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Supply chain management and material stewardship

Supply chain management and material stewardship

Cyanide consumption
(’000 tonnes)
Mining waste
(billion tonnes)
Materials (tonnes)
Procurement spend (Rbn)

Suppliers form a vital link in our business chain and are a key stakeholder in the company. They provide us with the raw materials needed to mine gold as well as the equipment and services for our mines. But supply chain management at Gold Fields extends beyond ensuring a costeffective and secure supply pipeline. As a core sustainability issue it incorporates the interests of local economies in our host countries, and provides the company with an opportunity to invest in the development of local small- to medium-sized businesses through preferential procurement practices.

Inasmuch as the company recognises the responsibility it has towards its suppliers, it also has a responsibility to ensure that it builds relationships with business partners who adopt sustainable business practices that do not cause harm to people or the environment. In effect a fruitful relationship will only develop if our partners accept and adopt the high standards of conduct that Gold Fields sets for its own employees and operations. Large organisations are in a unique position to influence the corporate governance and business practices of the companies in their supply chain, and Gold Fields endeavours to use this opportunity to entrench the principles of sustainable development in the companies with which it interacts.

Our relationships with suppliers also include the important element of material stewardship, which compels us to manage all materials used and disposed of by the operations. These standards are extended to its suppliers, particularly those who provide transport and waste management services.

Local procurement

While not legislated in all countries in which we operate, securing a “social licence to operate” is a common requirement and one that hinges partly on a company’s willingness to contribute to the local economy through sustainable procurement practices. It is Gold Fields’ policy to make use, where possible, of local suppliers in all regions. Our mines are often located in remote regions where infrastructure is poor and economic activity limited. In such instances, preferential procurement practices, benefiting indigenous or local suppliers and service providers, play an even greater role in helping to develop the local economy.

Legislation in the South America Region (Peru) requires that companies give priority to local suppliers, provided they meet the necessary standards. Around 15 per cent of the region’s procurement spend goes to local suppliers in the immediate area surrounding our Cerro Corona Mine. These suppliers provide heavy equipment, general services and light transportation. The contracts they have secured with Gold Fields have allowed many of these companies to grow from small start-up enterprises to profitable and sustainable medium-sized operations (see case study page 121).

The South Africa Region’s social and labour plan requirements emphasise local economic development, of which preferential procurement is an important component. It is Gold Fields’ policy to make use of local historically disadvantaged South African-owned (HDSA-owned) companies wherever possible. During the year we spent R3.05 billion with such suppliers, which accounts for 46 per cent of the total procurement budget in the South Africa Region.

In the West Africa Region, the majority of contractors are located within a 40 km radius of the mines, while the Australasia Region has, since inception, consistently made use of local suppliers.

While contracts with large organisations like Gold Fields can transform the business of local suppliers, many face multiple challenges in meeting the required contractual standards. Gold Fields is committed to providing assistance and an enabling environment that will allow local suppliers to overcome these challenges and become preferred vendors. Management in the South America Region meets with local suppliers on a bimonthly basis and offers ongoing training to bring these companies up to standard. Should an HDSA supplier not meet the required standards, the South Africa Region offers various interventions to support and develop the company concerned.

Ensuring sustainable development business practice

Business standards relate not only to the operational requirements of the company but also to other sustainable development issues such as safety, human rights, community development and environmental responsibility. The company’s supply chain management and material stewardship policies seek to encourage business partners and vendors to adopt sustainable business practices.

All contractors to the company are expected to meet its occupational health and safety and environmental management standards, which mostly comprise those set out in the OHSAS 18001 and ISO 14001:2004 standards. Suppliers undergo prescreening for health, safety and environmental management as well as regular compliance audits, conducted internally by the safety and environmental teams or externally by independent assessors.

As a signatory to the United Nations Global Compact and as part of its commitment to the principles of the International Council on Mining and Metals (ICMM), Gold Fields upholds the highest standards for the protection of human rights. Human rights are also a pillar of our sustainable development framework and are enshrined in our code of ethics and human rights policy.

During the year the company developed a human rights toolkit to entrench human rights practices across all its operations. The toolkit currently targets employees but future plans include its rollout to suppliers and contractors to raise awareness about the risk of human rights abuses. While suppliers are not currently screened specifically for human rights compliance, the general selection audit for new suppliers includes a human rights component and they are required to meet the human rights standards and commitments of the company. Any incidence of human rights abuse among suppliers can lead to the immediate termination of the contract.

In Peru contracts with local suppliers, and maintenance of these relationships, include stipulations for investment in local community development projects.

Ensuring responsible material stewardship

Gold Fields’ supply chain and material stewardship policies highlight the company’s commitment to source, store, utilise and dispose of materials in an environmentally and socially responsible manner, with due attention to issues of health and safety.

Fortunately, gold is not harmful to humans or the environment and has many beneficial applications in medicinal and environmental technologies. However, the gold production process utilises a wide range of materials and generates waste products which are potentially hazardous or environmentally harmful. Our biggest waste output comes from waste rock and tailings and chemical and diesel waste, while cyanide and reagents are potentially harmful chemicals being used in the gold process. The management, transportation and disposal of this waste, whether by the company or its contractors, are critical components in our material stewardship policy.

All waste disposal, transportation and recycling contractors are audited for ISO 14001 compliance and procurement contracts require certification in terms of the relevant waste management legislation of the country. During the year Gold Fields became the first mining group to obtain accreditation for full compliance with the International Cyanide Management Institute’s Cyanide Management Code. This accreditation extends to transport suppliers and contractors. The code is recognised as the gold mining industry’s best practice for cyanide management by the World Gold Council, the Council for Responsible Jewellery Practice, the International Finance Corporation and the G8 Group of Nations.

The South Africa Region recycles a large portion of its waste rock to process any available gold, while contractors recycle a portion of the remainder for use as crushed rock in construction. The remaining waste rock is kept in waste dumps, the rehabilitation of which is catered for by closure cost provisions. Many of these waste rock facilities undergo concurrent rehabilitation during a mine’s active life.

A portion of our tailings is also used as backfill for our underground operations to improve shaft stability, while the remainder is stored in tailings dams. Tailings dams have multiple control mechanisms to ensure that they are stable and that their potentially harmful impact on the environment is mitigated. The results of routine inspections, which range in frequency from daily to annually, are evaluated by independent, certified engineers. The tailings dams also have full pollution containment facilities designed to capture any runoff from the dams. Much of the water in the dams is recycled for use in the mine’s processes, thus ensuring that the facilities act almost as closed circuits. We also plant vegetation on the side slopes to ensure that dust emissions from the dams are limited. Tailings management systems are fully compliant with ISO 14001 certification requirements and externally audited.

The company’s operations have systems and contracts in place to recycle steel, grease, oils, organic waste and paper and cardboard products where possible. On-site salvage yards separate the various forms of waste for reuse and recycling.

Gold Fields does not import, export or transport any waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII.