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Introduction

Introduction

Visual inspection at the South Deep twin shafts

“To be the global leader in sustainable gold mining”

The mines that Gold Fields develops typically have a ten to 50-year horizon and their success can only be ensured if we invest in their long-term sustainability. A mine’s successful operation is inextricably linked to the skills and expertise of the people we employ, the companies with which we do business, the safety of our operations and the nature of the relationships that we build with neighbouring communities and governments. It is both a matter of corporate responsibility and business sense that our operations do not damage the environment or cause harm in any way to the diverse groups of people with whom we interact. As such Gold Fields’ vision to be the global leader in sustainable gold mining is underpinned by a sustainability policy that is fully integrated with the way we do business.

A careful consideration of sustainable development is critical for the global mining sector, as, historically, the mining industry’s social and environmental legacy has not always been a positive one. As a company that sees itself operating for the long-term future, Gold Fields needs to ensure that its impact is beneficial – economically, socially and environmentally. This remains a key responsibility for the managers and executives of the company and informs the business decisions we make regarding safety, our people, communities, the environment and the evaluation of new investments.

As a company that mines in four countries on three continents, from 4,000 meters below the surface of the earth to 4,000 meters above sea level, and an exploration or project development presence in 12 countries across all continents, each of our operations has to deal with unique operational, economic, social and environmental challenges. The success of our business is inextricably bound with meeting these challenges successfully.

Sustainable development is not new to Gold Fields, but the past two years have seen a consolidation of the Group’s sustainable development systems and structures, which are now integrated into a single, universal sustainable development framework. This incorporates best practice policies that have been consolidated into eight pillars of sustainable development, and refined to meet our operational needs. These include:

  • Occupational health and safety;
  • Human rights;
  • Ethics and corporate governance;
  • Risk management;
  • Environment;
  • Material stewardship and supply chain management;
  • Community and indigenous people; and
  • Stakeholder engagement.

While the operational roll-out of these policies and principles is the responsibility of management within each project or operation, the Safety, Health and Sustainable Development Subcommittee of the Board, supported by sustainable development managers in each region, monitors the Group’s overall sustainable development performance and drives our ongoing sustainability strategy.

In our sustainable development framework we are guided by the sustainability framework of the International Council on Mining and Metals (ICMM), which includes adherence to its ten principles of sustainability and the commitment of member companies to transparent public reporting, comprehensive risk management, sound corporate governance and independent, external assurance. We also subscribe to the United Nations Global Compact and seek to align our operations and strategies with its ten principles in the areas of human rights, labour, environment and anti-corruption.

Finally our sustainability policy has been informed by the Global Reporting Initiative’s (GRI) Sustainable Reporting Framework. The GRI has developed a framework which guides reporting on triple-bottom-line issues by companies that subscribe to it. Most multinational companies now report in accordance with the GRI framework and can self declare their level of GRI application. We declared a B+ GRI application level last year. This year we have self-declared an A+ GRI application level as required for ICMM members. Our auditors, PricewaterhouseCoopers, have third-party assessed our A+ self declaration. (See page 141 for their Assurance report). For a detailed breakdown of our performance against the GRI indicators go to our website at www.goldfields.co.za.

The following provides a headline overview of our performance in key areas that are critical to our stakeholders.

Occupational health and safety

We are continuing to make progress in reducing fatalities at our mines. But, despite a drop in fatalities from 22 to 18 during the year under review – all of them at our South African mines – we are well short of where we had hoped to be. Our policy dictates that if we cannot mine safely, we will not mine, and every fatality strengthens our resolve to mine with Zero Harm. This philosophy has been entrenched in the behaviour and attitudes of our people at both an operational and a corporate level. It has also spawned a number of initiatives to improve safety, such as the safe production management programme at our South African mines.

The Fatal Injury Frequency Rate (FIFR) for the Group improved by 15 per cent from 0.13 for financial 2009 to 0.11 in financial 2010, while the Serious Injury Frequency Rate (SIFR) improved by 11 per cent from 2.52 to 2.23 over the same period. The Lost Time Injury Frequency Rate (LTIFR) also displayed a slight improvement from 4.35 in financial 2009 to 4.31 in financial 2010. Finally, the Medically Treated Injury Frequency Rate (MTIFR) fell from 12.2 in financial 2009 to 7.53 in financial 2010, a 38 per cent improvement.

Occupational diseases remain an ongoing challenge, with silicosis, tuberculosis (TB) and noise-induced hearing losses (NIHL) being the most pressing, particularly at the South African operations. Overall TB rates dropped from 22.2 to 18.6 per 1,000 employees between financial 2009 and financial 2010 and silicosis from 5 to 2.7 per 1,000 employees. NIHL cases also decreased from 1.5 in financial 2009 to 0.9 per 1,000 employees in financial 2010. Project 4M, implemented to help the company meet the South African Mine Health and Safety Council’s 2013 milestones for silicosis and NIHL, is now well under way. Following baseline studies, we have begun making a range of engineering changes to reduce exposure to these risks at source.

