Integrated Annual Report
for the year ended 31 December 2014
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About Gold Fields
Gold Fields Limited is an unhedged, globally diversified
producer of gold with eight operating mines in Australia,
Ghana, peru and south Africa. in February 2013, Gold
Fields unbundled its mature underground Beatrix and KDC
mines in south Africa into an independent and separately
listed company, sibanye Gold Limited. it also expanded its
presence in Australia, acquiring the Darlot, Granny smith
and Lawlers mines (known as the Yilgarn south Assets)
from Barrick Gold in october 2013.
Gold Fields has attributable annual gold production of
approximately 2.2 million ounces, as well as attributable
Mineral reserves of around 48 million ounces and Mineral
resources of around 108 million ounces. Attributable
copper Mineral reserves total 620 million pounds and
Mineral resources 1,001 million pounds. Gold Fields has a
primary listing on the Jse Limited, with secondary listings
on the New York stock exchange (NYse), NAsDAQ Dubai
Limited (NYX) and the swiss exchange (sWX).
Cover piCtures
the processing plant at Gold Fields’
Granny smith mine in Western
Australia
revegetation of the tailings dam at
Gold Fields’ south Deep mine in
south Africa
Contents
1
2
3
4
5
6
7
IntRoductIon
About this report
About Gold Fields
ouR busIness
Our DNA
Our global footprint – 2014 in perspective
Our business model
LeAdeRshIp And peRFoRmAnce
Vision of the Chairperson
CEO report
CFO report
Corporate governance
Summarised remuneration report
stRAteGIc AnALysIs
Strategic trends
Risk and materiality
optImIsInG ouR opeRAtIons
Ensuring our mines deliver
Pursuing zero harm
Promoting environmental stewardship
GRowInG GoLd FIeLds
Redefining growth
An integrated approach to growth
Near-mine exploration performance
Update on remaining growth projects
1.1
1.2
1.2
2.1
2.2
2.3
2.4
2.5
3.1
3.2
4.1
4.2
4.3
5.1
5.2
5.3
5.4
5.5 Mineral Resource and Mineral Reserve Statement
secuRInG ouR FutuRe ResponsIbLy
Gold Fields as an employer of choice
Government and social relations
Community relations
AssuRAnce
First party: Internal Audit statement
Independent Assurance Report to the Directors of
6.1
6.2
6.3
7.1
7.2
Gold Fields Limited
7.3
Assured data
Administration and corporate information
IFc
IFc
IFc
1
2
4
9
12
14
18
28
32
37
40
42
47
54
56
67
72
78
80
82
84
88
90
96
98
102
108
116
118
119
123
125
iNtroDuCtioN
About this report
Integrated Annual Report
for the year ended 31 December 2014
Annual Financial Report
for the year ended 31 December 2014
mineral Resource and mineral Reserve
supplement to the Integrated Annual Report
for the year ended 31 December 2014
Our 2014 Integrated Annual Report comprises the
following three volumes:
• The Integrated Annual Report (IAR) 2014,
which examines the integrated nature of
our operational, financial and sustainability
performance
• The Annual Financial Report 2014, which fulfils
our statutory financial reporting requirements
• The Mineral Resources and Mineral Reserves
Overview 2014, which provides detailed
technical and operational information on our
mines and growth projects
The aim of our integrated approach is to enable
investors and other stakeholders to make a more
informed assessment of the value of Gold Fields
and its prospects. The IAR also forms part of our
Communication on Progress to the United Nations
Global Compact. A summary of our adherence
to the Global Reporting Initiative (GRI), the 10
Principles of the United Nations Global Compact
and the 10 Principles of the International Council
on Mining & Metals (ICMM) and its mandatory
requirements of the position statements are
presented online.
Forward looking statements
Gold Fields’ forward looking statements which
apply to this Integrated Annual Report, can be
found on our website at www.goldfields.com.
scope and boundaries of this report
This is Gold Fields’ 2014 Integrated Annual
Report. It covers the reporting period from
1 January 2014 to 31 December 2014.
The previous IAR was published in March 2014
and covered the financial reporting period from
1 January 2013 to 31 December 2013.
This Integrated Annual Report provides an
overview of Gold Fields’ eight global operations
in Australia, Ghana, Peru and South Africa, as
well as our exploration and business development
activities. Detail on the exact location of each
operation can be found on the global map on
p4 – 5, while growth and exploration projects can
be found on page 89.
We use an integrated approach to reporting
that examines our operational, financial and
sustainability performance. All non-financial data
for 2013 exclude the newly-acquired Yilgarn South
Assets, unless otherwise indicated. All 2014 non-
financial data are inclusive of the Yilgarn South
Assets. The existing Agnew and newly acquired
Lawlers operations were combined in Q4 2013
and it is therefore not possible to separate out
the data for the Yilgarn South Assets in 2014 to
allow for a year-on-year comparison with 2013.
Furthermore, all 2012 data, where stated, cover
only the continued operations of Gold Fields, i.e.
they exclude the contributions from the Sibanye
Gold assets. This report has been compiled in
accordance with the GRI’s G4 Guidelines and
the International Integrated Reporting Council
Framework. Gold Fields also references
a broad range of additional codes, frameworks
and standards in compiling the report, the full list
of which can be found on p48. We believe the
Integrated Annual Report, together with additional
documents held online, complies with the GRI G4
Core Reporting Guidelines.
An average exchange rate for 2014 of R10.82 and
A$1.11 to the US$ have been used in this report.
Assurance
Our auditors, KPMG, have provided reasonable
assurance on selected sustainability information in
this report, which is prepared in accordance with
the G4 guidelines. As a member of the ICMM we
are committed to obtaining assurance in line with
the ICMM Sustainable Development Framework:
Assurance Procedure. KPMG has provided
assurance on the four subject matters of the ICMM
(ICMM subject matter 5 is not applicable due to
Gold Fields’ transition to GRI G4 Core). The key
sustainability performance data for assurance by
KPMG in 2014 can be found on p123 – 124.
board approval
The Gold Fields Board of Directors considers
that this Integrated Annual Report complies in
all material respects with the relevant statutory
requirements of the various regulations governing
disclosure and reporting by Gold Fields and
that the annual financial statements comply
in all material respects with the South African
Companies Act No 71 of 2008, as amended,
as well as with International Financial Reporting
Standards. As such, the Board approves the
content of the Integrated Annual Report 2014,
including the Annual Financial Report 2014.
cheryl carolus
Chairperson of the Board
23 March 2015
the Gold Fields Integrated Annual Report 2014
1
1
Tailings storage facility at Cerro Corona in Peru
1.1
1.2
1.3
1.4
Our DNA
Our global footprint
Annual performance dashboard
Our business model
2
4
6
9
The Gold Fields Integrated Annual Report 2014 2
introduction
introduction
3
1.1 our dnA
OUR STRATEGIC
PILLARS
• Safe and productive teams
• Cost discipline in support of
sustainable cash generation
• No marginal mining – not
“ounces for ounces’ sake”
• To structure our business such
that the Group will generate a
15% free cash flow margin at a
gold price of US$1,300/oz
• A dividend-first policy – we pay
out 25% to 35% of normalised
earnings
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• Prioritisation of low-risk, high-
return assets
• Assets in regions where we
already have a presence
• Growth of reserves per share
and cash flow per ounce and
per share
• Prioritisation of cash flow,
profitability and return on
investment – not ounces
• Active portfolio management
“backing only franchise
assets”
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• Attraction and retention of
critical employees
• Employee development
• Employee health
• Shared Value
• Stakeholder relations
• Human rights and ethics
• Responsible environmental
management
• Energy and carbon
l e n c e
c e l
x
a l e
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Operatio
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R S
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Safety
H
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T R A T EGIC OBJE
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O U R VALUE
O U R VISIO
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To be the
global leader in
sustainable gold
mining
l
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ect Respo n s i
h generation to u n d e r
Securing o
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In
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p i n v
OUR STRATEGIC
PRIORITIES
OUR COMMITMENTS
TO STAKEHOLDERS
Focus on a
15% free cash
flow margin at
a gold price of
uS$1,300/oz
Proactive
portfolio
management –
clean up portfolio
and divest non-
core assets
Growth
through
value accretive
acquisitions and
near-mine
exploration
Employee Charter
• To be a company of which employees can be proud
• To celebrate achievement
• To treat employees with respect and to work with them to ensure
their health and safety
• To provide the right development and support for employees
to succeed
• With employees’ help, to make Gold Fields the best place to work
A safe, winning and productive team
Investor Charter
Strengthen the
balance sheet by
reducing debt
• To build a quality portfolio of productive mines
• To provide superior returns
• To deliver on our commitments
Pay dividends
of between
25% and 35%
of normalised
earnings
Deliver
South Deep
Focus on
safety and
maintaining our
social licence to
operate
A quality portfolio of assets, providing
superior returns on gold
Society and Community Charter
• To build strong relationships and trust
• To create and share value
• To measure our actions and impact
• To deliver against our commitments
The most trusted and valued
mining partner
The Gold Fields Integrated Annual Report 2014The Gold Fields Integrated Annual Report 2014
4
INTRODuCTION
INTRODuCTION
5
1.2 Our global footprint – 2014 in perspective
West Africa region
GHANA
NET CASH FLOW 7
US$123 million
Tarkwa
Damang
Accra
Mine
Damang
Tarkwa
Managed production (Au ’000oz)
All-in Cost (AIC) (US$/oz)
Mineral Reserves (million Au oz)1
Mineral Resources (million Au oz)1
Mine workforce2 (number)
178
558
1,175
1,068
1.23
5.26
7.49
9.57
1,756
4,3584
Total Recordable Injury Frequency Rate (TRIFR)6
1.54
0.52
SOUTH AFRICA
NET CASH FLOW DEFICIT 7
US$116 million
Johannesburg
South Deep
AUSTRALIA
NET CASH FLOW 7
US$218 million
Agnew/Lawlers
Darlot
Granny Smith
St Ives
Perth
KEY
Mines
Corporate office
Regional offices
For growth and
exploration projects,
see map on p89
PERU
Cerro Corona
Lima
NET CASH FLOW 7
US$150 million
Americas region
South Africa region
Australia region
Mine
Cerro Corona
Mine
South Deep
Mine
Agnew/Lawlers
Darlot
Granny Smith
St Ives
Managed production (Au-eq ’000oz)
All-in Cost (AIC) (US$/oz)
Mineral Reserves (million Au oz)1
Mineral Resources (million Au oz)1
Mine workforce2 (number)
Total Recordable Injury Frequency Rate (TRIFR)6
327
316
1.76
3.02
1,710
0.38
Managed production (Au ’000oz)
All-in Cost (AIC) (US$/oz)
Mineral Reserves (million Au oz)1
Mineral Resources (million Au oz)1
Mine workforce2 (number)
Total Recordable Injury Frequency Rate (TRIFR)6
201
1,732
34.90
69.80
5,2463
4.65
Managed production (Au ’000oz)
All-in Cost (AIC) (US$/oz)
Mineral Reserves (million Au oz)1
Mineral Resources (million Au oz)1
Mine workforce2 (number)5
271
990
0.87
2.57
580
Total Recordable Injury Frequency Rate (TRIFR)6
18.13
84
1,222
0.09
0.26
263
13.17
315
809
0.87
3.70
574
9.30
362
1,164
1.80
3.51
741
22.39
1 Managed Mineral Reserves and Resources
2 Employees and contractors
3 Excludes Corporate office (82 people)
4 Excludes Accra office (18 people)
Excludes Perth office (112 people)
5
6 TRIFR includes the total number of Fatalities, Lost Time Injuries, Medically Treated
Injuries and Restricted Work Injuries (for both employees and contractors).
Gold Fields believes that TRIFR – which is aligned with the health and safety metrics
of the International Council on Mining and Metals (ICMM) – is the most useful overall
measure of safety performance.
Net cash flow from operating activities after taking account of net capital
expenditure and environmental payments
7
The Gold Fields Integrated Annual Report 2014The Gold Fields Integrated Annual Report 2014 6
our buSinESS
1.3 Gold Fields’ annual performance dashboard
2014 performance drop against 2013
2014 performance on a par with 2013
2014 performance improvement on 2013 OR achievement in line with strategy
1Optimising our operations
p54
Category
Total workforce1
• Total employees
• Contractors
Gold produced – attributable (’000 oz)
Revenue (US$)
All-in-Cost (US$/oz)2
Gold price received (US$/oz)
Net cash-flow (US$)
Free cash-flow (FCF) margin (%)
Headline earnings/(loss) (US$m)
Dividends declared – SA cents per share3
Total assets (US$m)
Fatalities
TRIFR (rate per million)4
Energy consumption (TJ)
CO2 emissions (‘000 tonnes)5
Environmental incidents (Level 3)
Water withdrawal (Mℓ)
Water intensity (Kℓ withdrawn/oz gold produced)
1 Employees and contractors, including head offices
2 AIC include all cash costs plus costs related to sustaining and growing
production of a company, excluding taxes
3 Excludes dividends in specie
PErForMAncE
2013
16,852
10,167
6,685
2,022
2,906
1,312
1,386
(235)
n/a
(81)
22
7,296
2
4.14
10,569
1,731
3
30,302
15.01
2012
n/a
9,684
8,961
2,031
3,531
1,537
1,656
(280)
n/a
350
235
8,691
0
n/a
10,818
1,831
6
23,688
n/a
2014
15,440
8,954
6,486
2,219
2,869
1,087
1,249
235
13
27
40
6,858
3
4.04
10,4666
1,694
4
30,207
13.16
4 Per million hours worked, including employees and contractors
5 Scope 1, 2 and 3
6 The sum of direct and indirect energy consumption reflects a conversion factor
used by the Granny Smith power station for comparability to other operations. If the
conversion factor is not applied total energy consumption is 10,997 TJ
• Ranked fifth in EY
Excellence in Integrated
Reporting Awards
• 96% score in SA CDP
CDLI Index
• Platinum award in Ghana-
Africa Business Awards
AWARDS
n
o
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i
m
$
S
U
Net cash flow by Gold Fields operations7
2013
Gold: US$1,386/oz
Net cash: (-US$235 million)
2014
Gold: US$1,249/oz
Net cash: US$235 million
250
1,686
1,625
1,372
1,315
1,265
1,283
1,275
1,265
1,179
150
50
(50)
(150)
(250)
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2013
Net cash flow
Gold price
7 Net cash flow from operating activities after taking account of net capital expenditure and
environmental payments.
2,000
1,500
1,000
500
0
(500)
(1,000)
(1,500)
(2,000)
U
S
$
/
o
z
The Gold Fields Integrated Annual Report 2014
our buSinESS
7
2014 performance drop against 2013
2014 performance on a par with 2013
2014 performance improvement on 2013 OR achievement in line with strategy
2Growing Gold Fields
p78
Category
Attributable Gold Mineral Resources (Moz)
Attributable Gold Mineral Reserves (Moz)
Attributable Copper Mineral Resources (Mlb)
Attributable Copper Mineral Reserves (Mlb)
Resource delineation and project holding costs2 (US$m)
Brownfields exploration (US$m)
Brownfields exploration – metres drilled
Number of growth projects in portfolio1
PErForMAncE
2013
2012
113.393
125.499
48.608
1.119
708
122
32
250,138
5
54.856
1.284
1,024
202
51
n/a
5
2014
108.843
48.123
1.001
620
36
58
349,511
2
1 Advanced growth projects (excludes those that have been put up for disposal)
2 No greenfields exploration spend in 2014. This figure refers to resource delineation and holding costs for Salares Norte and Far Southeast
NEAR-MINE
EXPLORATION SPEND
US$58m
RESOURCE
DELINEATION2
US$36m
SOUTH DEEP
LIFE-OF-MINE
70 years+
Gold Mineral Resources (attributable Moz)
Gold Mineral Reserves (attributable Moz)
125.499
113.393
108.843
54.856
48.608
48.123
60.000
50.000
40.000
30.000
20.000
10.000
0
2012
2013
2014
2012
2013
2014
• IAS-SAMREC Award for best Mineral Reserve and Resource reporting
150.000
120.000
90.000
60.000
30.000
0
AWARDS
The Gold Fields Integrated Annual Report 2014
our buSinESS
8
2014 performance drop against 2013
2014 performance on a par with 2013
2014 performance improvement on 2013 OR achievement in line with strategy
3Securing our future responsibly
p96
Category
National value distribution (US$m)1
Socio-economic development spend (SED) (US$m)1
Payments to businesses (US$m)1
Payments to capital providers (US$m)1
Payments to governments (US$m)1
Employee wages and benefits (US$m)1
Minimum wage ratio2
Ratio of basic salary of men to women
Average training per employee (hours)
PErForMAncE
2013
2,980
16
1,817
172
380
595
3
1.2
97
2012
3,7683
10
2,5293
4353
4583
3363
3
1.4
142
2014
2,650
16
1,835
137
194
468
1.7
1.1
181
1 Details on p106 of this report
2 Entry level wage compared to local minimum wage restated, where applicable
3 Excludes Corporate and GIP expenditure
SED contributions by type 2014 (US$m)
SED contributions by region 2014 (US$m)
1,1
5,5
3,3
2,1
2,5
1,9
Local environment
Infrastructure
Education and training
Health and wellbeing
Economic diversification
SLPs (South Africa)
1,5
3,2
8,3
3,4
Australia
South Africa
Americas
West Africa
Total value distribution by region 2014 (US$m)
Total value distribution by type 2014 (US$m)
359
1,070
344
866
Americas
Australia
South Africa
West Africa
194
1,835
468
16
137
Government
Business
Employees/contractors
SED
Capital providers
• Silver Award in 2015 Sustainability Yearbook
• Top SA Mining Company in 2015 Sustainability Yearbook
• 81% performance rating on Dow Jones Sustainability Index
AWARDS
• Gold Fields Peru wins Peru 2021/CEMEFI Socially Responsible Company Distinctive Award
The Gold Fields Integrated Annual Report 2014
9
our buSinESS
1.4 Our business model – Unlocking the value
of gold
The untapped value inherent in a gold-containing ore body
5. Loss of “social licence” to operate
can only be accessed through the input and collaboration
of a number of different stakeholders. While Gold Fields has
the expertise, the financial and human resources as well as
the technical experience to mine gold, we recognise that we
cannot do so without the financial backing of investors, the
relevant licences from governments, the consent and buy-in
from neighbouring communities, sufficient access to water and
energy, the services of a range of suppliers and contractors,
and the skills and manpower of our people.
Only when all of these fundamentals are in place, is accessing
the ore body feasible. It is at this point that Gold Fields’ expertise
really comes into play. As experts in mechanised gold mining,
we are best positioned to extract maximum value from what we
recognise to be national assets and deliver it to our stakeholders.
The mining cycle – from exploration right through to mine
closure – is made optimally effective by the business’ strategic
imperatives that seek to deliver maximum value through safe
gold extraction. Our 2014 strategic focus areas were:
1. Drive safety and the goal of Zero Harm
6. Regulatory uncertainty and litigation
7. Security of power supply and cost of energy
8. Non-compliance with the Mining Charter in South Africa and
its Social and Labour Plans (SLPs)
9. Labour relations/wage negotiations
10. Safety and health of our employees
We remain acutely aware of our responsibilities to our investors,
our communities and our employees. Our commitment to these
three critical stakeholder groups is upheld in our Investor, Society
and Community and Employee Charters. By adhering to the
Gold Fields Values of Safety, Responsibility, Honesty, Respect,
Innovation and Delivery we seek to honour these commitments.
Living the Gold Fields Values also ensures that we achieve our
goal of causing Zero Harm to people, the environment and
communities, while delivering maximum value to shareholders.
(See Our DNA on p2 – 3).
The extraction of gold – and the generation of cash – is the end
2. Focus on a 15% free cash flow margin at a gold price of
result of all our efforts. From this flows a number of outcomes
US$1,300/oz
3. Proactive portfolio management – clean up portfolio and
divest non-core assets
4. Growth through value accretive acquisitions and near-mine
exploration
that deliver value to a broad range of stakeholders. On the
financial side, shareholders receive dividends, governments
benefit from royalties and taxes, and banks earn interest on
the debt funding they provide. The economy benefits from the
jobs we have created and sustained, the payments we have
made to our contractors and supply chain partners, and the
raw material – gold – that we send to the refineries and that
5. Strengthen the balance sheet and reduce debt
they distribute to the downstream jewellery industry or financial
6. Pay dividends of between 25% and 35% of normalised
earnings
7. Deliver South Deep
8. Maintain social licence to operate.
institutions for investment purposes. Employees receive salaries
and, where appropriate, bonuses, and benefit from skills
development and training. They also derive job security from
working for a strategically fit-for-purpose, sustainable company
with a strong balance sheet. Our host communities benefit from
the investments we make in infrastructure, education, sanitation,
housing and healthcare as well as our Shared Value projects.
