Gold Fields

5.2.6 Community relations and share value

Social licence to operate
Many mining companies face increasing pressures over their social licence to operate – i.e. the acceptance or approval of their activities by local stakeholders. Whilst formal permission to operate is ultimately granted by host governments; the practical reality is that many operations also need the permission of host communities and other influential stakeholders to carry out their operations effectively and profitably.

As such, Gold Fields believes it is important to avoid, minimise and manage the negative impacts of its operations on stakeholders while also maximising the positive benefits. In current market conditions – which have the potential to curtail the ability of Gold Fields to deliver local benefits – active stakeholder engagements, in combination with the Company’s Shared Value development approach (see p117 – 119) is particularly important as it shifts the focus from spending to the delivery of positive social and business impacts.

In this context, Gold Fields actively identifies and engages with the representatives of the following groups on a regular basis – both formally and informally:

• Central, regional and local government and their agencies
• Community-based organisations
• Traditional authorities
• NGOs
• Civil society
• Organised labour
• Local businesses

Such engagement is guided by:

• Applicable legislation and regulation
• The Mining Charter and South Deep’s mandated Social and Labour Plan (SLP)
• The ICMMs 10 Principles and Community Development Toolkit – and Position Statement on Indigenous Peoples
• The UN Global Compact’s 10 Principles
• The AA1000 Stakeholder Engagement Standard

All of our operations are required to implement culturally appropriate stakeholder engagement plans for all stages of the life-of-mine.

It is a Gold Fields requirement that all mines establish mechanisms through which communities can voice their grievances and complaints about the Group, its behaviour or that of its employees on social and environmental issues, and have these issues assessed and resolved.

Our community policy, charter and our community relations and stakeholder engagement guidelines can be found at https://www.goldfields.co.za/sus_society.php

Gold Fields Social Performance Framework

Socio-economic development (SED) spend
Gold Fields recognises that not all of the value it creates at a national level through royalties and taxes benefits its host communities. To address this deficit – and to maintain its social licence to operate – the Group focuses on SED initiatives and Shared Value projects in its host communities. Shared Value projects (p118 – 119) are sustainable projects that support Gold Fields’ own business objectives, whilst also generating positive socio-economic impacts for host communities by addressing their priority needs of employment, skills and enterprise development as well as environmental rehabilitation and water supplies.

At first glance, the spending on SED programmes – US$14 million in 2015 – appears small given that this reflects our traditional community social investments (CSI) spend in host communities. However, there is no doubt that a significant amount of our salaries and wages paid to employees finds their way back into these communities. A significant part of our spending is also with local business suppliers and contractors. Gold Fields is increasingly seeking to ensure employment and procurement is channelled to local communities and as a result stimulate local employment with specific targets being developed by all of our operations over the next year.

SED and wider community spend is focused on the delivery of benefits to host and labour sending communities. These include:

• Host community employment
• Host community procurement
• Skills development
• Educational investment
• Health investment
• Infrastructure support

Details of these initiatives in each region follow on pages 110 – 119.

Host community employment
Gold Fields is committed to employing host community members at all its operations – where this is feasible. By doing so, we are able to align the interests of host communities to those of our mines, maximise local value generation and build up its local skills pools.

Nevertheless, Gold Fields’ ability to recruit such workers can be constrained by the limited availability of skills at the host community-level in the first place – underlining the need for Gold Fields to also support local education and skills development.

In South Deep, for example, many of our workers recruited for lower skilled jobs have been recruited from the mine’s community-focused Adult Basic Education and Training courses. Similarly, at Cerro Corona in Peru, local employees were employed as part of our early and successful efforts to integrate members of the host communities into our workforce.

The number of host community members – including both employees and contractors – working at each of Gold Fields’ regions is set out on the next page. All our operations have been tasked with developing plans that encourage host community procurement and employment as well as setting three-year targets in 2016.

SED contributions by type 2015 (US$m)		SED contributions by region 2013 – 2015 (US$m)

Host community procurement

Where possible, Gold Fields seeks to procure goods and services from its countries of operation, and, where feasible, its host communities. This serves to:

• Enhance the national and local supply base, which is vitally important given the remote nature of some mines
• Generate employment opportunities for local people

Of the total 2015 procurement expenditure, US$1.27 billion, or 76%, was spent on businesses based in countries where Gold Fields has operations (2014: US$1.41 billion / 76%).

Within this figure, US$514 million, or 35% of total expenditure, was spent on suppliers and contractors from mine host communities (2014: US$600 million / 39%). Host procurement numbers are dominated by our Australian operations – US$439 million in 2015 – as the entire region of Western Australia is classified as a host community due to the extremely remote nature of this region and the fact that many employees fly into the operations from Perth.

