business depends on fit-for-purpose human resource (HR) structures to meet operational requirements. We focus on developing a high–performance culture through our performance management system and by having the appropriate succession plans and talent reviews in place. Above all, we seek to provide competitive and incentive-focused remuneration packages that attract and retain skills that are highly sought after. We also developed and implemented a diversity and inclusion dashboard to track our progress in building a more diverse workforce.
Potential impact of Covid-19
Covid-19 restrictions on movement of employees, both internationally and within countries, has resulted in skills shortages, particularly at our Australian operations and at Salares Norte.
6
(2020: 16)
SALARES NORTE
Delays and cost overrun relating to the construction and early-stage mining of the Salares Norte project
With construction starting at Salares Norte during 2020, our team implemented robust project control systems. Performance against our project plan is monitored weekly and monthly, and the project is tracking against plan. We continue to adhere to government-related Covid-19 restrictions, rules and laws, and have increased camp capacity to accommodate the required workforce. We do not currently envisage any delays to the construction process and expect project completion by Q1 2023.
Potential impact of Covid-19
Covid-19 restrictions on movement of employees, as well as material and machinery, resulted in some delays, though we managed to prioritise delivery of essential items over non-critical ones.
7
(2020: 7)
SAFETY
Safety and health of our employees, including occupational illnesses
The safety, health and wellbeing of our employees is paramount. With safety as our number one priority, we continuously review and upgrade our safety systems, cultures and programmes. In 2019, we implemented our Courageous Safety Leadership programme throughout the Group, which is complemented by critical controls, behaviour-based safety and Visible Felt Leadership programmes in all our regions. All operations are certified to the leading ISO 45001 health and safety standard.
 
8
(2020: 9)
CLIMATE CHANGE
Failure to implement climate change adaptation measures
Given the growing concern and uncertainty around extreme weather events, we are reviewing our climate change vulnerability risk assessments and, where necessary, adapting our approach in response to the changing environment. We continue to enhance the resilience of our operations – by, for example, rolling out renewable energy initiatives – while also improving our disclosure and implementing measures to adapt to climate-related changes at an operational level. We periodically assess and, where possible, mitigate the impact of climate change on our operations and our host communities.
 
9
(2020: 3)
SOUTH DEEP
Failure to maintain performance momentum and alignment with the build-up plan
South Deep achieved its business plan of 9,000kg (288koz). The South Deep team will continue to use their established management system to drive disciplined execution of the mine's business plan, while implementing business improvement initiatives across the value chain to position the mine for sustainable production.
 
10
(2020: 10)
CYBERCRIME
Cybercrime/loss of information and communication technologies (ICT) data
We continue to protect operational technology to decrease disruptions and ensure business continuity. Due to the dramatic increase in cybercrime globally, we implemented a software platform across the Group to safeguard infrastructure critical to our sustainability. Furthermore, we embedded additional software precautions at the onset of Covid-19 to protect our business against attacks as our people transitioned to home offices. All our mines and offices, with the exception of those in Chile, are ISO 27001 cybersecurity certified.
Potential impact of Covid-19
Cybercrime increased significantly during the pandemic, with cybercriminals taking advantage of employees working from home with limited ICT protection in place.
11
(2020: 11)
SOCIAL LICENCE
Loss of social licence to operate and stakeholder value creation
We continue to strengthen the relationships with our host communities through enhanced stakeholder engagement and community relations programmes. Furthermore, we continue to invest in Shared Value projects that benefit our operations and host communities in Ghana, Peru, Chile and South Africa. These projects focus on host community employment, procurement and SED investments. In Australia, we have developed an Aboriginal engagement strategy for approval and implementation, as well as a Reconciliation Action Plan (RAP) to guide relations with and create opportunities for Indigenous Peoples at our mines.
Potential impact of Covid-19
The pandemic escalated economic hardships in our host communities, who now have increased expectations that our mines will provide financial and other assistance to alleviate their burden.
12
(2020: 13)
WATER SECURITY
Water pollution, security and reduction in freshwater consumption
All our operations are certified to the ISO 14001 environmental standard, which require sound water management and disclosure. Furthermore, we developed and integrated three-year regional water management plans with our 2021 business plans across our operations. Finally, water recycling, reuse and conservation practices are in place in all regions, with targets achieved for 2021.
 
13
(2020: 1)
COVID-19
The impact of Covid-19 on our employees, communities and business plan
Our mines adhere strictly to the recommendations of the World Health Organization and other medical experts, as well as country-specific regulations, government decrees and protocols. Our vaccination campaigns among employees and contractors are our primary defence against the virus, and by end-March about 85% had been fully vaccinated. We continue to implement other protection measures at our operations and provide support to our employees who have been affected. We are also looking at ways of entrenching the "new normal" – such as remote working and restricted travel – in our ways of working.
 
14
(2020: 15)
GHANA CONTRACTORS
Challenges with local mining contractors in Ghana
We work closely with the two Ghanaian mining contractors at our Tarkwa and Damang operations to ensure they meet their contractual obligations to the mines, while, at the same time, remaining financially sound. This required renegotiations of their contracts and bringing in original equipment manufacturers (OEMs) to provide technical assistance for fleet maintenance, as well as financial support to provide debt relief and to procure additional fleet.
 
15
(new risk)
ESG
Stakeholder expectations, cost of capital and consequences of failure to meet targets
In 2021, our Board approved our 2030 ESG targets, which were made public on 1 December 2021. The targets were arrived at after extensive work with our operations, including setting capital budgets, to make sure that, while ambitious in nature, they are achievable. We will also report on an annual basis of our progress in achieving our 2030 targets. We see this strengthened commitment to ESG as an opportunity to build on our leadership position and strong reputation in this regard.