In mining our assets we also take into account a range of local
and global risks. The top 10 risks for the year were (further detail
This value, extracted from a previously untapped ore body
can be found on p50 – 51):
1. South Deep – Failure to deliver the business plan and loss of
investor confidence
2. Lower gold price and volatility
3. Non-achievement of a 15% free cash flow margin at a gold
price of US$1,300/oz
4. Replacing mineral resources and reserves at international
operations
and delivered to such a broad group of beneficiaries, is
considerable. However, we recognise that not all of the
outcomes of gold mining are value-adding. Mining waste and
CO2 emissions represent the consequences of mining and
can have a potentially negative impact on people, communities
and the environment. These need to be actively managed
and reducing the negative impact of these outcomes is a key
component of ensuring that we deliver net value through the
extraction of gold.
The end-to-end Gold Fields business model is captured in the
infographic on the two pages that follow.
ORE
BOdy
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A
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D
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P
P
A
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N
U
The Gold Fields Integrated Annual Report 2014
10
Our business
Our business
11
INPUTS
OUR BUSINESS
OUTPUT
OUTCOMES
SKILLS ANd eXPerTISe
We draw on the manpower, experience and
intellectual capital of our people.
Ore
bOdy
E
U
L
A
V
D
E
P
P
A
T
N
U
eQUITy ANd debT CAPITAL
The financial capital provided by banks,
shareholders and bond holders delivers
necessary funding.
WATer, eNerGy ANd LANd
These natural capitals are critical to
support the mining process.
CONTrACTOr ANd
SUPPLIer ServICeS
These partners supply the manufactured
capital (goods and services) for the
development and maintenance of
our mines.
GOverNMeNT LICeNCeS
We are required to meet the regulatory,
legal and fiscal requirements of our host
governments.
COMMUNITy CONSeNT
Community consent – or social capital –
ensures we secure and maintain our social
licence to operate.
STrATeGy
rISK
STrATeGy
rISK
rISK
N
UISITI O
ATIO
N
M
I
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e
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N
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C
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C e SSIN
O
r
P
M
I
N
I
N
G
STrATeGy
rISK
rISK
US$194 million
Taxes and royalties
paid to governments
15 440
Total workforce
US$13 million
Training and
development
VA
L
U
E D
GOLd
=
CASH
US$1.84 billion
Payments to businesses
and suppliers
US$105 million
Interest paid to financial
institutions
R0.40/share
Dividends declared
to shareholders
US$16 million
Community
investment
E
L
I
V
E
R
E
D
,
I
M
P
A
C
T
S
M
A
N
A
G
E
D
rISK
US$235 million
net cash generated
in 2014
STrATeGy
139Mt
Mining waste
1,69Mt
CO2 emissions
30,207Mℓ
Water withdrawal
The Gold Fields Integrated Annual Report 2014The Gold Fields Integrated Annual Report 2014
2.1
2.2
2.3
2.4
2.5
Vision of the Chairperson
CEO report
CFO report
Corporate governance
Summarised Remuneration Report
14
18
28
32
37
and performance
2 US$2.7bn
14
LEAdErSHiP
2.1 Vision of the Chairperson
We would not be in this
business if we did not
have confidence in the
long-term value of gold
Cheryl Carolus – Chairperson
Dear Gold Fields Stakeholders,
I believe that the impact of the Company’s
transformation has not been fully appreciated
Gold Fields has achieved a notable turnaround in
by many commentators, particularly as it was
its financial performance during 2014. It has
achieved in a weakening gold price environment.
strengthened its balance sheet by significantly
reducing its debt and returned to a positive cash
generating position despite a lower gold price in
the year under review.
Since 2012 the Company has reduced its cost
base – as measured by All-in Costs (AIC) per
It is therefore worth reflecting on some of the
measures taken by Gold Fields’ management,
which, I believe, make Gold Fields a leader in
the gold sector. Many of these were instituted
well before our peers were forced to act amid
the decline in the gold price during 2013.
ounce – by 35%, while at the same time achieving
They include:
a US$470 million swing in net cash generation from
operations – from an outflow of US$235 million
in 2013 to an inflow of US$235 million in 2014.
Our seven international mines in Ghana, Australia
and Peru managed to meet or even better their
production and cost guidance for the second
year running despite the continued decline in the
gold price.
These achievements contributed to 2014 being a
year in which Gold Fields’ shareholders and other
stakeholders derived significant benefits from the
wide-ranging restructuring of the Group, which
commenced in mid-2012. The restructuring had
been brought upon by the disenchantment of
investors in the gold sector, long before the sharp
• The formulation and strict implementation of
the strategy to move away from a focus largely
on production to a focus on sustainable cash
delivery and achieving a 15% free cash flow
margin at a gold price of US$1,300/oz
• A strategic shift from the capital and time-
intensive greenfields exploration-led growth
to brownfields (near-mine) exploration and
opportunistic, value-accretive acquisitions
• The restructuring of all corporate, regional and
operational structures to be fit-for-purpose.
Gold Fields’ head office costs are now amongst
the lowest in the industry
• The acquisition of the Yilgarn South Assets
in Australia, which is undoubtedly one of the
most value-accretive deals in the industry. Gold
fall in the gold price from April 2013 onwards,
Fields is likely to recoup its investment in the
which underpinned the need for change in
transaction by the end of this year, a mere two
the industry.
years after they were acquired
The Gold Fields Integrated Annual Report 2014
LEAdErSHiP
1515
GOLD FIELDS’ VALUE
DISTRIBUTION
US$2.7bn
• The unbundling of the Sibanye Gold assets
from Gold Fields. The share prices of both
companies performed well last year, buoyed
by the clearer management focus and access
to dedicated resources that the split enabled.
An investor in Gold Fields, who held on to
both shares after the unbundling, would have
outperformed the share prices of most of our
major peers in the industry during 2014
performances by all its seven international mines.
The successful integration of the Yilgarn South
Assets with our existing mines in Australia ensured
that the Australia region now accounts for almost
half of our total production with a significantly
reduced cost base. The Company has also
invested significantly in brownfields exploration
at its mines in Australia to extend their Mineral
Reserves and Resources.
COSTS BELOW
GUIDANCE
7%
Gold
Fields has
achieved a
notable turn-
around in its
financial and
operational
performance
over 2014
It is pleasing to reflect on the Company’s
achievements, but risks and challenges remain.
Now is not the time to grow complacent,
particularly when it comes to the safety and
wellbeing of Gold Fields’ employees. Tragically,
we had three fatalities – all at our South Deep
mine in South Africa – during the year. My heartfelt
condolences go out, once again, to the relatives,
friends and colleagues of Dirk Coetzee, Max Lehihi
and Olimpio Langa. It is in their memory, and those
who died at our mines before them, that this Board
continues to drive the achievement of Zero Harm
as a reality at all our operations. Similarly, reducing
the exposure of our employees to occupational
and non-occupational diseases such as Silicosis,
Tuberculosis, HIV/AIDS, Noise-Induced Hearing
Loss and Malaria must remain a priority.
Communities around the world are finding their
voice and are, rightfully, demanding to see greater
social and economic benefits from the mines that
they host. During 2014 Gold Fields’ total value
distribution – as measured by World Gold Council
standards – was almost US$2.7 billion in the
form of payments to capital providers, business
suppliers and employees, as well as in tax, royalty
and dividend payments to governments. These
are substantial contributions, but unfortunately
not much of this value is necessarily channelled
back to our host communities. In order to maintain
its social licence to operate, the industry needs
to build closer relationships with the communities
in which it operates. Gold Fields has taken a
significant step forward in putting its community
contribution on a more sustainable footing by
using the Shared Value framework to structure
its investments – but undoubtedly more needs to
be done.
On the operational front, Gold Fields improved
production and costs against previous year and
against 2014 Group guidance as a result of strong
The South Deep mine, however, again posed
some significant challenges. The implementation
of a safety-critical, ground support remediation
programme underground halted the bulk of the
mine’s production for four months. However the
programme had the full backing of the Board, in
line with our absolute commitment to ensuring the
safety of our people.
More fundamentally, many of the challenges
at South Deep are related to the shortage
of mechanised mining skills in South Africa.
Gold Fields has started to address this by
putting in a strong senior management team
with underground mechanised mining experience
gained in the platinum industry. The Board has
given management the mandate to determine
the way forward. As a consequence, long-term
targets have been taken off the table. We have
full confidence that the South Deep team will set
the mine up for long-term sustainable delivery
– though it will require more time than we had
originally anticipated.
Globally, our operations are confronted by a
range of external regulatory, political, labour and
price dynamics that will impact on their future
business performances. Gold Fields’ approach
is to deal with these issues in open and honest
engagement with its key stakeholders. We can
report some success in this regard, such as the
commencement of talks around a tax stability
agreement with the Ghanaian government and
stable labour relations at all our operations in the
year under review.
In South Africa, December 2014 was the deadline
for targets set under the 2010 Mining Charter.
We feel that we have substantially complied with
the elements of the Charter, ownership included,
and are actively engaging with the South African
Department of Mineral Resources to achieve
common ground.
The Gold Fields Integrated Annual Report 2014
16
LEAdErSHiP
2.1 Vision of the Chairperson (continued)
Furthermore, the gold sector in South Africa is bracing for its
Appreciation
bienniel wage talks with the trade unions, scheduled to start in
April 2015. Gold Fields is considering not participating in these
centralised wage talks but is planning to move to company-
level negotiations with its recognised trade unions to reflect the
different skills-levels of the South Deep mine when compared
with legacy gold mines in the country (p101).
As part of the rightsizing of the Company, the number of
directors was reduced from twelve to nine in 2013. The onus
on the remaining directors to guide Gold Fields and ensure
adherence to sound governance standards therefore took
on even greater significance last year. I believe they carried
out their duties and responsibilities with enthusiasm and
The industry around the world is also facing other cost
great competence. I want to express my sincere appreciation
pressures, particularly high electricity tariffs, which are
for their continued commitment to the Company and the
exacerbated by regular power outages. This is most acute
considerable experience and guidance they offered in the
at our Ghanaian and South African mines and we have
Board’s deliberations.
implemented measures to limit the impact of power shortages at
our operations.
Finally, I would like to thank Nick Holland, our CEO, his
management team and all Gold Fields employees for continuing
As a committed corporate citizen, Gold Fields is more than
on the path that the Group has embarked upon since mid-2012.
willing to play its role in addressing these challenges and finding
It is the correct path to take as it helped reduce the cost base
solutions that benefit all stakeholders. But I fear that we have not
to a level where Gold Fields can operate sustainably even at the
yet found the shared mutual interests with our key partners in the
current low gold price. However, it has not been an easy one for
sector – the governments and communities that host us, and our
our employees, who have seen many of their valued colleagues
trade unions. This can only be done through open dialogue and
genuine partnerships and not by additional regulatory, fiscal and
leave over the past two years. In light of this, our employees are
to be commended on their resilience and ongoing dedication to
cost imposts, which will be difficult to absorb by the embattled
the implementation of our business strategy. I have the utmost
confidence that they will continue to deliver results that will
benefit them as well as all our other stakeholders.
Cheryl Carolus
Chairperson
gold industry, particularly in South Africa.
The wider global economic environment in which Gold Fields
operates remains a challenge, as the gold price continues to
languish at levels of between US$1,100/oz – US$1,300/oz.
Despite continued strong demand for the physical metal in the
East, current global macro-economic circumstances mean that
the gold price is unlikely to return to its 2012 levels in the short
term. Investors have started to return to the gold equities sector
– Gold Fields’ share price has risen from its low of R31.40 in
December 2013, but remains volatile and largely follows the
movements of the gold price. Overall though the markets have
shown that those companies that do the right things will be
rewarded, as Gold Fields has over the past year.
That said, Gold Fields believes in gold and the metal’s medium-
to long-term price fundamentals remain strong. This means we
will continue to focus on gold mining and will not hedge. In the
short term, and given the current low-price environment, the
Company will continue the course on which it has embarked
with a clear emphasis on sustainable cash generation. This
will ensure the sustainability of our operations even if gold
falls further and will deliver considerable upside when the
price recovers, as it inevitably will. All other things being equal,
I believe that Gold Fields’ good performance in 2014 has
provided a sound platform for 2015.
The Gold Fields Integrated Annual Report 2014 LEAdErSHiP
17
Blast hole drill rig at the Tarkwa mine in Ghana
The Gold Fields Integrated Annual Report 2014 18
LEAdErSHiP
2.2 CEO report
A new strategy that
is firmly focussed on
cash generation – and
providing investors with
superior leverage to
the price of gold
Nick Holland – CEO
Dear Shareholders
2014 was the second full year in Gold Fields’
journey of strategic transformation to turn
the Group into a focussed, lean and globally
diversified gold mining company that generates
meaningful free cash flow and provides investors
with superior leverage to the price of gold. We
have made significant progress in this regard,
which is critical to our Vision of being the global
leader in sustainable gold mining.
Key to the continued success of this journey
is further embedding the Group’s overarching
strategic objective at all its operations:
Gold Fields seeks to generate a sustainable free
cash flow margin of at least 15% at a planning
gold price of US$1,300/oz, without compromising
the long-term sustainability of its ore bodies.
Financial highlights for 2014
Gold Fields exceeded its guidance for 2014 with
attributable gold equivalent production of 2.22
million ounces (2013: 2.02 million ounces) and a
significantly reduced cost profile.
Tight cost control across all of its operations
ensured that unit costs were lower than guidance
for the full year:
Actual
Feb 2014
Actual
2014 costs
guidance
2013 costs
All-in
Sustaining
Costs (AISC) US$1,053/oz US$1,125/oz US$1,202/oz
All-in Costs
(AIC)
US$1,087/oz US$1,150/oz US$1,312/oz
If one strips out South Deep, which is a mine in
development, the rest of our mines at an AIC of
US$1,020/oz are in the lower quartile in the gold
sector and are amongst the most cash generative
in the industry.
Other financial highlights included:
• The Group’s free cash flow (FCF) margin
for 2014 was 13% despite the fact that, at
US$1,249/oz, the actual annualised gold price
received was 4% lower than the planning price
of US$1,300/oz. If the price received for the
year was normalised to US$1,300/oz, then the
free cash flow margin would have been 14%.
• Notwithstanding a 10% decline in the average
gold price from US$1,386/oz in 2013 to
US$1,249/oz in 2014, cash flow from operating
activities – after taking account of net capital
expenditure and environmental payments –
improved from an outflow of US$235 million in
The Gold Fields Integrated Annual Report 2014
LEAdErSHiP
19
The strong
cash
generation
during 2014
enabled the
Group to
reduce its
net debt by
US$282 million
2013 to an inflow of US$235 million in 2014, a
overarching objective of a 15% FCF margin at a
positive swing of US$470 million.
gold price of US$1,300/oz, which has become the
• The strong cash generation during 2014,
together with the sale of non-core assets,
guiding principle for what we do in Gold Fields,
and is germane to the progressive transformation
enabled the Group to reduce its net debt by
that we have seen in the Group over the last two-
US$282 million to US$1,453 million at the end
and-a-half years.
of 2014.
• Debt reduction, together with agreements
reached with our group of bankers to restructure
our debt has significantly improved the Group’s
solvency and liquidity.
The early adoption of our focus on improving cash
flow proved prescient by providing Gold Fields
with a built-in safety cushion able to withstand
lower gold prices, especially when the gold price
declined dramatically early in 2013 and again
In addition, the strong cash generation during
in 2014.
2014 has enabled the Group to declare a final
dividend for 2014 of R0.20 per share which,
together with the interim dividend of R0.20 per
share declared on 21 August 2014, brings the total
dividend for 2014 to R0.40 per share. This is equal
to 34% of normalised earnings and in line with
our policy of paying out between 25% – 35% of
normalised earnings to shareholders.
our strategic journey
The transformation of Gold Fields has its roots
in my keynote address to the Melbourne Mining
Club in August 2012. In this speech, I challenged
the gold-mining industry to re-invent itself with
a more credible case for gold mining equities,
by addressing investor perceptions prevailing at
the time, that, collectively, we were not offering
sufficient leverage to the then high gold price.
Our response to this challenge in the second half of
2012 was the adoption of an ambitious and ongoing
transformation process aimed at turning Gold
Fields into a focussed, lean and globally diversified
gold mining company that generates significant
free cash flow (FCF) and provides investors with
superior leverage to the price of gold. At the same
time our ability to generate cash enables us to meet
the legitimate socio-economic demands of many
of our other stakeholders, in line with our vision of
leadership in sustainable gold mining.
At its core, the transformation process entails
a shift away from a focus on the pursuit of
production growth and reserve ounces at any
cost, and the adoption of a new focus on growing
the margin and improving FCF per ounce. This
fundamental shift in strategy was embodied in our
The trade-off between production volumes and
production quality inherent in our strategy has
resulted in the Group adopting a number of
supporting and complementary programmes, first
reported on in our 2013 Integrated Annual Review.
Progress on these is outlined below.
FocuS on whAt we Are GooD At
The philosophical orientation guiding the Gold
Fields’ transformation journey is to focus on those
activities that we are good at. Following a process
of serious analysis and introspection, we came
to the conclusion that our core competencies are
the operation of mechanised mines, mergers and
acquisitions (M&A) and brownfields (or near-
mine) exploration.
One area in which we have been less successful
is greenfields exploration and in taking projects
from initial discovery, through construction into
production. Despite having spent in excess of
US$1 billion on greenfields exploration since the
founding of the modern Gold Fields in 1998, and
having some of the best exploration professionals
in the business, Gold Fields has never taken
a single project through this entire process.
This shows how elusive greenfields exploration
success is.
In fact, Gold Fields’ entire portfolio of current
operating assets has been acquired. In contrast
to our lack of success in greenfields exploration,
we have been very successful at brownfields
exploration, in particular at our orogenic-style
assets in Australia and at Damang in Ghana.
As a consequence of this outcome we made
The Gold Fields Integrated Annual Report 2014 20
LEAdErSHiP
2.2 CEO report (continued)
the hard decision to stop greenfields exploration as the key
driver of growth, and to rather focus on acquisitions and
• The rationalisation and prioritisation of capital expenditure and
the deferral of non-essential capital, while not effecting the
brownfields exploration. We therefore disbanded our Growth and
sustainability of our mines
International Projects (GIP) division in late 2013, and refocussed
• The cancellation of near-mine growth projects that
our growth efforts on M&A and brownfields exploration.
demonstrated inadequate returns
Our growth strategy and philosophy is discussed in more detail
in the Growing Gold Fields section on p80.
• The disbandment of the Group’s GIP division
• General cost savings driven by ongoing business process
As far as operating mines are concerned, we concluded
re-engineering
early in 2012 that our core competency lies in the operation of
During 2014 these efforts continued apace with a view to
mechanised mines rather than in hard-rock, deep level, labour-
protecting the Group’s margins in the current low-gold price
intensive mining that characterised the KDC and Beatrix mines in
environment. Effective cost management will also prove
South Africa, which at that stage formed part of the Gold Fields
beneficial to our margin when the gold price eventually recovers,
portfolio. In late 2012, we therefore decided to separate those
as it will.
assets from Gold Fields by creating Sibanye Gold under a new,
focussed management team. Gold Fields’ remaining portfolio is
one of mechanised operations throughout the world.
In addition to the focus on operational cost containment, we took
the decision to scale down our involvement in activities which are
typically the domain of larger, industry-leading companies. We
Fit-For-purpoSe corporAte, reGionAl AnD
no longer aspire to be pioneers of research and development
operAtionAl StructureS
The transformation of Gold Fields, combined with our relentless
focus on cash generation, necessitated the implementation of
fit-for-purpose corporate, regional and operational structures
in which managers and employees are encouraged to act as
dynamic, engaged owners – and are rewarded for doing so.
In response we devolved full operational accountability for
sustainable cash generation to our regions, supported by
appropriate resourcing of our management teams at the
different levels in the organisation. Inevitably there was a
corresponding rationalisation of our corporate office functions,
mainly housed at the Group head office in Johannesburg, which
now only focusses on a relatively narrow set of strategic and
Group activities.
in areas such as technology, but to be fast-adopters of best
practice. This has helped us to reduce the costs of developing
and applying cutting-edge practices, while still ensuring that we
are able to leverage their benefits. A noticeable exception is at
South Deep, where Gold Fields is continuing to invest heavily
in the training of mechanised mining skills, of which there is a
critical shortage in South Africa.