In addition, Gold Fields works with communities and governments to develop broader, more diversified local economies – primarily by helping local people start and consolidate their own businesses.

Three-year local procurement and employment strategies and plans for South Africa, Ghana and Peru will be developed in 2016 to support the delivery of targets to be set at the same time. The targets will also be included in the balanced scorecards of managers responsible for their implementation.

Host community employment and procurement

	Number of employees from host community (as a % of total employees)				Number of workforce2 from host community (as a % of total workforce)
Region	2015		2014		2015		2014
Peru	19%		22%		29%		24%
Ghana	46%		48%		67%		66%
Australia1	89%		91%		90%		94%
South Deep	48%		46%		50%		47%
Group	51%		52%		59%		57%

	Local (in country) procurement							Host community procurement
Region	2015		2014		20133			2015		2014		20133
Peru	87%		88%		91%			7%		5%		6%
Ghana	64%		72%		68%			9%		6%		6%
Australia1	97%		99%		99%			66%		69%		72%
South Deep	100%		100%		100%			10%		9%		4%
Group	85%		91%		86%			35%		39%		31%

1	Host communities are those communities living in settlements within an operation’s direct area of influence. For Gold Fields Australian operations, Western Australia is classified as a host community due to the extremely remote nature of this region and the fact that many employees fly into the operations from Perth. Hence the high host community employment percentages relative to the other regions.
2	Workforce is the total of employees and contractors
3	Excludes Yilgarn South assets

Skills development
Gold Fields recognises that skills development is critical for integrating members of its host communities into its workforce or that of its suppliers. Similarly, Gold Fields supports the development of small- and medium-sized local businesses by helping community members attend courses in practical business skills to achieve portable skills as well as business law, financial management, marketing, ethics and entrepreneurship.

Education investment
Gold Fields recognises that education is critical for the social and economic development of its host communities, the improvement of its operating environments and the long-term integration of host community members into its workforce. Relevant educational initiatives range from equipping early learning centres and schools, extra lessons and bridging programmes for students, teacher training and bursaries for students to the sponsorship of mining universities.

Health investment
Many of Gold Fields workers are drawn from host communities, resulting in a high degree of interaction between the workforce and the local community. The promotion of community health is therefore not only important from the perspective of local socio-economic development – but also employee wellbeing and operational continuity. For example, at Tarkwa Gold Fields manages a local hospital that assists community members in addition to employees, while the mine also sponsors public health programmes in adjacent communities.

Infrastructure support
Some of Gold Fields’ areas of operation suffer from a severe lack of infrastructure, such as roads, electricity supply and social services, including schools and medical facilities. This not only impacts the development of host communities but can also, in certain cases, impact Gold Fields’ own operations. As such, infrastructure development represents a key area of focus. In 2015, Gold Fields spent a total of US$4.5 million on host community infrastructure initiatives, the largest slice of its SED spend.

Regional programmes

Americas region
Despite ongoing friction between local communities and other mining operators in the Cajamarca region, Gold Fields’ Cerro Corona mine so far remains largely unaffected. This is mainly due to the strength of the mine’s relations with the local community, which is supported by:

• Ongoing implementation of a well-established engagement framework with the communities in Hualgayoc that helps identify and address host community development priorities, including the availability of potable water, management of our environmental and social impacts and employment generation
• Gold Fields’ participation in the ‘Mesa de Dialogo y Concertacion de Hualgayoc’ (a communitybased, multi-stakeholder roundtable focused on regional development projects)
• Joint water monitoring with the host community, to provide assurance around the mine’s water impacts – a key focus point for communities in conflict with other mining operators in the area
• Support for the organisations responsible for the management of the Tingo and Maygasbamba rivers to improve irrigation infrastructure
• Visible benefits to the host community through the employment of community residents and targeted SED projects

The most critical community projects in Cerro Corona are linked to the communities' top priorities and include water provision for surrounding communities, job creation and local supplier development and houses at risk of collapse. Cerro Corona’s water management programme – which is also a Shared Value project (p119) – aims to bring drinking water to more than 90% of the families of Hualgayoc by 2017.