People

The responsible management of human resources is central to meeting our goal of being the global leader in sustainable gold mining. Reaching our target of five million ounces of gold a year in production or development by the end of 2015 will only be possible if we have a motivated, productive and skilled workforce. A comprehensive remuneration and incentive policy is in place to attract and retain the right talent and we invested R264 million during the year under review in training, education and development programmes. About 33,000 employees and 7,000 contractors received training to increase their skills and enhance the capacity of our workforce to meet our 2015 target.

2010 also saw the full implementation of our regionalisation strategy, enabling each region to determine the appropriate structure and complement for its workforce within the overall Gold Fields guidelines. During the year under review none of the regions implemented forced retrenchments, though the South Africa Region offered voluntary separation packages.

A focus of our human resources strategy in financial 2010 was the development and implementation of a human rights policy, covering topics as wide ranging as trade union membership and discrimination. Our new human rights policy, together with the Gold Fields’ code of ethics, adherence to international principles of good governance and corporate responsibility, as well as consistent reference to our six core values, ensure that our operations are equipped to identify potential abuses of human rights and implement corrective actions where required. This has undoubtedly contributed to the fact that we had a clear record regarding human rights abuses during the period under review. To further entrench adherence to these rights we have rolled out a human rights toolkit to all regions, designed to help managers and employees identify and recognise potential human rights risks. Human rights training will also be introduced for new employees at our induction centres in the current financial period.

Overview of our key sustainability issues for financial 2010
Highlights
   
Development of new vision and values for the company that assists with the roll-out of the Group Sustainable Development Framework.
   
Finalisation of the Safe Production Rules and the roll-out to all operations.
   
Completion of the DuPont follow-up assessment reviews in South Africa and their commencement in the other regions.
   
Hard Rock Safety Award to Driefontein for the most improved mine. Kloof was awarded second place and Beatrix fourth.
   
Three consecutive quarters at Beatrix without a fatal accident.
   
Damang operating for 428 days without a Lost-Time Injury. The mine being recognised as Ghana’s Safest Mine.
   
Cerro Corona achieving 4.2 million man-hours without a Lost-Time Injury and winning the Annual Mining Safety Award from the Peruvian Mining Safety Institute.
   
South Deep’s old-order mining licence converted to a new one.
   
Total spend of R150 million on our socio-economic investment activities.
   
Zero human rights transgressions.
   
No material breaches of our code of ethics reported.
   
No material fines were imposed on the company
   
ISO 14001, OHSAS 18001 and AS 4801 certifications maintained.
   
ISO 14001 certification achieved for Cerro Corona; all operations are now certified.
   
Cerro Corona achieved OHSAS 18001 certification.
   
All operations have been upgraded to full compliance in terms of the Cyanide Code.
   
Expanded carbon footprint calculations to include supply chain.
   
Placed fourth in South Africa’s Carbon Disclosure Project.
   
Carbon policy developed.
   
First gold miner to make use of carbon credits to fund a safety or climate change project – the Beatrix Methane project.
   
Beatrix project awarded Deal of the Year by UK’s Energy Risk magazine.
   
Development and implementation of the Well-being Strategy.
   
Total spend of R5.1 billion on procurement of local services and goods.
   
  Lowlights
   
Eighteen fatalities in the South Africa Region.
   
Seven Level 3 environmental incidences.
   
Difficulties with wage negotiations in the South Africa and West Africa regions.
   
Proposed rise in royalties at our Ghanaian operations.
   
Sharp increases in energy costs across our operations.

Environment

Water is a key environmental issue at all of Gold Fields’ operations and our water management strategy incorporates a comprehensive approach to limiting the use of water and mitigating the impact our mines have on water quality. Our total water withdrawal for the year was 63 million kl, while total discharge was 77 million kl, both slight improvements on financial 2009 when measured per unit of production.

We remained within all legal limits for water quality during the year and made satisfactory progress in our continuous water monitoring programme at Driefontein as well as our Tingo Valley Acid Mine Drainage (AMD) Rehabilitation Project at Cerro Corona. This rehabilitation project is linked to a legacy site that was not rehabilitated prior to Gold Fields’ involvement in the area. As part of our social responsibility strategy Cerro Corona has implemented a programme to mitigate the AMD emanating from the legacy site.

AMD is becoming a critical issue for the South African mining sector and, while not directly impacted, Gold Fields is playing a key role in formulating an industry response. Our mines on the far West Rand have the potential to cause AMD in future. However, due to the current dewatering process this will not become an issue until the current mined out areas are flooded, post closure. Gold Fields has engaged with numerous stakeholders and formulated a strategy designed to prevent the formation of AMD. We are in the process of implementing this strategy, which includes treating our water discharges to potable standards. This project, which has been named Liquid Gold, will be subject to extensive feasibility studies and will be linked to off-take agreements for the treated water. At all operations we continue to engage closely with local communities, government structures and environmental interest groups on issues of water management.