Furthermore, we have scaled back our participation in a wide
range of professional and industry bodies which in the past
inflated our corporate costs and general and administrative
expenditure. One example of this is our suspension of our
membership of the World Gold Council. During 2014 we
reduced our overall corporate costs to approximately US$10/oz,
which is amongst the lowest in the industry.
During 2014 the new corporate, regional and operational
protectinG the lonG-term SuStAinAbility oF our
structures were further bedded down and entrenched through-
ore boDieS
out the Group, including in the South Africa region. As a result
One of the serious risks in a low gold price environment and
Gold Fields now enjoys a cost-effective, focussed, flexible and
the attendant rationalisation, prioritisation and deferral of
fit-for-purpose management structure that is appropriate to both
scarce capital, is that producers may be tempted to engage in
our size and strategic priorities.
FocuS on cASh GenerAtion AnD Free cASh Flow
mArGin, not ounceS For ounceS’ SAke
practices that may have a short-term beneficial impact on cash
flows, but have a potentially devastating effect on the long-
term sustainability and integrity of their ore bodies. Regrettably
evidence of this is starting to emerge throughout the industry
Cost containment is a critical pillar of Gold Fields’ cash-
in the form of high-grading as well as excessive cutbacks in
generating strategy and the Group made considerable progress
brownfields exploration, stripping and ore reserve development.
as reflected in the 17% decline in AIC per ounce during 2014.
This was on top of a 15% decline in AIC during 2013, bringing
cumulative cost reductions between 2012 and 2014 to 29%.
A number of initiatives were pivotal in achieving the lower
cost base:
• The cessation of marginal mining at various operations
• The restructuring and rightsizing of our corporate, regional
and operational structures
• An 8% reduction in our global workforce – equivalent of
1,309 employees and contractors – during 2014, which is in
addition to the 711 employees and contractors that left the
Group in 2013
To ensure that our business has a strong future, we have made
continued exploration and development of our underground
and surface ore bodies a strategic priority. These are amongst
the last activities we would cut in a sustained low gold
price environment.
In addition, Gold Fields’ strategic objective of generating a
sustainable FCF margin of at least 15%, at a planning gold price
of US$1,300/oz, provides the Company with a built-in safety
cushion able to withstand a further drop in gold prices. Included
in this price are the costs associated with maintaining the
integrity of our ore bodies. Should prices go down to levels of
The Gold Fields Integrated Annual Report 2014 LEAdErSHiP
21
around US$1,100/oz or lower for a sustained period of time, we
the quality of the portfolio. The process is captured in the
would be looking at a new operating and planning protocol for
diagram below.
these lower prices to protect the integrity of our ore bodies.
Our strategic guidance to all of our mines is to mine at or below
the reserve grades of their ore bodies and, when prices again
recover, to maintain and grow the margin rather than to be lured
by incremental ounces.
STRATEGIC PORTFOLIO REVIEW
A new pArADiGm in Growth – proActive portFolio
mAnAGement
Acquire?
Operate?
Gold Fields’ new strategy has a direct bearing on our approach
Restructure?
Divest?
M&A
Franchise
assets
DIVEST
Non-franchise
assets
to growth. Not only does it mean that we must scrutinise every
dollar spent on growth, but it also defines the quality of the
assets that we seek to acquire.
In essence it means that we can no longer afford the capital
and time-intensive greenfields exploration-led growth strategy of
prior years, hence the disbandment in 2013 of our GIP division;
the closing down of our greenfields exploration portfolio; and
the disposal of the projects in the portfolio that were not aligned
with our Group objective (including the Chucapaca and Yanfolila
projects in Peru and Mali respectively).
The projects remaining in the portfolio are the Woodjam Project
in British Columbia, Canada, and the Arctic Platinum Project in
Finland, which are earmarked for disposal. The Far Southeast
Project in the Philippines and the Salares Norte Project in Chile
will be retained in the portfolio, as we recognise the embedded
value in these assets (p88 – 89).
To replace our previous exploration-led approach to growth we
have adopted a more opportunistic acquisition approach, with
the main criteria being:
• that all new opportunities must be in production and improve
the quality of our portfolio on a FCF per ounce basis
• are located in or near our existing regions, in well-understood,
stable countries that offer favourable regulatory regimes – and
offer near-mine growth potential and/or synergies with our
existing operations or regional structures.
A
C
q
U
R
E
I
R
E
S
T
R
U
C
T
U
R
E
O
P
E
R
A
T
E
OPERATE FRANCHISE ASSETS
• Operational excellence
• Sustainable 15% FCF margin
@ US$ 1,300/oz gold price
Gold Fields is comfortable with its corporate structure defined
by limited red tape and without too many levels of hierarchical
responsibilities. We believe that our size makes us more flexible
and nimble. We currently have eight operating mines and
conceptually we would ideally like to add two more mines to
our portfolio in the short to medium term.
innovAtion, upSkillinG AnD mechAniSAtion
The transformation of Gold Fields into a mid-tier producer has
clearly had a profound impact on the profile of our workforce.
These criteria mean that in future our growth portfolio will be
The most obvious, and painful, has been the need to reduce the
premised on a larger number of smaller, higher quality and
number of employees to bring down the cost base to a more
lower cost mines that offer immediate cash flow benefits.
sustainable level. This process started in 2013, when just over
Our acquisition in October 2013 of the Yilgarn South Assets in
711 employees were made redundant, and continued in 2014
Western Australia provides the benchmark in this regard.
with 1,309 retrenchments (8% of our total workforce), mostly at
Central to our new growth strategy is the adoption of an Active
Portfolio Management approach.
This requires an ongoing strategic review of all existing assets
as well as potential acquisition targets with a view to improving
the quality of our overall portfolio. It implies that we are prepared
to trade existing assets for better, new assets, if they will improve
our Ghanaian mines and at South Deep. With 8,954 employees
and 6,486 contractors on our books at the end of 2014, we
believe our human resource base is now close to where it should
be in terms of numbers.
The Gold Fields Integrated Annual Report 2014 22
LEAdErSHiP
2.2 CEO report (continued)
However, Gold Fields’ transformation has also required a
be dramatic, there is potential for operational disruption or even
different skills set. The profile of our employees at our Australian,
project delays and cancellations.
Peruvian and Ghanaian operations by and large meets our
skills requirements, supported by the continued development
and training of the workforce. At South Deep, Gold Fields is
pioneering mechanised gold mining on a scale and depth not
previously seen in South Africa, and the success of the operation
is largely dependent on its people. Our strategy is to grow our
own people through focussed internal training efforts and to
recruit the best local mechanised mining skills to supplement the
existing talent pool. During 2014 Gold Fields globally spent over
US$13 million on training and developing its employees.
A significant effort has been made to introduce international
best practice standards at South Deep. In addition to our
existing mechanised mining training centre, we brought over an
experienced team from our Australian mines to transfer skills and
we are starting to collaborate with the South African platinum
industry in setting training baselines for mechanised mining.
We have also recruited new leadership from the successful
Two Rivers mechanised underground platinum mine.
collAborAtive vAlue-creAtion At nAtionAl- AnD
community-level
Mining, executed responsibly, is a significant force for
sustainable growth. Our investment has significant multiplier
effects on employment, livelihoods and the national economy.
This value creation impacts a wide range of stakeholders,
including employees, host governments, host communities,
businesses and suppliers as well as the providers of risk
capital (p106).
I believe though that the mining industry’s ability to create and
distribute value could be significantly enhanced if we worked
more closely with governments, trade unions and communities
in boosting mining economies. In 2013 I alluded to efforts to
grow the mining pie, thus enabling all stakeholders to receive a
greater share of the wealth created by mining.
We remain of the view that this will only be achieved through
strong partnerships with all stakeholders, supported by stable
fiscal, legislative and regulatory environments and underpinned
by recognition of the full costs and benefits of mining. As a
committed corporate citizen in all our jurisdictions we continue to
play our role in maintaining and developing these partnerships.
Whole communities are directly and often exclusively dependent
on the sustainability and growth of the mining sector and one of
the biggest challenges facing mining companies is addressing
what is known as ‘the social licence to operate’ – building
relationships and trust with our host communities. While the
consequences of not obtaining this social licence will not always
It takes substantial time, effort and resources to establish and
maintain a strong social licence to operate and, once it is
lost, it is very hard to regain. Furthermore, our ability to grow
Gold Fields through the expansion of existing mines and the
development of new projects will – as and when deemed
appropriate – be determined by our ability to win the trust of
communities in our areas of interest.
While we have always invested heavily in communities through
our corporate social investment programmes, in 2013 we
committed to a different strategy for community-level value
creation, namely the creation of Shared Value. This means
pursuing mine-level business strategies that not only generate
positive socio-economic impacts but also enhance the value of
our business. Last year we commenced with the implementation
of a number of Shared Value projects (p114 – 115), focussing
on local procurement and enterprise development, mathematics
and science skills and water supply and quality. A range of new,
value-creating projects is currently being rolled out.
our StrAteGic prioritieS For 2015
During the current financial year Gold Fields will continue to
build on the strategies that it has implemented and rolled-out
over the past two years. The five strategic priorities for 2015
reflect this continued focus:
• South Deep – the top priority
• Cash flow and margin – making money at current prices
• Dividend payments of between 25% – 35% of normalised
earnings
• Balance sheet – reducing the net debt to EBITDA ratio to
1.0 times by end-2016
• Growth – brownfields exploration and opportunistic, value-
accretive acquisitions
These priorities support our long-term Vision for Gold
Fields, namely global leadership in sustainable gold mining.
The sustainability of our business is ensured by understanding
the linkages between all of the inputs and outputs of our
operations, enabling us to maximise the benefits for all
stakeholders and reduce the risks to the business.
Integrated thinking, which is defined by the SA Institute of
Chartered Accountants as “ensuring the long-term sustainability
of organisations through the sustained creation of value for
all stakeholders”, underpins this approach. While integrated
thinking, integrated management and integrated reporting
are embedded into the business, not all the linkages are
as yet formalised through defined management processes
and systems.
The Gold Fields Integrated Annual Report 2014 LEAdErSHiP
23
Nevertheless, we believe that the four key performance areas
The diagram below depicts the Group performance scorecard
the Group will be focusing on in the years ahead, will ensure that
for 2015. It illustrates specific key performance indicators,
integrated thinking is further entrenched in the business. These
which are approved on an annual basis by the Remuneration
four key performance areas are:
Committee of the Board of Directors.
The Gold Fields Group performance scorecard filters down
to Group executive, regional, operational and individual
scorecards. The 2015 CEO scorecard and how I performed
against my 2014 scorecard can be found in the Remuneration
Report in the Annual Financial Report on p32 – 45.
• Business optimisation
• People
• Finance
• Social licence to operate
These broad performance areas will inform how we measure
the business performance of our senior managers and will
determine their annual bonus payments.
FIGURE 2.1: Group Performance Scorecard for 2015
I M P R O V I N G
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The Gold Fields Integrated Annual Report 2014
24
LEAdErSHiP
2.2 CEO report (continued)
operational overview for 2014
Detailed overviews of all our mines are provided online and
in the Optimising our Operations section in this Integrated
Annual Report (p54), but I would like to comment on some key
operational aspects of our portfolio.
AUSTRALIA
The Group’s Australian operations, in aggregate, exceeded
guidance for 2014 both in terms of costs and ounces produced.
The four mines in the portfolio (St Ives, Agnew/Lawlers, Granny
Smith and Darlot) reported gold production of 1,031,000 ounces
at an AIC of US$1,015/oz against guidance for the full year of
975,000 ounces at an AIC of US$1,130/oz. The region reported
a net cash inflow of US$218 million during 2014.
Central to this performance has been the Yilgarn South Assets
(Granny Smith, Lawlers and Darlot), acquired from Barrick
Gold in October 2013. After initial criticism the acquisition is
now being widely lauded. This change in perception is largely
attributable to the rapid integration of the Yilgarn South Assets
into the Gold Fields portfolio and the application of Gold Fields’
operating model to the acquired assets. We are likely to pay off
the cost of the acquisition this year.
During the year, the Australian legislature repealed the
controversial carbon tax laws which will bring welcome tax
relief to the gold mining sector in particular. The savings to the
mines in the Gold Fields portfolio are approximately A$15 million
(US$13 million) per annum.
PERU
Our Cerro Corona mine increased gold equivalent production
by 3% to 326,600 ounces in 2014 at an AIC of US$316/oz. This
was against guidance of 290,000 gold-equivalent ounces at
an AIC of US$490/oz. The mine reported a net cash inflow of
US$150 million.
GHANA
The Group’s operations in Ghana, West Africa, exceeded
guidance for 2014 both in terms costs and ounces produced.
The two mines in the West Africa portfolio (Tarkwa and Damang)
reported gold production of 736,000 ounces at an AIC of
US$1,094/oz against a combined guidance of 685,000 ounces
at an AIC of US$1,134/oz. The region’s net cash inflow during
2014 was US$123 million.
At Tarkwa the expansion of the Carbon-in-Leach (CIL) plant from
an annual throughput of 12.3 to 13.3 million tonnes per annum
was completed by the end of December 2014. The expansion
is expected to enable Tarkwa to increase its future production
profile to a steady state level of approximately 550,000 ounces
per annum.
During 2014 Damang consolidated its return to profitability with a
strong performance after having been loss-making during 2013,
and is expected to continue to deliver steady performances for
the foreseeable future. The main focus at Damang remains the
identification of additional ore sources below our existing pit and
along the 27km of strike between Damang and Tarkwa, where
historical open pits were last drilled and mined when the gold
price was between US$300/oz and US$400/oz. This strategy
could contribute to an appreciable addition to Mineral Reserves
and Mineral Resources over the next three years.
SOUTH AFRICA
The South Deep mine in South Africa represents a key
opportunity for the Group to create long-term value for
shareholders. Indeed, with the rest of the Group’s portfolio
performing to expectations, the successful delivery of South
Deep – which accounts for 59% of the Group’s Mineral
Resources and 73% of Mineral Reserves – has taken on much
greater urgency for 2015 and beyond.
2014 has been a challenging year for South Deep with the
project’s build-up interrupted by an unplanned four-month long
ground support remediation intervention, necessitated by safety
considerations, as well as three fatal accidents.
During 2014 production decreased by 34% to 200,500 ounces
(2013: 302,100 ounces) and AIC dropped by 2% to US$1,732/
oz (2013: US$1,763/oz). Guidance for the year was 360,000oz
at an AIC of US$1,350/oz. Destress mining fell 46% during the
year from 53,694m2 to 29,071m2. However, despite the lower
production levels, South Deep made significant progress with
the restructuring of its cost base, with operating costs reduced
by 14% to R2.66 billion (US$246 million).
Management utilised the unplanned four-month hiatus in
production to fast-track a number of critical interventions aimed
at setting South Deep up for long-term success:
• A programme was implemented to address the surplus of
people and old, high-cost equipment on the mine, to improve
the safety culture and productivity, and deemed critical to
de-risk the mine’s build-up to full production
• The process of rationalising the equipment entailed the
removal of surplus and redundant equipment as well as the
limited introduction of more appropriate, specialised new
equipment in certain areas
• A voluntary separation process was implemented which was
accepted by 529 people (representing 14% of employees)
• In addition, management and the trade unions reached
agreement on changes to the shift roster to facilitate the
optimal re-deployment of employees to further improve
productivity
• The South Africa regional office was closed and regional
management, under a new Executive Vice-President,
Nico Muller, firmly embedded at South Deep. Mr Muller, who has
extensive mechanised mining experience in the South African
gold and platinum industry, has strengthened the South Deep
management team by recruiting a number of experienced
mechanised mining executives from the platinum sector.
South Deep is almost fully capitalised. Since 2007, Gold Fields
has built most of the infrastructure needed to support the build-
up to full production. Of the initial project capital expenditure of
approximately R9 billion approved in 2009, 85% has been spent.
Approximately R1.2 billion in 2009 money terms (R1.7 billion in
2015 terms (US$170 million)) remains to be spent over the next
10 years.
The Gold Fields Integrated Annual Report 2014 LEAdErSHiP
25
The current impediments to the build-up of South Deep do
enhancement of these practices can deliver multiple benefits
not relate to the integrity of the ore body or the installed
including cost savings, reduced impact in water scarce areas,
infrastructure but rather to the mining and production processes.
improved regulatory compliance and enhancing Gold Fields’
The focus during 2015 and 2016 will be the adoption of a
social licence to operate.
‘getting the basics right’ programme aimed at addressing the
key obstacles that have prevented South Deep from realising its
full potential. The key components of this programme, which is
discussed in more detail on p59 – 61, are:
Energy remains a major performance driver at 21% of Group
operating costs in 2014, having risen from 18% in 2013. This
trend will continue in future amid increasing energy demand and
supply constraints in all of our operating regions, unless we act
• A prioritised focus on delivering short-term objectives instead
to find more efficient and alternative energy sources. As part of
of long-term build-up targets
the Integrated Energy and Carbon Management strategy, each
• The adoption of specific key deliverables for 2015, the most
of our regions has set energy reduction targets (apart from
important of which is to urgently address the critical shortage
South Deep, which is in a ramp-up phase), which cumulatively
of mechanised mining and supervisory skills
should reduce our energy costs by more than 8% by 2016,
• Achieve cash breakeven during the latter half of 2016
delivering about US$20 million in savings per year.
STRENGTHENING OUR BALANCE SHEET
As previously stated, our priorities in terms of cash generation
are to:
• reward our shareholders with dividends;
• improve our balance sheet by further reducing net debt; and
• pursue accretive acquisitions, ideally of ‘in-production
ounces’.
Despite the robustness of our balance sheet, we focussed
in 2014 on further strengthening it by adjusting the maturity
schedule of our outstanding debt, reducing the absolute amount
of our debt, as well as improving our net debt to EBITDA ratio.
The strong cash generation during 2014, together with the
sale of non-core assets, enabled the Group to reduce its net
debt by US$282 million to US$1,453 million at the end of 2014.
The Group’s net debt to EBITDA ratio improved from 1.5 times
in December 2013 to 1.3 at the end of December 2014.
The medium-term objective is to reduce the net debt to EBITDA
ratio to about 1.0 times by 2016.
The net debt reduction, together with the agreement reached
with our group of bankers to amend and extend the maturity
date of commitments, totalling US$715 million, by two years on
the same terms, has significantly improved the Group’s solvency
and liquidity.
At the same time the regions have been tasked with ensuring
security of access to future energy sources. This is amid an
increasing shortage of energy supplies and rising energy costs
in many of the regions in which we operate. In Ghana, where
our mines have been asked by the government to reduce their
electricity consumption by 25% – 30% this year, the operations
have reached an agreement with a private utility which will
deliver the bulk of their energy requirements within the next two
years. In Peru and Australia new long-term supply agreements
have been signed with utilities, while South Deep has reached
agreement with the state-owned Eskom to implement load-
curtailment programmes that will have a limited impact on the
mine’s production and development in the short term.
A critical component of energy security and cost efforts
will be to find renewable sources of energy. We have set a
goal of 20% renewable energy generation on average in
all new mine developments, and renewable energy should
be considered as a component of the energy mix for new
projects. Greater use of renewables has the added benefit of
reducing our carbon footprint, which is one of Gold Fields’ key
environmental priorities.
Growing Gold Fields
As mentioned, our new strategic focus has meant that we could
no longer pursue the capital and time-intensive greenfields
exploration-led growth strategy of prior years, resulting in the
WATER, ENERGY AND CARBON
closure of our GIP division as well as the greenfields exploration
Responsible water management remains a vital component
portfolio. We also disposed of the vast majority of growth
of Gold Fields’ licence to operate and social licence at all
our operations and projects. Managing current and future
anticipated water security risks, which include both quantity and
quality of supply as well as costs, is also essential to ensure
sustainable production for existing operations and the future
viability of projects.
In 2014 we implemented a Group water management
guideline with a focus on water stewardship, which includes
identifying opportunities to enhance water reuse, recycling
and conservation practices at all Gold Fields operations.
This remains a key group objective for 2015 and beyond –
projects in the portfolio.