The following projects in 2015 supported this ambition:

• Towards the end of 2015, Cerro Corona started the construction of the Coymolache drinking water system to provide water connections to 35 families. The project is scheduled for completion in April 2016
• The completion of the rehabilitation of the main infrastructure that provides potable water to Hualgayoc City
• The completion of the first phase of the Cuadratura drinking water system, benefiting 85 families
• The replacement of 18 km of local water pipeline systems, including enhancement of water collection points. This water pipeline system will benefit 18 hamlets in the area and will cost an estimated US$4.5 million. Work started in September 2015 and is scheduled for completion in October 2016

Other key SED projects undertaken by Cerro Corona during 2015 included:

• Gold Fields provided financial and practical support to 813 small farmers in the district of Hualgayoc to plant 614 pastures. These pastures will assist with increasing milk sales in 2016 as the dairy industry is the second biggest economic activity in the Hualgayoc district after mining
• Gold Fields embarked on a voluntary programme to reconstruct five houses at risk of collapse in Hualgayoc City. Work on another four houses is scheduled for 2016 to prevent them from collapsing
• Construction and equipping of the Hualgayoc Health Centre was completed by Gold Fields in 2015 at a total cost of US$2.4 million. It is managed by the regional government and considered one of the most modern health facilities in the region

Australia region
The remote location of Gold Fields’ mines in Australia – as well as strong local socio-economic conditions – mean that stakeholder engagement, which is driven by a current stakeholder engagement plan, is largely focused on local indigenous groups. This includes engagement around native titles on Gold Fields’ licence areas, land access for near-mine drilling and the preservation of indigenous heritage.

The Gold Fields Australia Foundation is responsible for investments in community projects and during 2015 spent A$300,000 (US$216,000) in supporting a number of initiatives in support of indigenous groups, including bursaries to children from these communities

Under Gold Fields’ Community Policy, the Company is committed to working to obtain the consent of indigenous peoples for new projects (and changes to existing projects) – where they are located on lands traditionally owned by or under customary use of indigenous peoples – and that are likely to have significant adverse impacts on indigenous peoples.

Gold Fields’ St Ives mine is currently involved in a native title claim made by the Ngadju People for the recognition of their Native Title rights over a large parcel of land, including tenements held by St Ives. Details of the legal case are on page 40 of the AFR.

Subsequent to the sign-off of the Integrated Annual Report 2015 on 23 March 2016 an event occurred that is material to the Company. The press release on this event follow below:

Gold Fields Australia wins appeal in native title proceedings
Johannesburg, 29 March 2016:

Gold Fields Limited (Gold Fields) is pleased to announce that the Full Court of the Federal Court of Australia today overturned a July 2014 Federal Court decision that the re-grant of certain tenements to Gold Fields Australia’s St Ives mine in 2004 by the State was not compliant with the correct processes in the Native Title Act 1993 (Cth).

As such, the Federal Court has confirmed that St Ives’ re-granted tenements are valid for the purpose of the Native Title Act, and that while St Ives’ rights as tenement holder and the Ngadju People’s native title rights shall coexist, St Ives’ rights shall prevail should there be any inconsistencies.

Gold Fields welcomes this finding, which confirms that it has at all times complied with its legal obligations in respect of its dealings with these tenements. Gold Fields will continue to openly engage with the Ngadju People, and all other community stakeholders in relation to its operations in Australia.

It is not yet clear whether the Ngadju People will seek to appeal this decision.

West Africa region
In light of local socio-economic realities at our Ghanaian operations, community relations are a major focus for the Damang and Tarkwa mines. However, the mines’ lower production over the past two years has resulted in lower levels of funding for the Gold Fields Ghana Foundation (Gold Fields’ main SED vehicle in the country, which receives US$1 per ounce of gold sold and 1% of pre-tax profits).

As a result, Gold Fields has been carrying out targeted engagement with key host community stakeholders to minimise the impacts on both the affected individuals themselves and host communities more broadly. Furthermore, relationship assessment work – similar to that used at our South Deep mine (p114) – was completed in 2015 and its findings and mitigating actions implemented in 2016.

This is in addition to ongoing engagement that took place through the mines’ well-established consultation channels, including their:

• Broad-based mine consultative committees
• Formalised, regular engagement with local chiefs
• Regular community committee meetings
• Direct community forums
• Continual informal engagement

Key community issues in 2015 included:

• Compensation of farmers at Kottraverchy, Tarkwa: Despite 400 farmers previously accepting crop compensation, in 2014 a small group of farmers challenged the value of the compensation. Gold Fields is participating in a mediation process with the farmers, overseen by the Environmental Protection Agency (EPA) and an independent evaluator has been appointed
• Relocation of Ainoo residents, Damang: After raising concerns about the health and safety implications of their proximity to the Lima South Pit, six residents were successfully rehoused at a cost of around US$500,000. Our actions were guided by the Gold Fields practice guide on resettlement as well as guidelines developed by the World Bank’s International Finance Corporation

The Gold Fields Ghana Foundation – which has Company and external trustees – spent just over US$1 million on projects during 2015. The most important ones were:

• An information technology and early childhood development centre at New Atuabo
• Artisan training and the supply of tools at Tarkwa
• Additional classrooms at Gold Fields supported schools near Tarkwa
• Continuation of our scholar bursary schemes for 166 pupils at Tarkwa and 42 pupils at Damang

South Africa region
Under the 2002 Mineral and Petroleum Resources Development Act, mining companies must submit a SLP as a prerequisite for the granting of mining or production rights. Each SLP requires the Company in question to implement, amongst others:

• Employee development programmes, with an emphasis on BEE
• Local Economic Development (LED) programmes – with a focus on host communities and laboursending areas
• Employee accommodation and housing programmes (p131)

As such, the LED element of the SLP provides the regulatory framework for Gold Fields’ engagement with host community stakeholders in South Africa. Since the 2010 Mining Charter took effect Gold Fields has substantially complied with its requirements including those agreed to under the 2010 approved SLP and the 2013 SLP, yet to be approved.