The Group reported no major environmental incidents or fines for non-compliance during the year under review, but we had seven Level 3 incidents unchanged from financial 2009. All these incidents have been addressed and their impact mitigated.

Energy, climate change and carbon footprint

Gold Fields’ environmental responsibility is closely tied to issues of energy, climate change and carbon footprint. In South Africa in particular our carbon footprint is dictated by the use of coalfired energy purchased from South Africa’s energy utility, Eskom. Energy saving is thus a key component in our integrated carbon management strategy, which was finalised during the year. The strategy provides a framework for the inclusion of carbon and climate change-related issues into business planning models and decision-making processes throughout the organisation.

Gold Fields is already recognised as a leader in the South African mining industry in dealing with carbon-related issues. For the fourth year in a row we submitted a disclosure report to the National Business Initiative’s Carbon Disclosure Project. We were ranked fifth overall on the Carbon Disclosure Leadership Index: JSE 100 for 2009, similar to our ranking in 2008. Total carbon emissions for calendar 2009 amounted to 7.4 million tonnes, similar to the level of emissions in 2008.

Gold Fields is making use of the sophisticated market mechanisms that have developed around the carbon credit market. During the year under review we sold Certified Emissions Reductions (CERs), the financial securities used to trade reduced carbon emissions, to fund a methane gas project at our Beatrix Mine. With this deal we not only became the first gold mining company in the world to utilise CERs, but have set the scene for the use of carbon credits to fund other greenhouse gas and energy-saving projects at Gold Fields (see case studies, pages 116 and 117).

Energy supply and pricing is an issue at all our operations, but has required particular attention in South Africa following on Eskom tariff increases of 25 per cent for each of the next three years. As a company we invested significant financial and human resources in energy-saving initiatives around the globe in financial 2010. This has seen our South African electricity consumption decline by five per cent (around 30 MW) to below 600 MW and we are seeking similar energy savings in the current financial year.

Stakeholder engagement and social development

Local communities grant us our social licence to operate and it is imperative that we take an active interest in their development and well-being. Such engagement begins at the exploration stage; in projects such as Komana in Mali (see case study page 112), we invest around ten per cent of our exploration budget on sustainability issues. Before we invest though, communities are engaged to determine their economic, social and environmental requirements. This engagement continues through the construction and production phases of the mine and continues beyond its closure. It is a cradle-to-grave approach which is entrenched in our approach to sustainable development.

Our stakeholders include a wide range of groupings: local, regional and national governments, regulators, NGOs, employees and contractors, formal and informal communities, industry associations and academics institutions. We engage with them in formal and informal meetings and the key issues raised by them inform the content and substance of our sustainability programmes.

During financial 2010 we invested around R150 million directly in sustainability projects covering a wide range of areas, including enterprise development and employment creation, infrastructure, health and education. In addition we make it a priority to employ local labour and contractors, wherever possible. This is in line with our policy that our manpower make-up in every region should ideally reflect the demographics of the host country.

Supply chain management and material stewardship

A critical part of our commitment to local communities is making use, wherever possible, of local suppliers and contractors. Our involvement with these suppliers and contractors extends beyond procurement spend and extends to training and mentoring support. In return we expect these firms to adhere to the same high standards of sustainable development that we do. They are audited and closely monitored for their management of human rights, environmental and safety issues. We plan to roll out the newly developed human rights toolkit to all suppliers and contractors to raise their awareness of these important issues.

These responsibilities extend to the treatment of our waste material, which is often undertaken by contractors. Material stewardship is critical in ensuring that we leave a limited environmental footprint. During the year Gold Fields became the first mining group, registered as a signatory with the International Cyanide Management Institute, to obtain accreditation and full compliance for all its eligible operations under the International Cyanide Management Code. This accreditation extends to all transport and other major suppliers and contractors, which have to provide a certificate of safe disposal and are also subject to our normal ISO 14000 certification audit. Tailings and waste rock remain our big-ticket items when it comes to material wastage and during financial 2010 we made further progress in retreatment to extract further value from them. A large portion of our industrial waste, such as oil, grease and steel, is recycled.

Corporate governance and risk management

Underpinning our sustainable development programme is a commitment to sound corporate governance standards. Corporate ethics and corporate governance are strategic imperatives for the success of Gold Fields’ business. During financial 2010 the Board of Directors adopted the recommendations on good corporate governance as contained in the King III Report on Governance for South Africa, which became effective on 1 March 2010 and will be implemented fully in our next financial period. No material transgressions of our ethics policy were reported during the period under review. In addition, no significant fines or nonmonetary sanctions for non-compliance with legal requirements have been levelled against the company.

Gold Fields also supports the principles and processes of the Extractive Industry Transparency Initiative through its membership of the ICMM.

Gold Fields has a well developed enterprise-wide risk management (EWRM) process, which has been in place for a number of years. The overriding purpose of EWRM is to assist the company in achieving its business and strategic objectives, support the company’s efforts to achieve the highest levels of corporate governance and achieve full compliance with the requirements of the King III Code.