In contrast to our lack of success in greenfields exploration,
we have been very successful at brownfields (near-mine)
exploration, in particular at our orogenic-style assets in
Australia and at Damang in Ghana. Our future growth strategy
will therefore focus primarily on brownfields exploration and
accretive acquisitions.
NEAR-MINE EXPLORATION IN AUSTRALIA
All of Gold Fields’ mines in Australia are orogenic in nature.
Orogenic deposits are generally attractive because they are
The Gold Fields Integrated Annual Report 2014 26
LEAdErSHiP
2.2 CEO report (continued)
well understood, they can be large and of good grade, and
they tend to occur in clusters at different scales. Together this
provides a good deal of flexibility and optionality on large
tenement packages. Orogenic deposits are a Gold Fields’ core
competency. We know how to find them, how to define them and
how to mine them.
St Ives and Agnew are good examples of the longevity of
operations leveraging off orogenic gold camps. In 2002 when
Gold Fields acquired St Ives, it had reserves of 2.3 million
ounces and a six-year Life-of-Mine. Ten years of production
later, during which time St Ives has produced 6.1 million ounces,
reserves and the Life-of-Mine remained similar at 2.2 million
ounces and seven years. Agnew has provided a similar
example of successful reserves replacement.
Gold Fields is now leveraging off its understanding of the
orogenic systems by putting it to use at the Yilgarn South
operations, acquired in October 2013.
Against this backdrop, the key strategic objective of the Australia
region is to make significant investment in near-mine exploration
to extend the life of its mines. In this context, Gold Fields
invested a total of A$60 million (US$54 million) in near-mine
exploration at its Australian mines last year, aimed principally
at improving the Mineral Resource and Reserve positions of
these mines over the next two to three years. In 2015 a further
A$85 million (US$77 million) is in the process of being invested
in near-mine exploration at all our mines in Australia.
Discovery of orogenic-style ore bodies requires consistent
funding and is by nature episodic, as targets are either retired
DIVESTMENT OF MARGINAL PROJECTS
In 2014 we significantly accelerated the disposal programme
of the projects in the portfolio that were not aligned with our
overarching group objective. These include:
• Chucapaca in Peru
• Yanfolila in Mali
• Talas in Kyrgyzstan
• Asosa in Ethiopia
The Arctic Platinum Project in Finland and the Woodjam Project
in British Columbia, Canada, are earmarked for disposal.
In October 2014 the Group sold its 51% stake in Chucapaca for
US$81 million in cash, plus a future production royalty of
1.5%, to its joint venture partner in the project, Buenaventura,
Peru’s largest mining company, which previously owned 49%.
Similarly, Gold Fields will retain an indirect interest in the Yanfolila
project as London-listed Hummingbird Resources funded the
US$20 million acquisition price through the issue of shares in
June 2014. We now have a 25.1% stake in Hummingbird, which
also holds the Dugbe asset in Liberia.
Securing our future
KEEPING OUR PEOPLE SAFE AND HEALTHY
Safety will always be management’s first priority in running our
operations and it is critical that we continuously emphasise that
our first value is “if we cannot mine safely we will not mine”.
It is with deep regret therefore that I have to report three fatal
accidents at the South Deep mine during 2014:
when deemed unattractive or progressed through exploration
• In May, Dirk Coetzee, an engine specialist sub-contracting
milestones as their prospectivity becomes better defined. The
results of this significant investment in realising tenement
endowment will hopefully start to show in 2015.
The new high-grade Invincible open-pit at St Ives represents a
for Sandvik, was fatally injured when a reversing dump truck
struck him at the entrance to the workshop.
• Also in May, Max Lehihi, a diesel mechanic, was struck on the
head by a drill rig boom while walking past a drill which was in
the rig service bay.
very significant discovery and is testament to the prospectivity
• In July, Olimpio Langa, a lube utility vehicle operator, was
of the Speedway Corridor which is one of the areas prioritised
for exploration in 2015. Open-pit infrastructure and bunding
has commenced with a view to first production from mining
at Invincible, which is located on Lake Lefroy, during the June
2015 quarter. At Agnew an elevated focus on defining new ore
sources at Waroonga and New Holland is also being supported
by near-mine exploration outside of current mining areas.
At Waroonga infill drilling has further delineated the Fitzroy,
Bengal, Hastings (FBH) deposit, which will provide a take-over
mining front to supplement reduced mining from the maturing
Kim lode. First production is expected in Q2 2015.
At Granny Smith exploration during 2014 provided further
support for the replication of numerous deeper lodes in the
Wallaby underground deposit. These results are early indications
of the potential for significant Mineral Resource and Reserve
replenishment potential at the Wallaby deposit. At Darlot near-
mine exploration during 2014 has delineated sufficient ore
reserves to secure stable production in 2015.
fatally injured when the lube vehicle he was operating ran over
him while he was refuelling a drill rig.
Subsequent to year-end South Deep reported another fatality. In
March Kennedy Katongo, a boilermaker, was injured at a station
tip. He succumbed to his injuries in hospital three days later.
My sincere condolences go out to the families, friends and
colleagues of the deceased.
These were industrial-type accidents associated with workshops
and equipment, and precipitated the issuing of a Section 54
order by the Department of Mineral Resources in May and July,
placing a moratorium on all workshop-related activities across
the mine and effectively stopping production for a total of about
two weeks.
The management team at South Deep also conducted a
comprehensive mine-wide review of all safety protocols,
procedures and standards in line with its mandate to improve
the mechanised mining culture. As a result of the safety review,
it was determined that legacy ground support in some of the
The Gold Fields Integrated Annual Report 2014 LEAdErSHiP
27
ramps in the older part of the mine were below the international
best practice standards. Despite the fact that 70% of South
Deep’s output was sourced from these areas all production and
destress activities in the affected areas were stopped for about
four months so that a ground support remediation programme
could be implemented. The programme contributed significantly
to de-risking South Deep’s build-up and, more importantly, made
the mine safer.
The three fatalities we recorded were an undoubted setback
on our path to Zero Harm. However our Total Recordable Injury
Frequency Rate (TRIFR) saw a slight improvement across the
Group, up 3% on the previous year.
The Group has also intensified operation-specific health and
wellness programmes, focussing on improving the physical and
mental health of our employees.
VALUE-CREATION AT NATIONAL AND COMMUNITY LEVEL
Despite a second year of adverse market conditions in 2014,
Gold Fields continued to distribute value to a wide range of
stakeholders, including employees, host governments, host
communities, businesses and suppliers as well as the providers
of risk capital.
In 2014 our total value distribution – as reported according
to World Gold Council methodology – was US$2.65 billion
(2013: US$2.98 billion), with 69% going to businesses and
suppliers (2013: 61%), 7% to governments (2013: 13%), 18% to
employees (2013: 19%), 5% to capital providers (2013: 6%) and
1% on Socio-economic Development programmes (1%) – mostly
in host communities.
Our contribution to communities is on a much more sustainable
footing now that we are using the Shared Value framework to
structure our investments in community projects with a focus
on social and economic impacts rather than just social spend.
We are gaining valuable experience with each Shared Value
project that we are undertaking. They range from the promotion
of mathematics and science teaching among South Deep’s host
communities to multilateral water management projects at Cerro
Corona and increased sourcing from community suppliers.
Clearly we must not waiver in continuing to transform the sector
to make it truly representative of the South African population,
upskilling and educating our workforce and host communities
and providing business opportunities to emerging entrepreneurs
and companies. But true transformation will take time and cannot
come at the expense of investors, who have fled the sector over
the past few years amid poor returns on their capital.
As the South African government considers new conditions for
an extension to the existing Charter for mining, we appeal to it
to meet the industry in an open and honest engagement so that
a framework can be established that ensures the longer-term
prosperity of the sector.
Similarly, the trade unions operating in the gold industry need
to realise that continued wage increases without associated
productivity-linked packages are becoming unaffordable to
most mining companies. This will ensure the survival of many
marginal gold operations and provide employees with an upside
to improved profits when the industry emerges from its current
downturn, as it has started to do.
message of thanks
I would like to express my gratitude to my fellow directors
on the Board, led by our Chairperson, Cheryl Carolus. Their
sound experience and guidance to the executive management
team ensured that we remained on track with our ambitious
restructuring agenda, despite the extensive time and resources
this demanded from directors.
There were some changes to the executive team at Gold Fields
during 2014. Nico Muller and, in January 2015, Avishkar Nagaser
joined the Executive Committee. They and the rest of the Exco
team have provided the renewed energy necessary to see the
Group through the sometimes difficult and painful restructuring.
Lucy Mokoka has also joined our management team as Company
Secretary. I want to personally thank Kgabo Moabelo and Willie
Jacobsz (who has returned to his role as Senior Vice-President,
Investor Relations, for North America) for their steadfast support
and the valuable advice they offered me.
I have repeatedly stressed the need for stakeholder partnerships
across all our geographic jurisdictions to improve the value
creation potential of the mining sector. The appeal to our trade
union partners and government is particularly urgent in South
Africa, where a review of the Mining Charter and the gold
industry’s two-yearly wage talks are taking place in 2015. These
are critical events that will determine the longer-term prosperity
of the mining sector, and its approximate 500,000 workers.
Most critically, I would like to express my sincere gratitude to all
the employees of Gold Fields who have demonstrated enormous
resilience and dedication in what has been the second year
of the transformation of the Group, exacerbated by difficult
economic conditions. This is now a lean team, which I believe
can rival any of our peers in terms of experience, technical
ability and energy. They have risen to the difficult challenge
and the results are there for all to see. Gold Fields is in the best
Gold Fields has dedicated substantial human and capital
resources towards meeting the targets of the 2010 revised
Mining Charter in our firm belief that the principles of the
Charter support the true empowerment of the industry. We
believe that we have complied with the key targets set out in the
Charter (p104 – 105), including the equity empowerment target
of 26% ownership and housing one worker per room at our
South Deep hostels.
of hands.
Nick Holland
CEO
The Gold Fields Integrated Annual Report 2014 28
LEAdErSHiP
2.3 CFO report
Debt reduction ...
has significantly improved
the group’s solvency
and liquidity
Paul Schmidt - CFO
The year 2014 consolidated the transformation
of Gold Fields and the nature of its business.
These developments are reflected in the financial
performance of the Company with the cash
position, its balance sheet and debt position
significantly strengthened during the year.
A detailed analysis of our 2014 financial
performance is provided in the ‘Management’s
discussion and analysis of the financial
statements’ of the 2014 Annual Financial
Report. The consolidated income statement,
statement of financial position and cash flow
• The strong cash generation during 2014,
together with the sale of non-core assets,
enabled the Group to reduce its net debt by
US$282 million to US$1,453 million at the end
of 2014
• Debt reduction, together with agreements
reached with our group of bankers to extend
the maturity dates of certain of our debt has
significantly improved the Group’s solvency
and liquidity
• Capital expenditure decreased from
US$739 million in 2013 to US$609 million
statement – extracted from the Annual Financial
in 2014
Report 2014 – are provided here together with
additional commentary.
• The Group declared a final dividend for
2014 of R0.20 per share which, together
I also want to remind shareholders that our cost
reporting is based on the World Gold Council
cost metrics of All-in Sustaining Cost (AISC) and
All-in Cost (AIC) introduced in 2013. We believe
these metrics help investors, governments, local
communities and other stakeholders to better
understand the ‘true cost’ of producing and selling
an ounce of gold.
From this financial year onwards Gold Fields will
also report in US Dollars only, as it is now the
dominant currency in the Company’s portfolio.
The Group achieved a number of notable financial
highlights during 2014:
with the interim dividend of R0.20 per share
declared on 21 August 2014, brings the total
dividend for 2014 to R0.40 per share (2013:
R0.22 per share). This is equal to almost 34%
of normalised earnings and in line with our
policy of paying out between 25% – 35% of
normalised earnings to shareholders
paul Schmidt
CFO
2014 was
a year of
change
to the
structure
of Gold
Fields and
the nature
of our
business.
The Gold Fields Integrated Annual Report 2014
LEAdErSHiP
29
Consolidated income statement
for the year ended 31 December 2014
Figures in millions unless otherwise stated
uniteD StAteS DollAr
Notes
2014
2013
continuinG operAtionS
Revenue
Cost of sales
net operating profit
Investment income
Finance expense
Loss on financial instruments
Foreign exchange gains
Other costs
Share-based payments
Long-term incentive plan expense
Exploration expense
Feasibility and evaluation costs
Share of results of equity accounted investees after
taxation
Restructuring costs
Impairment of investments and assets
Profit on disposal of investments
Profit on disposal of Chucapaca
(Loss)/profit on disposal of property, plant and equipment
profit/(loss) before royalties and taxation
Royalties
profit/(loss) before taxation
Mining and income taxation
1
2
3
4
5
27
16
6
33
7
8
9
profit/(loss) from continuing operations
DiScontinueD operAtionS
profit from discontinued operations, net of taxation
10.1
profit/(loss) for the year
profit/(loss) attributable to:
owners of the parent
– Continuing operations
– Discontinued operations
non-controlling interest holders
– Continuing operations
– Discontinued operations
earnings/(loss) per share attributable to ordinary
shareholders of the company:
Basic earnings/(loss) per share from continuing
operations – cents
Basic earnings per share from discontinued
operations – cents
Diluted basic earnings/(loss) per share from continuing
operations – cents
Diluted basic earnings per share from discontinued
operations – cents
11.1
11.2
11.3
11.4
2,868.8
(2,334.4)
2,906.3
(2,277.8)
534.4
4.2
(99.2)
(11.5)
8.4
(62.5)
(26.0)
(8.7)
(47.2)
–
(2.4)
(42.0)
(26.7)
0.5
4.6
(1.3)
224.6
(86.1)
138.5
(118.1)
20.4
–
20.4
12.8
12.8
–
7.6
7.6
–
20.4
2
–
2
–
628.5
8.5
(69.5)
(0.3)
7.3
(97.2)
(40.5)
–
(65.9)
(47.7)
(18.4)
(39.4)
(809.5)
17.8
–
1.6
(524.7)
(90.5)
(615.2)
20.1
(595.1)
287.9
(307.2)
(295.7)
(583.6)
287.9
(11.5)
(11.5)
–
(307.2)
(79)
39
(79)
39
NET EARNINGS
US$12.8
million
Net earnings
from continued
operations reported
a significant
turnaround – in 2013
the net loss was
US$584 million
The Gold Fields Integrated Annual Report 2014 30
LEAdErSHiP
2.3 CFO report (continued)
Consolidated statement of financial position
at 31 December 2014
Figures in millions unless otherwise stated
ASSetS
non-current assets
Property, plant and equipment
Goodwill
Inventories
Equity accounted investees
Investments
Environmental trust funds
Deferred taxation
current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Assets held for sale
total assets
eQuity AnD liAbilitieS
Equity attributable to owners of the parent
Share capital
Share premium
Other reserves
Retained earnings
Non-controlling interest
total equity
non-current liabilities
Deferred taxation
Borrowings
Provisions
Long-term incentive plan
current liabilities
Trade and other payables
Taxation and royalties
Current portion of borrowings
total equity and liabilities
net debt
uniteD StAteS DollAr
Notes
2014
2013
14
15
20
16
18
19
24
20
21
22
10.2
23
24
25
26
27
28
25
5,764.9
4,895.7
385.7
132.8
252.4
5.5
30.4
62.4
1,092.8
368.3
226.5
458.0
40.0
6,857.7
3,538.8
57.9
3,412.9
(1,636.5)
1,704.5
124.5
3,663.3
2,481.3
387.0
1,765.7
320.3
8.3
713.1
509.7
58.2
145.2
6,857.7
1,452.9
6,234.7
5,388.9
431.2
93.8
237.5
7.5
23.9
51.9
1,061.4
404.5
272.7
325.0
59.2
7,296.1
3,851.4
57.8
3,412.9
(1,340.8)
1,721.5
193.8
4,045.2
2,627.4
399.4
1,933.6
294.4
–
623.5
462.4
34.6
126.5
7,296.1
1,735.1
The Gold Fields Integrated Annual Report 2014 LEAdErSHiP
31
Consolidated statement of cash flows
for the year ended 31 December 2014
Figures in millions unless otherwise stated
cash flows from operating activities
Cash generated by operations
Interest received
Dividends received
Change in working capital
Cash generated by operating activities
Interest paid
Royalties paid
Taxation paid
Net cash from operations
Dividends paid
– Ordinary shareholders
– Non-controlling interests holders
– South Deep BEE dividend
Cash generated by continuing operations
Cash generated by discontinued operations
cash flows from investing activities
Additions to property, plant and equipment
Proceeds on disposal of property, plant and equipment
La Cima non-controlling interest buy-out
Yilgarn South Asset purchase
Payment for Bezant
Proceeds on disposal of Chucapaca
Purchase of investments
Proceeds on disposal of investments
Environmental trust funds and rehabilitation payments
Cash utilised in continuing operations
Cash utilised in discontinued operations
cash flows from financing activities
Equity contributions from non-controlling interest holders
Loans raised
Loans repaid
Proceeds from the issue of shares
Cash (utilised in)/generated by continuing operations
Cash generated by discontinued operations
Net cash generated/(utilised)
Cash transferred on unbundling of Sibanye Gold
Effect of exchange rate fluctuation on cash held
Cash and cash equivalents at beginning of the year
cash and cash equivalents at end of the year
cash generated by operations1
uniteD StAteS DollAr
Notes
2014
29
30
31
32
33
22
22
808.5
1,061.3
3.6
0.1
83.7
1,148.7
(103.8)
(88.8)
(105.3)
850.8
(42.3)
(29.8)
(10.6)
(1.9)
808.5
–
(530.9)
(608.9)
4.9
–
–
–
81.0
(4.4)
6.4
(9.9)
(530.9)
–
(125.9)
2.0
463.9
(591.8)
–
(125.9)
–
151.7
–
(18.7)
325.0
458.0
235.0
2013
467.1
970.2
8.0
–
10.0
988.2
(89.4)
(99.9)
(298.2)
500.7
(64.5)
(61.2)
(1.1)
(2.2)
436.2
30.9
(914.6)
(739.3)
10.4
(12.8)
(135.0)
(10.0)
–
(3.5)
35.0
(4.5)
(859.7)
(54.9)
253.0
6.8
3,177.7
(2,971.3)
0.8
214.0
39.0
(194.5)
(106.4)
(29.7)
655.6
325.0
(234.9)
NET CASH
US$851
million
Net cash generated
by our operations
improved markedly
due to lower taxes
paid during the year
and higher working
capital releases
CASH
BALANCE
US$458
million
The cash balance at
the end of 2014 had
improved strongly
from US$325 million
to US$458 million
1 Net cash flow from operating activities after taking account of net capital expenditure and environmental payments
The Gold Fields Integrated Annual Report 2014 32
LEADERSHIP
2.4 Corporate governance
Achieving our Vision of global leadership in sustainable gold
through a number of other mechanisms, including employee
mining, and our ability to fulfil our stakeholder promises (p3),
climate surveys, newsletters and internal staff communication,
requires corporate governance of the highest level. This means
among others.
a governance framework that actively supports the proactive
and effective management of those strategic dynamics that
will ultimately determine our long-term sustainability, whether
operational, economic, social, environmental or otherwise.
Our management approach is underpinned by our commitment
to sound and robust corporate governance standards, which
is essential to our ultimate operational and strategic success.
The Group Compliance Officer plays a pivotal role in this area
by ensuring that the Company complies with all laws, regulations
The Board is required to meet at least four times a year. It
convened eight times during 2014.
The Board of Directors is satisfied that the Company Secretary
has the necessary competence, qualifications and experience.
The Company Secretary is a full-time employee of the Company.
The full Directors’ Report is contained on p24 – 31 of the Annual
Financial Report.
and the highest levels of corporate governance.
Monitoring of perforMance
2.4.1 Board of Directors
The Board is the highest governing authority of the Company.
The Board of Directors’ Charter articulates the objectives and
responsibilities of the Board. Likewise, each of the Board
subcommittees operates in accordance with its written terms
of reference, which are reviewed on an annual basis by the
Board. The Board takes ultimate responsibility for the Company’s
The Chairperson is appointed on an annual basis by the
Board, with the assistance of the Nominating and Governance
Committee, following a rigorous review of the Chairperson’s
performance and independence. In line with recommendations
by the King III Code, the Board carries out a rigorous evaluation
of the independence of directors who have served on the
Board for nine years or more. The Nominating and Governance
Committee assesses the independence of non-executive
adherence to sound corporate governance standards and sees
directors annually.
to it that all business decisions and judgements are made with
reasonable care, skill and diligence.
rotation anD retireMent froM the BoarD
In terms of the Memorandum of Incorporation (MOI), the number
of directors shall not be less than four and not more than 15.