However, in 2014, amid continued social unrest and rising poverty and unemployment levels in the Westonaria municipality – home to our South Deep mine – Gold Fields set out to assess and understand the community expectations amid the ever-growing risk that the social volatility will spread to the mine.

South Deep’s journey from compliance to its future focus is outlined in the infographic on the following two pages.

The use of the Relational Proximity Indicator tool to measure the strength of community relationships at South Deep has been ongoing since Q2 2014 and all 10 of our host communities in Westonaria were assessed by the end of 2015. These assessments have revealed a significant gap in South Deep’s community investment programme and its ability to positively impact community perceptions. The community raised unemployment, education, skills development and the mining companies’ social and economic obligations as the key issues that need to be addressed.

With a more comprehensive understanding of the risk, community needs and community perceptions, last year South Deep’s approach shifted materially from one focused on compliance to one focused on good practice. The South Deep community relations team was strengthened and a range of new strategies, programmes and projects have been developed and implemented, as outlined in the infographic. These initiatives were undertaken in addition to the SLP and Shared Value projects (p118) already undertaken by South Deep:

South Deep’s Social Licence to Operate journey

View enlraged South Deep’s Social Licence to Operate journey

Gold Fields and Sibanye Gold Alliance
An alliance was formed in 2015 between Gold Fields and Sibanye Gold, the other mining house hosted by the Westonaria communities, to join forces building sustainable host communities. Service providers were appointed during Phase 1 of a programme with the aim of building an agricultural economy organised by the community itself. An eight week workshop was held as a part of Phase 1 that established a number of enterprises in agriculture, sewing, construction, landscaping, security services and waste recycling, creating around 200 jobs in the area. The second phase commenced early in 2016.

Continued on page 116

Community trusts
In 2015, South Deep began collaborating with the trustees of the South Deep Education Trust, the South Deep Community Trust and the Westonaria Community Trust to facilitate more effective delivery of project benefits to host communities. During Q4 2015, a strategy document, informed by engagements with key community stakeholders, was ratified by the trustees of the South Deep Education and Community trusts.

During the year, there has been a significant acceleration of funding by the three South Deep trusts with a particular focus on educational initiatives, such as supporting two tertiary technical institutions and Early Childhood Development near South Deep and allocation of bursaries to high school and university students in the Eastern Cape and KwaZulu-Natal, two of the major labour-sending areas of the mine. During 2015 the South Deep trusts spent a combined R12 million (US$1 million) and the Westonaria Community Trust R12.3 million (US$1 million) on community and education projects.

Local procurement
The local procurement project was initiated in 2015, with the aim of increasing the ability of local community entrepreneurs to provide goods and services to South Deep and, potentially, other businesses in the area and consequently stimulate local job creation. Entrepreneurs in host communities were interviewed and around 500 enterprises and 4,900 individuals were recorded as potential suppliers to South Deep. This list will be further analysed through a business diagnostics exercise to be undertaken early in 2016 by a business incubator firm.

Thusanang community
The informal settlement of Thusanang, which is located 1km from South Deep, is the mine’s closest host community and one that has grown from about 370 households in 1999 to about 3,500 households in 2015. Only about 10% of these households have a member working, some of them at South Deep, the remainder are unemployed. This presents a significant risk to South Deep. A relationship assessment was undertaken last year, and together with the findings and recommendations of a community profiling exercise, forms the basis of an action programme to be started in early 2016. A key focus of the first phase of this plan is to prevent any further growth in the Thusanang settlement, thereby giving South Deep the opportunity to develop alternative economic scenarios in co-operation with local stakeholders.

SLP projects
In parallel to the development of the extended community investment strategy for Westonaria, South Deep continued to invest in its SLP projects during 2015. The most important projects were:

• The restoration of the historic Healdtown College in the Eastern Cape completed in early 2015
• The building of the Thusanang Community Clinic in our closest host community with the facility set to be handed over to the Department of Health in early 2016
• The completion of a bakery at South Deep, with the mine’s hostels acting as anchor clients. The bakery became fully operational in February 2016, employing five people

Independent bakery funded by South Deep