The Board currently comprises nine directors, two of whom are
executive directors and seven of whom are independent non-
executive directors. Advised by the Nominating and Governance
Committee, the Board ensures that the election of independent
directors falls on reputable persons of well-known competence
and experience, who are willing to devote a sufficient part of
their time to the Company. The committee also ensures that
the Board has adequate diversity in respect of race, gender,
business, geographic and academic background.
The role of non-executive directors, who are independent of
management, is to protect shareholders’ interests, including
those of minority shareholders. They are also intended to ensure
that individual directors or groups of directors are subject to
appropriate scrutiny in their decision-making.
In accordance with the MOI, one-third of all directors (including
executive directors) shall retire from office at each Annual
General Meeting. The first to retire are those directors appointed
as additional members of the Board during the year, followed
by the longest serving members. Retiring directors can be
re-elected immediately by the shareholders at the Annual
General Meeting. The Board, assisted by the Nominating and
Governance Committee, recommends the eligibility of retiring
directors (subject to availability and their contribution to the
business) for re-appointment. In addition to the requirement that
one-third of directors retire each year, directors who have served
on the Board for more than three years since their last election
or appointment are required under the MOI to retire at the next
Annual General Meeting.
BoarD of Directors’ charter
The Board reviewed and approved the Board of Directors’
Charter to align it to the recommendations of King III. The Board
The roles of the Chairperson of the Board and the CEO are
Charter was amended during the year to include a provision
kept separate. Non-executive director Cheryl Carolus was the
that allows the retirement age of directors of 72 years to be
Chairperson of the Board and Nick Holland the CEO of Gold
extended by a further period of 12 months, effective from the
Fields for the entire period under review. Rick Menell was
end of the year in which a director turns 72, at the discretion of
appointed to the Social and Ethics Committee in April 2014.
the Board. The Charter compels directors to promote the Vision
The Board is kept informed of all developments at the Company,
of the Company, while upholding sound principles of corporate
governance. Directors’ responsibilities under the Charter
primarily through the executive directors, executive management
include:
and the Company Secretary. The Board is also kept informed
The Gold Fields Integrated Annual Report 2014 LEADERSHIP
33
• Determining the Company’s Code of Ethics and conducting
Board committees
its affairs in a professional manner, upholding the core values
of integrity, enterprise and transparency
• Evaluating, determining and ensuring the implementation of
corporate strategy and policy
• Determining compensation, development, skills development
The Board has established a number of standing committees
with delegated authority from the Board. The committee
members are all independent non-executive directors and the
CEO is a permanent invitee to each committee meeting. Each
Board committee is chaired by an independent non-executive
and other relevant policies for employees
• Developing and setting best-practice disclosure and reporting
director.
practices that meet the needs of all stakeholders
Committees operate in accordance with written terms of
• Authorising and controlling capital expenditure and reviewing
reference and have a set list of responsibilities. These can be
investment capital and funding proposals
found online at www.goldfields.com/au_standards.php for the
• Constantly updating the risk management systems, including
setting management expenditure authorisation levels and
exposure limit guidelines
• Reviewing executive succession planning and endorsing
senior executive appointments, organisational changes and
general remuneration policies. In this the Board will be guided
by the Remuneration Committee as well as the Nominating
and Governance Committee
following committees:
• Audit Committee
• Nominating and Governance Committee
• Remuneration Committee
• Safety, Health and Sustainable Development Committee
• Capital Projects Control and Review Committee
• Social and Ethics Committee
In addition, the committees are required to evaluate their
effectiveness and performance on an annual basis and to report
the respective findings to the Board for consideration.
Board of directors
Nominating and
Governance
committee
audit
committee
remuneration
committee
safety,
Health and
sustainable
development
committee
capital
Projects
control and
review
committee
social and
ethics
committee
figUre 2.5: Summary attendance table of Board and Board committee meetings
Board
special
Board
audit5
shsD
capital
projects
nominating
and
remcom governance
social
and
ethics
number of meetings per year
CA Carolus1
K Ansah2
AR Hill3
NJ Holland
RP Menell4
DN Murray
DMJ Ncube
PA Schmidt
GM Wilson
4
3
4
4
4
4
4
4
4
4
4
4
3
3
4
3
4
4
4
4
6
–
–
–
–
6
–
6
–
6
4
3
4
3
–
4
4
–
–
–
4
–
–
4
–
4
4
–
–
4
4
3
–
4
–
–
–
4
–
4
4
3
4
–
–
–
–
4
–
–
4
3
–
4
–
3
4
4
–
4
1 Apologies tendered for Board and sub committee meetings held on 10 February 2014 and 11 February 2014
2 Apologies tendered for Special Board Meeting held on 04 June 2014
3 Apologies tendered for Special Board Meeting held on 04 June 2014 and the SHSD meeting on 18 August 2014
4 Apologies tendered for Special Board Meeting held on 11 June 2014
5 Two Risk meetings were held during 2014 and were attended by all Audit Committee members
The Gold Fields Integrated Annual Report 2014
34
LEAdErSHiP
2.4 Corporate governance (continued)
2. kofi Ansah (70)
4. richard p menell (59)
BSc (Mechanical Engineering), UST
BA (Hons), MA (Natural Sciences
Ghana; MSc (Metallurgy), Georgia
Geology), Cambridge; MSc (Mineral
Institute of Technology
Exploration and Management), Stanford
Mr Ansah was appointed a director of
University, California
Gold Fields in April 2004. He is also a
Mr Menell was appointed a director
director of Ecobank Limited (Ghana).
of Gold Fields on 8 October 2008. He
DIRECTORS
1. cheryl A carolus (56)
chairperson
BA Law; Bachelor of Education,
University of the Western Cape
Ms Carolus was appointed a director
of Gold Fields on 10 March 2009 and
was appointed as the Chairperson on
14 February 2013. She is Executive Chair
of Peotona Group Holdings. She is a
director of a number of other public and
3. Alan r hill (72)
BSc (Hons); MPhil (Rock Mechanics),
Leeds University
private companies, including Investec
Mr Hill joined the Board on 21 August
and De Beers, and she also serves
2009. On 2 October 2010, he was
pro bono on non-profit organisations
appointed the CEO and Executive Chair
including WWF and The British Museum.
of Teranga Gold Corporation and was
She served as South Africa’s High
appointed non-executive Chair in 2013.
Commissioner to the United Kingdom
After graduating, Mr Hill worked for a
from 2001 to 2004; Chairperson of the
number of mining firms before joining
South African National Parks Board for
Barrick Gold in 1984. He spent 19
six years and Chairperson of South
years with Barrick from which he retired
African Airways from 2009 to 2012. She
in 2003 as Executive Vice-President:
was awarded an honorary doctorate in
Development.
law from the University of Cape Town for
her contribution to freedom and human
rights. In 2014, she was awarded the
French National Order of Merit by the
Government of France.
also became a member of the Board
of Sibanye Gold Limited with effect
from 1 January 2013. Mr Menell has
over 36 years’ experience in the mining
industry, including service as President
of the Chamber of Mines of South Africa,
President and CEO of Teal Exploration
& Mining, as well as Executive Chair
of Anglovaal Mining and Avgold. He
is a director of Weir Group Plc and
Rockwell Diamonds Inc, as well as Senior
Advisor to Credit Suisse. He also serves
as a director of a number of unlisted
companies and non-profit organisations.
The Gold Fields Integrated Annual Report 2014 LEAdErSHiP
35
4
3
5
9
7
6
1
8
2
5. David n murray (70)
as non-executive Chairperson of South
8. nicholas J holland (56)
BA (Hons) Econ; MBA, University of Cape
African Airways. He is currently Executive
chief executive officer (ceo)
Chair of Badimo Gas and Managing
BCom, BAcc, University of the
Director of Vula Mining Supplies.
Witwatersrand; CA(SA)
Town
Mr Murray was appointed a director of
Gold Fields on 1 January 2008. He has
more than 39 years’ experience in the
mining industry and has been CEO of Rio
Tinto Portugal, Rio Tinto Brazil, TVX Gold
Inc, Avgold and Avmin. He also served as
a non-executive director of Ivernia Inc.
6. Donald mJ ncube (67)
7. Gayle m wilson (70)
BCom; BCompt (Hons); CA(SA)
Mrs Wilson was appointed a director
on 1 August 2008. She was previously
an audit partner at Ernst & Young for
16 years, where her main focus was on
listed gold and platinum mining clients.
BA (Economics) and Political Science,
Fort Hare University; Postgraduate
She was lead partner on the global
audit of AngloGold Ashanti and other
Diploma in Labour Relations, Strathclyde
mining clients during her career included
Mr Holland was appointed an executive
director of Gold Fields in 1997 and
became CEO on 1 May 2008. Prior to that
he was the Company’s CFO. Mr Holland
has more than 35 years’ experience
in financial management, of which
25 years were in the mining industry.
Prior to joining Gold Fields, he was
Financial Director and Senior Manager of
Corporate Finance at Gencor.
University, Scotland; Graduate MSc
Northam Platinum, Aquarius Platinum,
9. paul A Schmidt (47)
(Manpower Studies), University of
Anglovaal Mining (now ARM) and certain
chief Financial officer (cFo)
Manchester; Diploma in Financial
Anglo Platinum operations.
BCom, University of the Witwatersrand;
Management; Honorary Doctorate in
Commerce, University of the Transkei
Mr Ncube was appointed a director
of Gold Fields on 15 February 2006.
Previously, he was an alternate director
of Anglo American Industrial Corporation
and Anglo American Corporation, a
director of AngloGold Ashanti as well
BCompt (Hons), Unisa; CA(SA)
Mr Schmidt was appointed CFO on
1 January 2009 and joined the Board
on 6 November 2009. Prior to this, he
held the positions of acting CFO from
1 May 2008 and Financial Controller from
1 April 2003. He has more than 19 years’
experience in the mining industry.
The Gold Fields Integrated Annual Report 2014 36
LEAdErSHiP
2.4.2
Internal and external standards and principles
listings requirements
Sustainability standards
business ethics standards
Our code of ethics is
aligned with national and
international business ethics
and anti-corruption standards,
including: The UN Convention
against Corruption (2003)
and the oecD convention on
Combating Bribery of Foreign
Public Officials in International
Business Transactions (1997)
We support the principles and
processes of the extractive
industry transparency
initiative (EITI), through our
membership of the ICMM.
Ghana and Peru are the EITI-
compliant countries in which we
operate
South Africa’s king iii code
on corporate Governance,
as well as the Prevention and
Combating of Corrupt Activities
Act (2004)
The United States’ Sarbanes-
Oxley Act (2002), Dodd-Frank
Act (2010) and the Foreign
corrupt practices Act (1977)
Our primary listing is on the JSE
Limited (JSE) – meaning we
are subject to the JSe listings
requirements
We have implemented
South Africa’s king iii code
on corporate Governance,
King III principles and
recommendations across
Gold Fields.
We have secondary listings
on NASDAQ Dubai Limited,
Euronext in Brussels and
the SWX Swiss Exchange –
meaning we are subject to
each exchange’s disclosure
requirements
Our shares are traded on the
New York Stock Exchange
NYSE – meaning we are subject
to relevant NYSE disclosure
and corporate governance
requirements, such as those
of the uS Securities and
exchange commission,
as well as the terms of the
Sarbanes-oxley Act (2002)
Our Sustainable Development
Framework is guided by the
international council on
mining and metals’ (ICMM)
10 principles on sustainable
development, their supporting
position statements and
external assurance thereof
We are guided by the 10
principles of the un Global
compact (in which we are
a participant), including
their implementation in our
business activities, and the
annual submission of the
Communication on Progress
report
All of our eligible operations are
in conformance with the world
Gold council Conflict-Free
Gold Standard. A copy of our
Conflict-Free Gold Report, our
Statement of Conformance,
together with the independent
limited assurance opinion
can be viewed online at www.
goldfields.co.za/sus_reporting.
php
Our reporting is guided by
the internationally recognised
Global reporting initiative
(GRI) G4-Core Sustainability
Reporting Guidelines, including
the Mining and Metals Sector
Supplement
management system
standards
iSo 14001 environmental
management system standard:
all operations certified
ohSAS 18001 safety
management system standard:
all operations certified
AA 1000 stakeholder
engagement principles: we are
guided by these principles
international cyanide
management code: all eligible
operations are compliant
internal standards and
principles
Gold Fields has developed a
comprehensive set of internal
standards and principles that
underpin how we do business.
These include:
our vision and values:
Everything that we do to
achieve our Vision of becoming
the global leader in sustainable
gold mining is informed by
our Values. These are applied
by our directors, as well as
employees at every level of the
Company
board of Directors’ charter:
This articulates the objectives
and responsibilities of the
Board. Likewise, each of the
Board committees operates in
accordance with written terms
of reference which are regularly
reviewed
Sustainable Development
Framework: Gold Fields’
Sustainable Development
Framework is based on
good practice, as well as our
operational requirements.
The framework, which is
governed by an overall
Sustainable Development
Policy, is made up of the
following pillars:
• Energy and carbon
management
• Communities
• Environment
• Ethics and corporate
governance
• Human rights
• Material stewardship and
supply chain management
• Occupational health and
safety
• Risk management
• Stakeholder engagement
The Group has developed
a range of guidelines
(https://www.goldfields.com/
au_standards.php) in how it
conducts business in those
areas
code of ethics: The Gold
Fields Code of Ethics commits
and binds every employee,
officer and director within
Gold Fields to conducting
business in an ethical and fair
manner. The Board’s Audit and
Social and Ethics Committees
are tasked with ensuring the
consistent application of, and
adherence to, the Code. The
Code is on our website at
(https://www.goldfields.com/
au_ethics.php)
The Gold Fields Integrated Annual Report 2014
LEADERSHIP
2.4.3 Board committees
The Board has established a number of standing committees
with delegated authority from the Board. The committee
members are all independent non-executive directors and the
CEO is a permanent invitee to each committee meeting. Each
Board committee is chaired by an independent non-executive
director.
Committees operate in accordance with written terms of
reference. In addition, the committees are required to evaluate
their effectiveness and performance on an annual basis and to
report the respective findings to the Board for consideration.
NomiNatiNg aNd goverNaNce committee
During 2014, the Nominating and Governance Committee
re-affirmed its terms of reference. It is the responsibility of this
committee, which has three independent directors, among other
things, to:
• Develop the Company’s approach towards corporate
governance, including recommendations to the Board
• Identify successors to the posts of Chair and CEO, and make
appropriate recommendations to the Board
• Consider the mandates of the Board committees, the selection
and rotation of committee members and chairs, and the
performance of each committee on an ongoing basis
• Evaluate the effectiveness of the Board, its committees and
management, and report the findings of this evaluation to the
Board itself
The Committee assessed its performance and effectiveness
during the period under review and was found to be functioning
satisfactorily and discharging its duties.
audit committee
The Audit Committee has formal terms of reference which are
reviewed annually and set out in its Board approved Charter. The
Board is satisfied that the Committee has complied with these
terms and with its legal and regulatory responsibilities as set
out in the Companies Act No 71 of 2008, as amended, the King
Report on Governance Principles for South Africa 2009 (King III)
and the JSE Listings Requirements.
The full duties and responsibilities of the Audit Committee and
the Audit Committee statement appear in the Annual Financial
Report on p3 – 4. The Committee assessed its performance and
effectiveness during the period under review and was found to
be functioning satisfactorily and discharging its duties.
remuNeratioN committee
It is the responsibility of this committee, which consists of four
independent directors, among other things, to:
• Establish the Company’s remuneration philosophy
• Establish the terms and conditions of employment for
executive directors and other senior executives (which
currently includes a short-term performance-linked bonus
scheme and a long-term share incentive scheme)
• Review remuneration policies on a regular basis
The Company’s remuneration policies, as well as details of
directors’ fees and equity-settled instruments, are contained in
the Remuneration Report on p32 – 45 of the Annual Financial
Report 2014.
Safety, HealtH aNd SuStaiNaBle developmeNt
committee
It is the responsibility of this committee, among other things, to
assist the Board in its oversight of the Company’s environmental,
health and safety programmes, as well as its socio-economic
performance. In particular, this includes the monitoring of the
Company’s efforts to minimise health, safety and environment-
related incidents and accidents, and to ensure its compliance
with relevant regulations around health, safety and the
environment. All members of the committee have been selected
on the basis of their considerable experience in the field of
sustainable development.
The committee assessed its performance and effectiveness
during the period under review and was found to be functioning
satisfactorily and discharging its duties. The committee
consists of five independent directors and continues to
monitor performance by management in relation to the Group’s
policies and guidelines, as well as the implementation of any
recommendations made by the committee.
capital projectS coNtrol aNd review committee
It is the responsibility of this committee, which consists of four
independent directors, among other things, to:
• Satisfy the Board that the Company has used correct, efficient
methodologies in evaluating and implementing capital projects
in excess of R1.5 billion or US$200 million
• Ensure that adequate controls are in place to review such
projects from inception to completion, and make appropriate
recommendations to management and the Board
The committee assessed its performance and effectiveness
during the period under review and was found to be functioning
satisfactorily and discharging its duties. The committee
continues to review the results attained on completion of each
project against the authorised work undertaken.
Social aNd etHicS committee
It is the responsibility of this committee to ensure, among other
things, that:
• Gold Fields discharges its statutory duties in respect of
section 72 of the Companies Act No 71 of 2008, as amended,
dealing with the structure and composition of Board
subcommittees
• Gold Fields adequately embeds the 10 Principles on
Sustainable Development of the International Council on
Mining and Metals (ICMM) and the 10 Principles of the United
Nations Global Compact
• Gold Fields upholds the goals of the Organisation
of Economic Cooperation and Development (OECD)
recommendations regarding corruption
The Gold Fields Integrated Annual Report 2014 LEADERSHIP
• Gold Fields complies with the Employment Equity Act, as
amended, the Broad-Based Black Economic Empowerment
Act, as amended, and the provisions of the 2014 Mining
Charter
• Gold Fields directors and staff comply with the Company’s
Code of Ethics
• Gold Fields practises labour and employment policies that
comply with the terms of the International Labour Organization
(ILO) protocol on decent work and working conditions
• Gold Fields ensures the continued training and skills
development of its employees
• Gold Fields performs its responsibilities in respect of social
and ethics matters and that these policies are reviewed on an
annual basis, or as required
Non-executive director Rick Menell was appointed a member of
the Committee in April 2014.
The committee also has oversight over the South Deep Education
Trust, the South Deep Community Trust and the Westonaria
Community Trust through the South African Transformation
Committee (previously known as the BEE Sub-committee), a sub-
committee of the Social and Ethics Committee. The members
of the South African Transformation Committee are Rick Menell
(Chair), Cheryl Carolus and Don Ncube.
The Social and Ethics Committee comprises the chairs of the
Audit Committee, Remuneration Committee, the Safety, Health
and Sustainable Development Committee, Nominating and
Governance Committee and the Capital Projects Committee.
executive committee
The Executive Committee (Exco) is not a committee of the Board.
It is primarily responsible for the implementation of Company
strategy, as well as carrying out the Board’s mandates and
directives. Exco meets on a regular basis to review Company
performance against set objectives and develops Company
strategy and policy proposals for consideration by the Board.
Exco also assists the Board in the execution of the Company’s
disclosure obligations. A series of guidelines on disclosure has
been disseminated throughout the Company. The Executive
Committee consists of the principal officers and executive
directors of Gold Fields – 11 members in total.
Each of Gold Fields’ regional operating subsidiaries has
established Board and Executive Committee structures to ensure
sound corporate governance practices and standards. At least
one of the Company’s executive directors serves on the boards
of the operating subsidiaries.
The Gold Fields Integrated Annual Report 2014 LEAdErSHiP
37
2.5 Summarised Remuneration Report
This is a summarised version of the Remuneration Committee’s
2.5.1 Guaranteed pay and benefits
Remuneration Report, the full version of which can be found on
p32 – 45 of the Annual Financial Report (AFR).
As a global company with the majority of our operations
now outside South Africa, we compete for talent in a global
The key principles of Gold Fields’ remuneration policy are to:
marketplace, and our approach to remuneration takes account of
the need to be competitive throughout the various jurisdictions in
• support the execution of the Group’s business strategy
• provide competitive rewards to attract, motivate and retain
which the Group operates.
highly skilled executives
Gold Fields also provides, where appropriate, additional
• motivate and reinforce individual, team and business
elements of compensation, including retirement savings, health-
performance
care assistance, life and disability insurance, housing and
• provide a safe productive and respectful working environment
personal accident cover.
The remuneration strategy is underpinned by sound
In 2014, the average increase for employees was 6.875% and
remuneration management and governance principles, and
that of its senior management 5% on average. This took effect in
comprises the following key elements:
March 2014.
• Guaranteed pay
• Benefits
• Short-term incentives (STI), i.e. annual performance bonuses
• Long-term cash incentive instrument i.e. as detailed in the
Long-Term Cash Incentive Plan (LTIP)
Gold Fields’ remuneration philosophy aims to attract and retain
motivated, high-calibre employees, whose interests are aligned
with those of our shareholders. This is achieved through a
balance of guaranteed and performance-based remuneration
(variable pay).
The 2015 paymix for our executives is displayed in the graphic
below.
FIGURE 2.2: Paymix for on-target total remuneration in 2015
%
100
80
60
40
20
0
37
24
39
39
23
38
41
23
36
CEO
CFO
Executive
The 2014 annual gross remuneration packages, or GRP, payable
to the CEO, Nick Holland, and the CFO, Paul Schmidt, as
determined the Remuneration Committee, were as follows:
• Nick Holland: R8,757,442 (US$809,375) plus US$348,000
• Paul Schmidt: R5,524,238 (US$510,588) plus US$94,000
In addition to the GRP, each executive director is entitled, among
other things, to benefits that comprise participation in the Gold
Fields Long-Term Cash Incentive Plan; consideration of an
annual incentive bonus based on the fulfilment of certain targets
set by the Board of Directors; and an expense allowance.
In 2014 the ratio of average executive director compensation vs
average employee compensation was 25.02.
2.5.2 Short-term incentive (annual performance
bonus)
Executive directors are eligible to earn performance bonuses
of 60% of GRP for the CFO and 65% of GRP for the CEO
for on-target performance, which comprise both individual
and strategic performance objectives as well as wider Group
objectives. The annual bonus could increase above 60% and
65% respectively if the stretch target is achieved.
Targets for annual bonuses are set by the Remuneration
Committee. In the case of the CEO and CFO, 65% of the
performance bonus is based on Group objectives and the
LTIP
Annual bonus
Guaranteed package
remainder is based on individual strategic objectives. For the
regional EVPs, bonuses are judged against Group, regional and
operational objectives.
GROUP PERFORMANCE TARGETS
For the year ended 31 December 2014, the Group performance
targets, and how senior executives performed against these
targets, were as follows:
The Gold Fields Integrated Annual Report 2014 38
LEAdErSHiP
FiGure 2.3: Group performance targets and executive performance
Weight
2013
Actual
2014
Actual
threshold
+0.0%
2014
target
+100%
maximum
+200%
Achieved
Safety improvement – TRIFR
Gold (equivalent) production1 –
’000 oz
All-in Cost US$/oz
Development and waste mined
unit2
20%
20%
40%
20%
100%
4.66
19%3
+0%
+10%
+20%
167%
2,104
1,312
2,294
1,074
2,162
1,195
2,242
1,138
2,322
1,081
1.8%
1.0%
+0%
+5%
+10%
165%
200%
20%
150%
1 Managed equivalent ounces converted from copper production at the planned gold/copper price ratio to eliminate price differences
2 Development comprises the following: South Deep – Destress 20%, Reef tonnes 20% and International operations – Open-pit waste 30%, Underground metres 30% –
improvement relative to target.
3 The TRIFR percentage change is based on the improvement in 2014 against 2013 (includes Yilgarn South Assets during Q4 2013)
South Deep’s safety performance measurement was reduced by
• increase the alignment of executives and shareholders with
75% in view of the three fatalities at the mine during 2014. The
the future growth and profitability of Gold Fields.
bonus parameter objectives and their weightings for 2015 are
unchanged from 2014. Targets for these objectives are in line
with the operational plans and guidance given to the market.
INDIVIDUAL PERFORMANCE TARGETS
The CEO and CFO were also assessed on individual, strategic
objectives (the CEO’s performance scorecard is included in full
in the Remuneration Report). These objectives were built around
three strategic pillars: Operational Excellence, Growing Gold
Fields and Securing our Future.
The CEO received a personal performance score of 3.5 out
of 5 for 2014 and the CFO received a personal performance
score of 4.5 out of 5. The aggregate bonus paid to members
of the executive team in February 2015 was 70% of guaranteed
remuneration. For the CEO it was 93% and the CFO 98% of
guaranteed remuneration. For the CEO the bonus accounts for
65% of GRP, for the CFO it is 60%.
2.5.3 long-term incentives
The Company operates a long-term cash incentive plan (LTIP)
designed to encourage senior and key employees to identify
closely with the long-term objectives of Gold Fields and allow
them to participate in the future financial success of the
Company.
In particular the LTIP is designed to:
• reward key senior managers for their performance and
contribution to long-term sustainable financial results that drive
shareholder value; and
Salient features of the LTIP:
• The LTIP is a three-year performance plan.
• Each performance cycle starts on January 1 of the first year
and ends on December 31 of the third year.
• Annual awards will be made to eligible participants
• Allocations will be based on the formula: Annual salary x
applicable % by grade x personal performance
• Vesting will be based on two corporate performance
conditions equally being met:
– Free Cash Flow margin (FCFM) 50% weighted
– Total Shareholder Return (TSR) 50% weighted
Threshold must be achieved for pay-out of any portion of the
award to be triggered
The LTIP replaces the Gold Fields 2012 Share Plan to align it with
the restructuring of Gold Fields.
2.5.4 Guaranteed pay adjustments
The annual remuneration review takes place in March. All eligible
employees received a salary increase on 1 March 2014 and the
average increase for executives during 2014 was 5%. The overall
increase in labour costs was positioned within the approved
mandate of the committee.
The Gold Fields Integrated Annual Report 2014
LEAdErSHiP
39
2.5.6 executive directors’ and prescribed officers’ remuneration
The table below provides details of the remuneration of executive directors and prescribed officers in 2014. The equivalent table,
providing the remuneration and fees in US dollar terms can be found in the full Remuneration Report in the AFR.
FiGure 2.4: Directors and prescribed officers’ remuneration and fees
Non-executive directors' fees, executive directors' and prescribed officers' remuneration
The directors and officers were paid the following remuneration for the year ended 31 December 2014
board fees
All Figures
Stated in r'000
Directors
Fees
committee
fees
Salary¹
pension
Scheme
contribution
Annual
bonus²
Sundry7
Severance
Sub-total
pre-tax Share
proceeds
for shares
awarded in
previous
years8
total realised
earnings for
the 12 month
period ended
31 December
2014³
For the 12
month period
ended 31
December
20139
executive
Directors
Nicholas Holland
Paul A. Schmidt
prescribed
officers
Ernesto Balarezo
Alfred Baku
Richard Weston
Willie Jacobsz
Naseem Chohan
Brett Mattison
Lee-Ann Samuel
Taryn Harmse
Nico Muller4
Michael Fleischer5
Kgabo Moabelo6
non-executive
Directors
Cheryl A. Carolus
Alan R. Hill
David N. Murray
Richard P. Menell
Gayle M. Wilson
Donald M. J.
Ncube
Kofi Ansah
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,513.6
825.4
825.4
825.4
825.4
825.4
825.4
–
533.9
417.4
553.8
648.4
572.5
233.1
10,668.4
5,785.7
1,731.0
682.2
11,384.3
6,363.6
65.0
61.4
–
–
23,848.7
12,892.9
4,320.7
4,448.8
28,169.4
17,341.7
24,932.8
16,358.4
7,521.3
7,967.3
7,028.5
5,107.8
3,160.0
3,656.3
3,450.0
2,763.4
1,181.3
397.8
2,392.1
–
–
–
–
–
–
–
–
1,495.9
802.8
–
590.0
406.2
383.3
659.7
131.3
62.5
326.2
–
–
–
–
–
–
–
7,753.3
6,465.8
6,264.7
3,758.5
3,005.4
3,713.4
3,685.0
3,011.3
553.7
–
–
–
–
–
–
–
–
–
4,328.0
2,705.0
–
–
–
–
–
1.3
2,500.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,063.5
4,526.7
–
–
–
–
–
–
–
19,602.6
18,634.0
14,096.0
8,866.3
6,755.4
7,775.9
7,518.3
6,435.7
4,366.3
5,525.6
7,245.0
2,513.6
1,359.3
1,242.8
1,379.2
1,473.8
1,397.9
1,058.5
1,716.6
1,806.5
2,200.9
2,325.6
1,105.7
1,436.2
1,214.0
855.0
–
–
622.3
–
–
–
–
–
–
–
21,319.2
20,440.5
16,296.9
11,191.9
7,861.1
9,212.1
8,732.3
7,290.7
4,366.3
5,525.6
7,867.3
2,513.6
1,359.3
1,242.8
1,379.2
1,473.8
1,397.9
1,058.5
18,009.0
7,539.0
14,635.0
10,558.8
5,609.2
7,524.9
5,321.5
3,358.2
–
14,171.6
7,719.8
2,403.0
1,213.0
1,325.0
1,531.0
1,416.0
1,150.0
1,017.0
total
7,466.0
2,959.1
61,079.9
7,271.1
55,959.0
9,660.7
9,592.0
153,987.8
22,052.3
176,040.1
145,793.2
1 The total US$ amounts paid for 2014, and included in Salary above, were as follows: Mr NJ Holland US$348,000, Mr PA Schmidt US$94,000, Mr JW Jacobsz US$290,045
and Mr MD Fleischer US$6,442
2 The annual bonus accruals for the 12 month period ended 31 December 2014, paid in February 2015
3 These amounts reflect the full directors' emoluments in Rand for comparative purposes. The portion of executive directors' emoluments payable in US$ is paid in terms of
agreements with the offshore subsidiaries for work done by directors' offshore for offshore companies
4 Nico Muller – Appointed on 1 October 2014
5 Michael Fleischer resigned effective 31 January 2014. As per employment contract Mr Fleischer was eligible for a total severance package of R5,0m. R2,7m was paid in
February 2014
6 Kgabo Moabelo – Voluntary retrenchment due to restructuring effective 31 July 2014. As per employment contract a total severance package of R4,5m was paid
7 Sundry includes a special bonus for Mr N Muller of R2,5m, Mr A Baku of R2,7m and Mr E Balarezo of R4,3m
8
Includes dividend payments
9 Comparatives have been restated by R1,6m to exclude travel reimbursements
The Gold Fields Integrated Annual Report 2014 Fire assaying of gold samples at Granny Smith in Australia
3.1
3.2
Shareholder and investor expectations
Social licence to operate
Political drivers
Strategic trends
3.1.1 Gold supply and demand
3.1.2
3.1.3
3.1.4
Risk and materiality
3.2.1
3.2.2
3.2.3
3.2.4 Materiality assessment
Internal assessment
External assessment
Integrated Reporting process
42
42
44
45
46
47
47
47
48
48
3analysis
42
StrAtEgic AnALySiS
3.1 Strategic trends
Investment
demand has
played the
key role in
influencing
the gold
price for the
last decade
and more
Like other companies, Gold Fields is subject to a
year increases in new output are predicted to
range of external strategic dynamics that inform
continue until around 2017 (as existing projects
decision-making, and influence both current and
start up) – with more incremental changes
future business performance.
Analysis of four of these key strategic issues is set
out below.
3.1.1 Gold supply and demand
ISSUE
Investment demand has played the key role in
influencing the gold price for more than the last
thereafter. These new incremental ounces will be
insufficient to offset parallel falls in supply from
maturing mines that were in production up to the
end of 2013
• A retreat from marginal mining projects by
operators who had previously pursued a
strategy of ‘production growth at any cost’
– driven by the previous high gold price.
Many of these projects are now economically
decade. Such demand has largely been driven by:
unsustainable, and it is inevitable that
• The need for a safe haven asset in advance of –
and during – the 2008 financial crisis
• The subsequent need to hedge against feared
hyperinflation as governments applied large-
scale quantitative easing – pushing the gold
price to a record high in 2011
In 2012, investor demand eased as it became
apparent that many of the feared ‘economic worst
case scenarios’ were unlikely to materialise. The
gold price subsequently retreated to sub-2011
levels – just as the equity and real estate markets
started to offer stronger returns. As a result, many
investors sold their physical gold holdings in
2013 – resulting in a sharp drop in the gold price.
Gold demand continued to decline in 2014 by 4%
year-on-year according to the World Gold Council,
while total supply was little changed. On balance,
the negative supply and demand trends have seen
the average gold price received by Gold Fields
rationalisation will take place
• A significant drop in gold exploration budgets
since the gold price fell between 2011 and
2012. This accentuated the longer-term trend
of declining exploration activity in evidence
since the mid-1990s and is likely to inhibit the
longer-term ability of gold producers to increase
supply
• A decline in gold scrap recycling in response
to the lower gold price. According to the World
Gold Council gold recycling hit a seven-year
low in 2014 and shows few signs of recovery
in 2015
• A decline in average grades at most gold
operations around the world
These supply trends are likely to take place
amid short- and medium-term investor concern
about macroeconomic and geopolitical fragility
in key regions of the world. In the longer term,
key demand fundamentals may again assert
decline to US$1,249/oz in 2014, from US$1,386/oz
themselves due to:
in 2013 and US1,656/oz in 2012.
Nonetheless, the world continues to face a number
of long-term issues which could position gold as a
continued attractive investment option. According
to commodity analysts CPM Group the total gold
supply is set to fall after 2017. This is due to:
• Successive year-on-year reductions in
supply from existing mines, which exceeded
the significant amount of new production that
has come online between 2011 and 2013 (driven
in part by the high gold price). Similar year-on-
• Ongoing growth in emerging market demand
for physical gold – in China, India and other
countries, although China showed a slight
decline in 2014 from its high levels of the
previous year
• A continued build-up of gold reserves by the
world’s central banks (or at least maintaining
their current holdings) amid economic and
political uncertainty. In 2014 central bank
purchases totalled 477 tonnes, the second
highest for 50 years
The Gold Fields Integrated Annual Report 2014 StrAtEgic AnALySiS
43
Figure 3.1: Gold demand in 2014 and 2013 –
FiGure 3.1: Gold demand and supply in 2014 and 2013 – World Gold Council (WGC) (tonnes)
World Gold Council (WGC) (tonnes)
Figure 3.1: Gold supply in 2014 and 2013 –
World Gold Council (WGC) (tonnes)
477.2
409.3
885.4
904.6
408.2
389.0
1,262.0
1,121.7
2,384.6
2,152.9
42.1
(39.3)
3,114.4
3,050.7
2014 demand
2013 demand
2014 supply
2013 supply
Jewellery
Technology
Investment
Jewellery
Technology
Investment
Central bank net purchases
Central bank net purchases
Mine production
Net producer hedging
Recycled gold
Mine production
Net producer hedging
Recycled gold
RESPONSE
Gold Fields believes in gold. This means the Company will
continue to focus on gold mining and will not hedge, on the basis
that we believe:
price and/or further falls in the price of gold (should they occur).
It also means Gold Fields will be particularly well-positioned to
capture future upside and deliver superior leverage to investors
when the gold price recovers. In such circumstances, Gold
Fields is committed to maintaining discipline when the market
• The supply and demand fundamentals support a medium- to
becomes more buoyant, and to avoiding the temptation of
long-term recovery in the gold price
producing incremental ounces. The generation of free cash
• The Company’s portfolio approach and strategic and mining
flow will remain Gold Fields’ priority – irrespective of market
expertise should provide returns for gold investors now and in
conditions.
the future
Gold Fields’ ability to maximise value can be attributed to
grading’ – due to the obvious negative impact this would have
This builds on Gold Fields’ existing commitment to avoid ‘high-
its strategic shift to cash flow generation by:
• De-prioritising production volume
• Setting specific cash flow targets and margins and linking
short- and long-term management incentives to key
deliverable criteria
• Closing marginal mining operations at existing mines and
selling non-strategic growth assets
• Stopping all greenfields exploration
This strategy, conceived before the price of gold experienced a
serious drop – means Gold Fields now enjoys a high degree of
on the sustainability of its ore bodies. As such, Group guidance
requires all operations to mine at or below their reserve grade.
Gold Fields is also continuing to invest in the future of its mines.
This includes the ongoing development of its ore bodies – and
proactive near-mine exploration. These are strategic essentials
that will in no way be compromised by the current price
environment.
Beyond this, the company’s Active Portfolio Management
strategy (p80) is ‘locking-in’ commercial sustainability and cash-
generation into the long-term business. This strategy includes:
resilience in the face of current market conditions.
• A focus on low-risk, cash-generative near-mine exploration
For example, all production is being planned around the delivery
of a 15% free cash flow margin at a gold price of US$1,300/oz.
This means the Company will – compared to many of its peers –
be in a relatively strong position to weather a sustained low gold
and acquisition opportunities
• An end to all greenfields exploration activity
• The disposal of non-aligned and/or marginal growth projects
The Gold Fields Integrated Annual Report 2014 44
StrAtEgic AnALySiS
3.1 Strategic trends (continued)
3.1.2 Shareholder and investor expectations
ISSUE
When the price of gold was high, investors showed signs of
frustration with the inability of mining operators to offer sufficient
leverage to the price of gold – instead opting for gold exchange-
traded funds (ETFs). Now that the price of gold has fallen, many
investors have abandoned the sector altogether. This has not
only been due to the ‘push’ of lower gold prices – but also the
‘pull’ of more buoyant equity markets and other resurgent asset
prices in key jurisdictions. This poses a significant risk to the
sector as a whole – in terms of its value, liquidity and ability to
finance future growth.
Only those gold mining companies that can demonstrate their
ability to deliver strong cash-generation and investor returns –
even with an historically low gold price – will be able to avoid
the potentially serious consequences of this dynamic. The gold
price will no longer support complacent strategies based on
the maximisation of production volumes – strategies that had
previously been embedded into the ‘DNA’ of many companies
following the last gold price boom. Instead, only the decisive
rationalisation of production and asset portfolios, severe cost-
controls and a ruthless focus on cash-generative production
will provide succour. Whilst many companies have implemented
incremental measures to improve productivity and reduce costs,
more dramatic forms of transformation are needed to earn back
investor trust and guarantee commercial sustainability.
RESPONSE
Gold Fields offers one of the most positive examples of what
can be achieved when Company strategy is fully aligned with
investor interests. The transformation of Gold Fields was first
described in its 2012 Integrated Annual Report – before the
sharp drop in the price of gold in 2013. Although the 2013
unbundling of Sibanye Gold was one of the most ‘visible’
actions taken in this respect – it was just one of many measures
(a significant number of which are ongoing) to redefine the
Company. This not only included the avoidance of marginal
production, the reform of Group management structures and a
withdrawal from greenfields exploration – but also more positive,
growth-orientated measures such as the acquisition of the cash-
generative Yilgarn South Assets in 2013. This was part of an
overall effort to:
• Benefit from simplified, disciplined and nimble management
structures – pursuing a strategy (and associated, centrally-
defined KPIs) that is fully aligned with investor interests
• Focus the Company on ‘what it is good at’ – i.e. core gold
mining operations, as demonstrated by the strong post-
acquisition performance achieved at the Yilgarn South Assets
• Improve the overall quality of the Group’s production portfolio
– and pursue low-risk, disciplined growth that is fully aligned
with Company strategy
1 Miningmx, Gold Fields Claws its Way Back, 19 December 2014
These efforts have paid off. Gold Fields was one of the best
performing gold mining companies on the Johannesburg Stock
Exchange (JSE) in 2014 – outperformed only by Sibanye Gold,
which was itself unbundled from the Group in February 2013.
The price of Gold Fields’ shares increased by 60% over this
period – albeit from a relatively low starting point caused by the
low gold price.1 Those investors who held on to their shares in
both Gold Fields and Sibanye Gold clearly benefited from the
unbundling and the implementation of Gold Fields’ decisive,
cash-generative strategies. Whilst the current low gold price
means that such benefits can only be framed in relative terms,
these actions helped protect shareholder value – and means
Gold Fields is well-placed to deliver more absolute benefits once
the gold market rebounds.
FIGURE 3.2: Return on investment in Gold Fields’ shares
Indexed from 28 Nov 2012 (=100) to 31 Dec 2014
140
120
100
80
60
40
20
0
28 Nov 2012
31 Dec 2014
Gold Fields and Sibanye shares combined
Gold price
XAU Index
The graph shows the performance of Gold Fields’ shares since 28 November 2012,
the day before the unbundling of Sibanye Gold was announced. For the purposes of
showing a total return, the share prices of Gold Fields and Sibanye have been
combined after the official unbundling took effect in 11 February 2013 (this excludes
dividends). The share price performance is compared to the gold price and the
Philadelphia Gold (XAU) Index over the same period.
Nonetheless, Gold Fields still needs to deliver on its key portfolio
asset – South Deep. If South Deep is excluded from Gold Fields’
portfolio, then the Company is one of the most cash-generative
in the sector. The mine remains cash negative, however, and
continues to pose a number of notable challenges – in terms
of underground mechanised engineering and mining skills
specifically. It was in recognition of these challenges that
Gold Fields undertook a major mining review – with the aim of
‘rebasing’ production there. The current priority is for South Deep
to become financially self-supporting as soon as feasible without
undermining its long-term build-up.
Nonetheless, the long-life of the mine – and its massive cash-
generating potential – means it is also important to invest time,
energy and money now to optimise its value over the long term.
Gold Fields is committed to balancing these needs – for the
benefit of both current and future investors. A more flexible and
realistic approach towards the development of South Deep is
essential both in terms of short-term investor sentiment and
long-term value optimisation (p59 – 61).
The Gold Fields Integrated Annual Report 2014 StrAtEgic AnALySiS
45
3.1.3 Social licence to operate
ISSUE
The nature of the extractive sector means the industry must
pay particular attention to its social licence to operate. Unlike
other companies, mining companies are physically ‘tied’ to their
mineral deposits – and cannot simply relocate their investments
and activities to new locations when facing deteriorating local
and/or national operating environments. Furthermore, many
mines’ lifecycles can span decades – making it essential for
mining companies to be able to navigate inter-related social,
economic and political dynamics over time.
This can leave mining projects vulnerable. For example, research
from Harvard University suggests that major projects facing
community conflicts can incur costs of up to US$20 million a
week in lost value. Furthermore, advanced exploration projects
can lose up to US$50,000 per day when community conflicts
force their suspension.1
As such, mining companies need to maximise their positive
local impacts, minimise their negative local impacts and make
sure that this is communicated to – and recognised by – host
community stakeholders. Whilst many companies generate
significant value for their host societies and governments –
including through the generation of public revenues – this does
not always benefit those host communities who otherwise bear
the brunt of any negative impacts. As such, additional and
targeted efforts need to be made to ensure host communities
directly benefit from the presence of mining operators – and
have a direct interest in their continued and profitable operation.
RESPONSE
Gold Fields recognises that while it must satisfy immediate
shareholder requirements for cash generation and navigate
the implications of the current low gold price – it also needs
to secure the longer-term value of its assets. As a result, it
also recognises that the long-term generation of value for
shareholders will ultimately be supported by:
• Responsibility: ongoing investment in the maintenance of
responsible operational standards – and the avoidance and
mitigation of the Company’s negative social and environmental
impacts. This includes ongoing investment in effective water
management – something that is an increasingly material
issue for most mining companies and can, if poorly managed,
have a serious impact on local communities (p73 – 76)
• Trust: frank, two-way communication about potentially
sensitive issues, realistic management of expectations and
the visible honouring of Company commitments. This includes
ongoing engagement on issues such as indigenous rights
(p108 – 109), employment opportunities (p111 – 112) and
social transformation. In this context, it is not enough to
maximise Gold Fields’ positive impacts and minimise its
negative impacts. What the Company achieves in this regard
needs to be honestly and effectively communicated to host
communities, so that such efforts are fully understood,
contextualised and recognised by local people
• Shared Value: the pursuit of cost-effective, mine-level
business strategies that enhance not only the value of our
own business, but also generate positive social impacts.
This helps to ensure that interactions with local stakeholders
are firmly based on mutual interest from the start. Gold
Fields currently has five Shared Value pilot projects (p115) –
including a multilateral water management project at Cerro
Corona; the promotion of mathematics and science teaching
at South Deep; increased sourcing from local community
suppliers at both mines; and an innovative quarrying
programme at Damang to generate local employment and
reduce mine costs. These are further supported by Gold
Fields’ broader, ongoing efforts to recruit employees and
contractors from local communities – and to source goods
and services from local companies (p106 – 107)
These efforts are particularly important in the context of the
low gold price, which has significant impacts in terms of the
retrenchment of local employees and on the ability of the
Company to invest in community development projects.
In terms of growth, new mining projects are particularly
susceptible to the loss (or non-achievement) of a social licence
to operate – due to the introduction of new impacts, the testing
of new relationships and the untested nature of new investments.
In this context, Gold Fields is also applying a new growth
strategy that is likely to reduce its risk exposure in this respect
considerably. This includes:
• Refocussing on near-mine exploration – with local communities
likely to actively support mine expansion and Life-of-Mine
extension due to the economic opportunities these represent
• The disposal of non-aligned greenfields projects in higher-risk
operating environments – and a focus of expansion efforts
on well-established, lower-risk and cash-generative mining
projects. This includes the acquisition of the Yilgarn South
Assets in 2013 – as well as a current focus on mergers and
acquisition opportunities in lower-risk regions (p80 – 81)
1 Rachel Davis and Daniel Franks, Cost of Company-Community Conflict in the Extractive Sector, 2014
The Gold Fields Integrated Annual Report 2014 46
StrAtEgic AnALySiS
3.1 Strategic trends (continued)
3.1.4 Political drivers
ISSUE
Mining companies have long had to navigate political criticism
over their perceived lack of contributions to the societies in
which they operate. In part, this is due to the nature of mineral
deposits which are both finite – and which are perceived to be
‘national’ assets. As such, certain governments have been active
in their attempts to maximise the value that they can extract from
mining companies – usually in the form of tax.
On the face of it, this is right and proper – but such efforts can
be counter-productive if carried out in a way that:
• ignores the broader, less tangible benefits that mining
companies deliver to host societies – in terms of (for example)
local employment, skills transfers and local procurement.
These are rarely factored into the equation – meaning fiscal
decisions are taken that can ultimately undermine host
countries’ own interests; and
• places too much emphasis on the short-term value that
can be extracted from mining companies – often as a result
of immediate budgetary and/or social pressure. This can
compromise companies’ longer-term value generation,
reducing the overall value accruing to host countries –
including investment in, and the development of new and
existing ore bodies.
Part of the reason the gold sector has faced significant resource
nationalism in recent years is due to the historically high gold
price. This gave rise to perceptions that gold mining companies
were making windfall profits – whilst host countries gained little
additional benefit. Such analysis ignored the high input costs
that tempered the ability of gold mining companies to generate
large profits. Now that the gold price has fallen significantly,
many mining operators are particularly sensitive to additional
government imposts and/or fiscal and regulatory uncertainty.
Indeed, investment in growth and development is already
shrinking as a result of current market conditions.
Finally, there can be less dramatic yet still impactful challenges
relating to permitting. This is often due to the sometimes limited
resources available to local regulators – and, in a small number
of cases, attempts to use permitting as a form of leverage to
force engagement on unrelated issues. Environmental regulation
is both necessary and valuable – but delays in processing (and
associated uncertainty over mine development) can potentially
undermine the development and growth of existing operations –
and thus attendant value for host communities and societies.
RESPONSE
Gold Fields is a strong proponent of economic transparency.
This includes its proactive support of the Extractive Industries
Transparency Initiative (EITI), as well as its own efforts to
report its wider economic contributions to host communities
and societies. Gold Fields believes that once the full picture
is made available to stakeholders – both at community- and
1 World Gold Council ‘Goldfacts’ website – www.goldfacts.org
national-level – it will become more apparent that value
creation is not a zero-sum game. Instead, if maximisation of
value for host communities and host countries is the ultimate
aim – governments, communities, unions and other interested
stakeholders are more likely to achieve this through constructive
and positive cooperation with the mining sector, rather than
through unilateral imposts.
In 2014 our total direct value distribution was US$2.65 billion
(2013: US$2.98 billion), apportioned as follows:
• US$1.84 billion to business and suppliers
(2013: US$1.81 billion)
• US$194 million to host governments (2013: US$380 million)
• US$468 million to employees and contractors
(2013: US$595 million)
• US$137 million to providers of capital (2013: US$172 million)
• US$16 million on Socio-Economic Development programmes
in our host countries (2013: US$16 million)
Gold Fields is in the process of developing a better
understanding of its indirect economic impacts – and these are
believed to be substantial. For example, the World Gold Council
estimates that for every employment position directly created
by the gold mining sector – another employment position is
indirectly created. This number is even higher in many African
countries. Similarly, it is estimated that each employee in the
industry in southern Africa has (on average) a total of eight
dependants who ultimately rely on them for support.1
Furthermore, Gold Fields also supports broader economic
development through:
• The recruitment, training and development of people in its
host countries – many of which suffer from high levels of
unemployment and limited skills pools – as technically skilled
artisans, operators, engineers, managers and in other roles
• The utilisation of – and engagement with – national and
host community suppliers. This includes the long-term
encouragement and development of local economic
capabilities – and support for the development of viable local
economic hubs
In this context, Gold Fields is working with its peers – through
the Minerals Council of Australia and the Gold Royalty Response
Group – to challenge plans to increase the royalty rate on gold
production in Western Australia (p103). These plans appear
to be driven by current budget shortfalls caused by a marked
decline in public revenues generated by the iron ore sector.
Similarly, Gold Fields is in ongoing, direct engagement with
the Government of Ghana around the potential introduction
of a common taxation framework to apply to all gold mining
companies – creating a level-playing field for both Gold Fields
and other operators (p103).
Gold Fields also hopes to work in partnership with regulators to
ensure that permitting is carried out in a timely and effective way
to limit the negative impact that project delays are likely to have
on the Company.
The Gold Fields Integrated Annual Report 2014 StrAtEgic AnALySiS
47
3.2 Risk and Materiality
Gold Fields uses a set of four well-defined processes to assess
5. Assessment and moderation: The risks are assessed and
its risks, opportunities and material issues:
moderated at a Group-level by relevant risk owners and Exco
1. Key risks – and mitigating actions – are identified using an
members
Enterprise-wide Risk Management (ERM) process.
6. Exco risk meeting: Exco reviews the top risks and sets/
monitors Group-wide mitigation strategies. This takes place
2. The Company takes into account the views and concerns
of a wide group of stakeholders through direct and indirect
every six months
stakeholder engagement processes.
7. Audit Committee review: The Audit Committee reviews the
3. As part of the Integrated Reporting process, the Company
top risks and mitigation strategies twice a year
conducts comprehensive interviews with key management,
8.
Internal audit review: The Internal Audit function assesses
collects operational, financial and sustainability data, and
progress against – and adherence to – mitigation strategies
analyses the short-, medium- and long-term strategic trends
on a regular basis
affecting the business.
4. Material sustainability issues are assessed and prioritised
according to the GRI G.4 Guidelines, and comprehensive
internal and external stakeholder interviews conducted to
determine the relative ranking of material issues.
The Group Heat Maps on p50 – 53 set out:
• The Group’s top 10 risks as well as top 5 regional risks, as
identified through the ERM process (i.e. the Group’s top
operational and strategic risks at the end of 2014)
• Key movements in the top 10 Group risks between 2013 and
The outputs from these four processes have informed the
2014
identification of the risks, opportunities and material issues
• Key mitigating strategies to avoid and/or mitigate the top 10
contained in this Integrated Annual Report. Key elements of the
Group risks for 2014, and the top 5 risks per region
four processes are set out below.
3.2.1 Internal assessment: Enterprise-wide Risk
Management
3.2.2 External assessment: Stakeholder
engagement
Proactive and frank stakeholder engagement plays a vital role in
Gold Fields’ mature ERM process is aligned with the ISO 31000
helping Gold Fields identify its material issues. All stakeholder
international risk management standard, as well as the risk
engagement activities are informed by the AA 1000 principles of:
management requirements of South Africa’s King III Code.
The ERM process – which prioritises risks on the basis of
probability and severity – is based on the following process:
• Inclusivity
• Materiality
• Responsiveness
1. Workplace risk assessments: Managers carry out ongoing
Gold Fields’ engagement activities fall into two categories:
workplace risk assessments in accordance with international
standards (for example, ISO 31000 and the SAMREC
guideline)
• Direct engagement, including organised dialogues,
roundtable discussions, one-to-one meetings, internal surveys
and regular engagement with local communities at each
2. Mine/region reviews: Each regional and mine Executive
operation and project
Committee conducts a review of the top risks and mitigating
• indirect engagement, including the use of external
strategies on a quarterly basis
benchmarks and standards (such as the UN Global Compact)
that are designed to reflect and address societal expectations
3. Presentation to the Group Executive Committee (Exco):
Each Mine Manager presents the top 10 risks and mitigation
operAtionAl enGAGement
actions to Exco during quarterly business reviews –
and mitigating actions are assessed for relevance and
effectiveness
4. Compilation of Group Risk Register: The Group Risk
Manager extracts the top risks from the regional and
operational registers in line with the tolerance levels set by
the Board, and compiles the Group Risk Register
At an operational-level, all mines identify, prioritise and directly
engage stakeholder groups that have the potential to affect
their operational, sustainability or financial performance.
This includes, for example, ongoing engagement of:
• Employees and their representatives by our human resources
teams and general managers
• Local communities by our community relations teams and
general managers
The Gold Fields Integrated Annual Report 2014 48
StrAtEgic AnALySiS
3.2 Risk and materiality (continued)
• Regulators by our discipline heads and general managers
• Key contractors and suppliers by our procurement teams,
health and safety managers and operational personnel
StrAteGic enGAGement
At a strategic-level, Gold Fields’ corporate and regional
management teams implement an ongoing programme of direct
and indirect engagement. This includes ongoing engagement of:
• In-country peer companies by the regional Executive Vice-
Presidents (EVPs)
• Central, regional and local governments by the Company’s
3.2.4 Materiality assessment
Gold Fields has carried out a formal process to assess and
prioritise its material sustainability issues. It has done so using
criteria aligned with those set out in the GRI G4 Guidelines:
• The actual or potential impact of Gold Fields on stakeholders
• The actual or potential impact of stakeholders on Gold Fields
This G4 assessment has been carried out in parallel to – and
integrates aspects of – the ERM and stakeholder engagement
processes described above.
corporate affairs teams and legal teams, as well as members
MATERIALITY PROCESS
of the Group Exco and regional EVPs
• Shareholders and potential investors by the Group investor
relations team, CEO, CFO and regional EVPs
The outcomes of stakeholder engagement are integrated into
Gold Fields’ internal reporting processes – including its quarterly
regional board reports, sustainable development reports and
other documents. In addition, they inform Gold Fields’ ERM
process, and external reporting processes.
3.2.3 Integrated Reporting process
The outputs of the ERM and stakeholder engagement processes
are analysed alongside the information collected for the
Integrated Annual Report. This includes:
• Gold Fields’ operational, financial and sustainability data
generated through our data management systems
• The output of dedicated integrated reporting interviews with
managers and executives at operation-, region- and Group-
level
• Short-, medium- and long-term strategic analysis of the
external environment
This is with the aim of:
• Gaining greater insight into the Group’s material issues
• Identifying and assessing the management actions taken in
response to each material issue – as well as the effectiveness
of such actions
• Defining the content of this Integrated Annual Report
The Integrated Annual Report is prepared on the basis of
this process and is subject to a rigorous internal assurance
process. The Board – through the Audit Committee – is ultimately
responsible for the contents of this Integrated Annual Report.
Gold Fields’ G4 materiality process is based on a series of
iterative assessments using a common, quantitative scoring
framework. It draws on a range of internal and external sources,
as outlined below:
1. Legislation: national and international
2. Standards
a. Internal: Gold Fields’ Vision and Values; Sustainable
Development Framework; Stakeholder Charters; and Code
of Ethics
b. External: 10 Principles of the UN Global Compact; UN
Guiding Principles on Business and Human Rights; ICMM
10 Principles on Sustainable Development; and ISO 14001
(environment) and OHSAS 180001 (safety) management
standards
3. Documentation
a. Internal: Gold Fields Board reports; Safety, Health and
Sustainable Development reporting; and ERM output
documents
b. External: Media reports; NGO commentary; and sector
analysis
4. Engagement
a. Internal: G4-specific engagement of Exco and the Board
– including final confirmation of Gold Fields’ material
sustainability issues’ G4-specific engagement of Group-
and regional-level discipline experts; and general internal
engagement
b. External: G4-specific engagement of Group- and regional-
level stakeholders; general external engagement; and the
Open Working Group proposal for post-2015 Sustainable
Development Goals.
The Gold Fields Integrated Annual Report 2014 StrAtEgic AnALySiS
49
Each step of the G4 materiality process is outlined below with the final outcome shown in the table on this page.
FIGURE 3.3: Steps in the G4 materiality process
initial results
Initial research
and engagement
1
2 Development of
3
4 Development of
the final materiality
results
Integration of
feedback
• Review of current sustainability issues facing the gold mining
sector and Gold Fields ‘footprint’ countries
• Preliminary engagement with internal discipline experts
• Review of ERM system outputs
• Prioritisation of all GRI G4 Aspects – in line with the G4 materiality
assessment criteria
• Presentation of initial results to key internal stakeholders
• Presentation of initial results to key external stakeholders
• Collation and adjustment of results
• The setting of ‘boundaries of impact’ for each G4 Aspect
• Categorisation and consolidation of G4 Aspects into higher-level,
Gold Fields-specific ‘issues’
• Sign-off of the final assessment results by Exco
These steps involve detailed engagement to determine the
ranking of Gold Fields’ material sustainability issues. Senior
Step 4: prioritiSeD mAteriAl iSSueS
executives at the Company, including its regional operations, and
representatives of external stakeholders – including industry,
cluster
government and environmental organisations – were briefed on
Health and safety
the GRI process and asked to evaluate all G4 aspects in terms
Industrial relations
of importance to Gold Fields and its stakeholders. This took the
form of a ranking with 1 being the most critical to Gold Fields
and its stakeholders, and 10 considered not material at all.
Water management
Total value distribution
Employee development
Once these rankings had been made they were averaged and a
Managing environmental issues across the lifecycle
score reached for each aspect. A score between 1 and 5 means
Compliance
that these issues are material to Gold Fields. Scores between 5
and 10 suggest that internal and external stakeholders consider
these issues of less material importance to Gold Fields and its
stakeholders. However, this does not mean that they will not be
addressed by our management team when the issues arise.
The final step in determining the key material aspects was to
cluster those aspects that cover similar areas, for example,
‘closure planning’ and ‘environmental compliance’ were
clustered under ‘managing environmental issues’.
The outcome – depicted in the table alongside – ranks ‘health
and safety’, ‘industrial relations’, ‘water management’, ‘total value
distribution’ and ‘employee development’ among the key GRI
aspects that internal and external stakeholders consider most
material to Gold Fields and its wider stakeholder base. These
are also the non-operational issues that confront our operational
management teams on a daily basis.
Community value distribution
Government relations
Energy and carbon management
Workforce
Human rights
Social licence to operate
Human rights due diligence on investments
Resettlement
Materials
Biodiversity
General grievance mechanisms
Supply chain management
Equal remuneration
Child/forced labour and freedom of association
Product impacts
Market regulation
Score
1.8
1.9
2.9
2.9
3.0
3.3
3.4
3.4
3.6
4.0
4.0
4.5
4.6
5.2
5.2
5.2
5.2
5.6
5.6
5.7
7.8
8.5
8.9
The Gold Fields Integrated Annual Report 2014 50
StrAtEgic AnALySiS
3.2 Risk and materiality (continued)
FIGURE 3.4: Gold Fields – Top 10 risks
Maximum
I
Y
T
R
E
V
E
S
4
5
8
10
2
76
1
3
9
Minimum
Maximum
PROBABILITY
FIGURE 3.5: 2013 risks – how we performed in 2014
FIGURE 3.5: 2013 risks – how we performed in 2014
)
0
0
1
−
0
(
x
e
d
n
I
y
t
i
l
i
b
a
b
o
r
P
x
y
t
i
r
e
v
e
S
90
80
70
60
50
40
30
20
10
0
90
80
80
81
72
72
72
70
54
Lower
gold price
Loss of investor
confidence
Failure to deliver
South Deep
Free cash flow
margin
Delivery of
Mining Charter
1
2
3
4
5
2013
2014
PERFORMANCE EXPLANATION
1
2
3
4
5
2013’s No 1 risk is the second highest risk
in 2014. The improvement is due to the fact
that Gold Fields has shown in 2014 that it can
operate in a low gold price environment
The ‘loss of investor confidence’ risk, the
No 2 risk in 2013, was removed as a risk in
2014 and recorded as an implication of the
South Deep and gold price risks
Investor focus on Gold Fields’ management
of South Deep increased as a risk in 2014
amid the declining production of South Deep
between 2014 and 2013
The possible failure to deliver a 15% free
cash flow margin at US$1,300/oz remains a
high risk due to the continued decline in the
gold price
Since Gold Fields has met most of the 2010
Mining Charter targets the risk associated
with non-compliance has significantly
diminished. The results of the South African
government’s audit of mining companies’
Charter performances had not been
published by March 2015
The Gold Fields Integrated Annual Report 2014
StrAtEgic AnALySiS
51
FIGURE 3.6: Top 10 risks – Mitigating strategies
RISK
DESCRIPTION
MITIGATING STRATEGIES
1
2013: 3
2
2013: 1
3
2013: 4
4
2013: 20
5
2013: 16
6
2013: 6
8
2013: 5
9
2013: 11
10
2013: 13
South Deep -
Failure to deliver
the business plan
• Revised business plan set for 2015 by a new management team with
SEVErity
strong mechanised mining experience
• Trial application of two alternative mining methods with the potential for a
step-change in destress mining
• Implementation of the South Deep turnaround strategy
Lower gold
price and
volatility
• Ongoing portfolio optimisation to ensure cash-generation
• Increase in geographical and currency diversification
• Application of a strict stage-gate process to ensure the cash generation
potential of future growth projects
Non-achievement
of 15% free cash
flow margin at
US$1,300/oz.
Replacement
of Mineral
Resources and
Reserves outside
of South Africa
• Effective portfolio management to improve the free cash flow per ounce
• Implementation of comprehensive recovery plan at Damang and St Ives
• Business process re-engineering and continuous focus on cost control and
cash generation
• Comprehensive near-mine exploration plans in all other regions
• Examination of potential M&A opportunities
• Approval of further capital to support drilling at the Salares Norte Project
in Chile
Loss of ‘social
license’ to operate
• Ongoing targeting of M&A opportunities in lower risk mining jurisdictions
• Ongoing application of effective community relations structures in place in
all regions as well as societal value proposition strategies
Regulatory
uncertainty and
litigation
• Continued engagement, together with peer companies, with all
stakeholders on finding a comprehensive and sustainable solution
to address issues relating to compensation and medical care for
occupational lung disease in the gold mining industry in South Africa.
• Pro-active litigation/investigation management and defence.
ProbAbiLity
• Application of Energy and Carbon management strategies, plans and
targets at all operations
• Investigation of renewable energy options for all projects
• Major new agreement with Genser Energy for the supply of power to the
SEVErity
Damang and Tarkwa mines
• Favourable renewal agreements with power providers in Australia and Peru
• New load curtailment agreement with Eskom at South Deep without
ProbAbiLity
impacting production
• Five-year energy security plans required for each region in 2015
• Ensure continued compliance with SA’s Mining Charter and its SLP
• Continued engagement with the Department of Mineral Resources and
SEVErity
other key stakeholders
• Compliance with South Deep’s commitments and implementation of
Shared Value project, including mathematics and science-focussed
education initiatives
7
2013: 12
Energy security
and costs
Non-compliance
with South
Africa’s Mining
Charter and
Social & Labour
Plans
Disruptive labour
relations
• Plans to move to mine-level negotiation with organised labour at
South Deep
• Implementation of an enhanced union engagement strategy at South Deep
Employee health
and safety
• Ongoing implementation of safety strategies in all regions – including
behaviour-based safety programmes
• Comprehensive first-pass support programme at South Deep
• Continuously engaging to reinforce a robust health and safety culture
on-mine
2013 figure shows the ranking of each risk in the previous year
ProbAbiLity
SEVErity
ProbAbiLity
SEVErity
ProbAbiLity
SEVErity
ProbAbiLity
SEVErity
ProbAbiLity
SEVErity
ProbAbiLity
SEVErity
ProbAbiLity
SEVErity
ProbAbiLity
The Gold Fields Integrated Annual Report 2014 52
StrAtEgic AnALySiS
3.2 Risk and materiality (continued)
FIGURE 3.7: Top 5 risks – Australia region
Maximum
I
Y
T
R
E
V
E
S
4
1
3
2
5
Minimum
Maximum
PROBABILITY
RISK
DESCRIPTION
MITIGATING STRATEGIES
1
2
3
4
5
Reserve life at all
operations
• Significant near-mine exploration to delineate further reserves
and spend, commensurate with 1 million ounce production
profile
• Ongoing business improvement to achieve cost savings and
productivity gains necessary
Native title at
Kambalda
• Proceedings heard in March 2014, decision handed down in
July 2014. Appeal lodged in December 2014
• Legal team engaged to advance appeal to full Federal Court on
the strongest possible basis
Failure to achieve
delivery against
operational plans
• Annual strategic planning process to generate realistic mine
plans
• Weekly, monthly and quarterly monitoring of performance
Australian gold
price
Turnover of
key personnel
and impact on
operational
performance
• Target to be in lower quartile of Australian gold producers
• Monitor relationship between Australian Dollar and US gold
price
• Review and improvement of employee development
programmes
• Employee Value Proposition implementation
• Maintain current remuneration market position
FIGURE 3.8: Top 5 risks – West Africa region
Maximum
I
Y
T
R
E
V
E
S
3
2
1
4
5
Minimum
Maximum
PROBABILITY
RISK
DESCRIPTION
MITIGATING STRATEGIES
1
2
3
4
5
Gold price
volatility and
increasing
operating and
capital costs
• Ongoing implementation of business process re-engineering
initiatives
• Cost leadership and cost containment
• Fit-for-purpose structure
• Renegotiate supplier contracts
Erratic power
supply and load
shedding
• Independent Power Purchase Agreement with Genser Energy
• Ongoing consultations with national electricity utilities
• Increase generation capabilities from back-up generators
Tightened
fiscal policies
– pressure on
government to
reduce revenue
shortfall
Loss of
environmental
and social
licence to
operate
• Investment Agreement negotiation and implementation
• Frequent and direct engagement with government via Chamber
of Mines
• Public awareness and communication campaigns
• Successful tax audits by external auditors
• Enhanced Community Relations structures provided at
operations
• Frequent stakeholder engagement/relationship
• Community awareness campaigns
• Preparation for Akoben (environmental) audits
• Comprehensive environmental turnaround plans implemented
Increased
stakeholder
expectations
• Working with employees to improve productivity and provide a
basis for real wage increases as a trade-off
• Working with key suppliers to mitigate payment delays when
they occur
• Shared Value projects rollout
The Gold Fields Integrated Annual Report 2014 StrAtEgic AnALySiS
53
FIGURE 3.9: Top 5 risks – South Africa region
Maximum
I
Y
T
R
E
V
E
S
3
2
1
5
4
Minimum
Maximum
PROBABILITY
RISK
DESCRIPTION
MITIGATING STRATEGIES
1
2
3
4
5
Failure to
achieve the mine
plan
• Establish organisational discipline and performance
management systems
• Mine plan for 2015 revised to more achievable target
• Critical enabling projects identified with project leaders in place
Primary and
secondary
support
Training & skills
deficit at South
Deep
• One-pass support system to be introduced on completion of
the underground trials
• 4.5 x 4.5m destress cut pilot project in progress to facilitate
mechanised support
• Full plant tailings (FPT) infrastructure and commissioning
• Review of mechanised mining artisan requirements
• On-the-job operator training to advance competency levels,
including upgraded simulator training
• Accelerated training for managers and supervisors
• On-going management and supervisory leadership
development programmes
• Targeted technical skills training programmes aligned to
mechanised mining needs
Union and labour
relations
• Develop and implement a new wage strategy
• Improved management engagement process with labour
• New communication structures and channels introduced
Lack of
Heavy Mobile
Equipment (HME)
skills, availability
and utilisation
• Appoint HME manager to implement a new strategy
• Commission the new 93L workshop
• Implement fleet performance management system
• Implement maintenance management strategies, policies and
procedures
• Implement priority projects – short term gains to optimise
operations
FIGURE 3.10: Top 5 risks – Americas region
Maximum
I
Y
T
R
E
V
E
S
2
5
4
1
3
Minimum
Maximum
PROBABILITY
RISK
DESCRIPTION
MITIGATING STRATEGIES
1
2
3
4
5
Erosion of free
cash flow, price
volatility and
cost inflation
• Ensure continued delivery of the production plan
• Strict cost containment and reduction measures implemented
Poor conditions
of some local
houses
• Participation in government plan to repair damaged houses
• Priority repair for houses in very poor condition
• Ongoing monitoring of condition and maintenance programme
Increased social
pressures,
conflicts and
community
expectations
due to change in
authority
• Anticipation of community conflict through intensive
engagement
• Properly planned contingencies in place for conflict
• Stringent follow up and feedback on all commitments made to
communities
• Focussed and strong engagement with local authorities
Increase in
regulatory
scrutiny,
sanctioning
process and
inspections
Maintaining
throughput
• Aggressive process in place to challenge sanctions and
penalties
• Strict compliance with regulations through internal auditing and
constant monitoring
• SAG (Semi-autogenous grinding) mill analysis and eliminating
motor restrictions
• Implement process plant optimisation project
The Gold Fields Integrated Annual Report 2014 Plant at Darlot in Australia
4.1 Ensuring our mines deliver
4.1.1 Group operational performance
4.1.2 Regional operational performance
Energy and carbon management
4.1.3
4.2 Pursuing Zero Harm
4.2.1 Health and safety performance
4.2.2
Safety management
4.2.3 Health and wellness management
4.3 Promoting environmental stewardship
4.3.1 Managing impacts across the lifecycle
4.3.2 Water management
4.3.3 Regional water initiatives
4.3.4 Materials and waste management
56
56
59
62
67
67
67
69
72
72
73
74
76
4operations 56
PiLLAr: oPtiMiSing our oPErAtionS
4.1 Ensuring our mines deliver
In 2014, Gold Fields consolidated its position as a
this proactive strategy, Gold Fields is in a favourable position to
more focussed, leaner business by continuing with the
weather current low gold prices – particularly when compared to
restructuring commenced during 2013. The most obvious
many of its peers.
manifestation of this transformation was the 2013 unbundling of
the Company’s conventional, deep-level underground mines in
South Africa to create Sibanye Gold.
Gold Fields’ portfolio is now characterised by modern, fully
mechanised open-pit and underground mining – with diversified
production spread across three continents.
In this context, Gold Fields continued to focus on improving the
cash-generation performance of its existing operations. During
2014, this included:
• The avoidance of marginal mining – including the cessation
of all heap leach production at Tarkwa – whilst protecting the
commercial sustainability of its mines by eschewing high-
This supports our broader strategy focused on cash-generation
grading and investing in ore development on an ongoing basis
rather than ‘ounces for ounces sake’ – enhancing the Company’s
ability to generate free cash flow and delivering investors
superior value over the price of gold during 2014 through its
dividend policy and share price performance. As a result of
• Enhanced cost-efficiency at all of its operations
• Brownfields exploration for Life-of-Mine extensions
• Production and strategic planning based on the delivery of a
15% free cash flow margin at a gold price of US$1,300/oz
4.1.1 Group operational performance
FiGure 4.1: Group operational performance
key operating statistics
Gold produced – attributable (’000oz)
Revenue (US$m)
All-in Sustaining Cost (US$/oz)
All-in Cost (US$/oz)
Gold price (US$/oz)
Operating profit (US$m)
Operating costs (US$m)
Headline earnings (losses) (US$m)
Normalised earnings (US$m)
Cash flow (outflow) (US$m)
Free cash flow margin (%)
2014
2,219
2,869
1,053
1,087
1,249
1,191
1,685
27
85
235
13
2013
2,022
2,906
1,202
1,312
1,386
1,239
1,679
(81)
58
(235)
n/a
2012
2,031
3,531
1,310
1,537
1,656
1,879
1,674
350
409
(280)
n/a
Tailings facility at Cerro Corona in Peru
The Gold Fields Integrated Annual Report 2014
PiLLAr: oPtiMiSing our oPErAtionS
57
PRODUCTION
COSTS
• What Gold Fields said it would achieve in 2014: 2.20 million
• What Gold Fields said it would achieve in 2014:
attributable gold equivalent ounces
• What Gold Fields did achieve in 2014: 2.22 million
attributable gold equivalent ounces
In 2014, attributable gold production increased 10%
to 2.22 million ounces (2013: 2.02 million ounces). This reflected:
– AiSc of uS$1,125 per attributable gold ounce
– Aic of uS$1,150 per attributable gold ounce
• What Gold Fields did achieve in 2014:
– AiSc of uS$1,053 per attributable gold ounce
– Aic of uS$1,087 per attributable gold ounce
• Higher production in Australia, following the integration of the
Yilgarn South Assets
• Improved production performance at Damang
• Higher production at Cerro Corona, as a result of increased
plant throughput and improved copper grades leading to
higher gold equivalent ounces
In 2014, the All-in Cost (AIC) of US$1,020/oz at Gold Fields’
seven international mines was well below the year’s historically
low average gold price of US$1,249/oz (2013: US$1,386/oz) –
producing a free cash flow margin of 14%. This compares
favourably to the Group goal of a 15% free cash flow margin at a
gold price of US$1,300/oz. This performance reflects:
The improved production performance was achieved despite:
• A four-month production slowdown at South Deep, as a result
of secondary ground support remediation work (p60)
• Lower production at Tarkwa following the closure of its heap
leach facilities
The addition of the Yilgarn South Assets to Gold Fields’ portfolio
means the Australia region is now Gold Fields’ largest source of
production. During 2014 production was distributed as follows
(2013 numbers are for Q4 2013 annualised):
• Americas: 15% (2013: 13%)
• Australia: 46% (2013: 43%)
• South Africa: 9% (2013: 13%)
• West Africa: 30% (2013: 31%)
Gold Fields’ production guidance for 2015 is around 2.20 million
ounces.
• The robust nature of Gold Fields’ leaner, more focussed
portfolio – including the 2013 unbundling of its mature,
conventional mines in South Africa
• The 2013 acquisition of the Yilgarn South Assets, their
successful integration and subsequent operational cost and
production improvements, helped lower the Group’s average
production costs
• Greater cost-efficiencies at all of the Group’s mines
At South Deep, however, AIC was US$1,732/oz. This reflected
the fact that the mine is still in development – as well as a
number of short-term production disruptions (including the four-
month secondary support remediation programme).
Overall, Group AIC was US$1,087/oz (2013: US$1,312/oz),
while Group All-in Sustaining Cost (AISC) was US$1,053/
oz (2013: US$1,202/oz). This places the Company amongst
the lowest-cost producers in the industry – and reflects the
successful execution of the following key policies:
FIGURE 4.2: Attributable gold production
’000oz
FIGURE 4.3: All-in Costs
US$/oz
FIGURE 4.4: Net Cash Flow
US$ million
2,031
2,022
2,219
2,500
2,000
1,500
1,000
500
0
1,537
1,312
1,087
2,000
1,500
1,000
500
0
2012
2013
2014
2012
2013
2014
300
150
0
(150)
(300)
235
(280)
2012
(235)
2013
2014
The Gold Fields Integrated Annual Report 2014 58
PiLLAr: oPtiMiSing our oPErAtionS
4.1 Ensuring our mines deliver (continued)
MANAGEMENT OF CAPITAL EXPENDITURE
Gold Fields rationalised and prioritised capital expenditure
without undermining the sustainability of its operations and ore
bodies – and despite an increase in the near-mine exploration
expenditure of its Australian mines during the year. As a result,
actual capital expenditure was US$609 million – 12% below
planned expenditure for the year (US$695 million) and 18%
below actual capital expenditure in 2013 (US$739 million).
South Deep experienced a sharp drop in capital spending from
US$202 million in 2013 to US$92 million in 2014 as most of the
infrastructure investment at the project was completed by 2013.
FOCUS ON CASH FLOW MANAGEMENT
The continued prioritisation of cash-generation over production
volumes supported a reduction in marginal mining across the
Group. Specific actions in 2014 included:
• Closure of Tarkwa’s marginal North Heap Leach facility
• Increased focus on the mining of higher-grade deposits –
without compromising the long-term sustainability of each
mine
WORKFORCE RESTRUCTURING
Gold Fields continued to optimise its low-cost operating model
during 2014 – including through reductions in labour costs.
Specific actions included:
• The implementation of voluntary retrenchments at South Deep
– resulting in 529 redundancies
• Retrenchments in Ghana following the closure of Tarkwa’s
heap leach facilities and the transition to a two-shift system at
Damang – with 628 people affected at both mines
• Continued rightsizing of our Australian operations, following
the Yilgarn South acquisition, affecting 98 employees at the
four mines
Overall, the size of the workforce decreased 8% to 15,440
employees and contractors (2013: 16,852). Despite the regretful
impact on those who have been retrenched, the restructuring
has helped to deliver a leaner, more efficient workforce – as well
as fit-for-purpose regional management teams.
RATIONALISATION OF GOLD FIELDS’ GROWTH PORTFOLIO
Gold Fields applied a strategy of Active Portfolio Management
through which it continued to divest itself of growth assets that
are not aligned to its long-term financial and strategic objectives.
In 2014, this included:
• The sale of its 85% stake in the Yanfolila Project in Mali to
Hummingbird Resources (p88 – 89)
• The sale of its 51% stake in the Chucapaca Project in Peru to
Buenaventura (p88 – 89)
• The sale of the Talas Project in Kyrgyzstan and the Asosa
Project in Ethiopia (p88 – 89)
• The decision to dispose of the Arctic Platinum Project in
Finland and the Woodjam project in Canada (p88 – 89)
Furthermore, almost all greenfields exploration has been halted – with
focus instead being placed on near-mine growth. As a result, growth-
related expenditure dropped by 70% to US$36 million (2013:
US$122 million). The 2013 disbandment of the Group-level Growth
and International Projects (GIP) team – and the devolution of
responsibilities for growth and exploration to the regional level – has
also had a material impact on Group costs. The Group also raised
US$107 million through the disposal of assets (p80).
For 2015 Gold Fields has provided guidance for AISC of
US$1,055/oz and an AIC of US$1,075/oz – reflecting a continued
decline in capital expenditure at South Deep, as most of the
infrastructure investment has been completed, as well as further
cost-efficiencies across the Group. Total capital expenditure for
2015 is forecast at US$660 million (2014: US$609 million).
Causeways onto Lake Lefroy, at the St Ives gold mine
The Gold Fields Integrated Annual Report 2014 PiLLAr: oPtiMiSing our oPErAtionS
59
4.1.2 Regional operational performance
This section provides a summary of the 2014 performance at
each of Gold Fields’ regions. Further details can be found in the
online operational overviews.
Nonetheless, higher production in Australia was partially offset
by disruptions at St Ives, including higher-than-average rainfall
in Q1 2014, which inhibited open-pit operations at the Neptune
operation, the closure of the underground Argo operation in
Q1 2014 and a lower underground head grade.
AMERICAS
Production at Cerro Corona increased 3% – to 326,600 gold
equivalent ounces (2013: 316,700 gold equivalent ounces).
This performance was primarily due to:
• An increase in the overall amount of ore processed, helped by
a lower strip ratio
• Improved copper grades treated at the mill
Nevertheless, higher production was partially offset by the
presence of secondary copper, leading to a decrease in copper
recovery.
Cerro Corona remained the Group’s lowest-cost operation, with
an AIC per ounce of gold sold of US$316/oz (2013: US$206/oz).
AIC, gross of copper credit per equivalent ounce of gold sold,
was US$702/eq-oz (2013: US$713/eq-oz).
AUSTRALIA
All four mines in Western Australia – Agnew/Lawlers,
Darlot, Granny Smith and St Ives – reported stable or
improved production, while reducing their operational costs.
This demonstrates the ability of these mines to significantly
enhance the overall quality of Gold Fields’ production portfolio.
In 2014, regional production increased 47% – to
1,031,000 ounces (2013: 700,200 ounces). The increase was
largely attributable to:
• The inclusion of the Yilgarn South Assets for the full year of
operation as opposed to only one quarter in 2013
• Ongoing operational optimisation at Agnew/Lawlers and Darlot
• An outstanding production performance from Granny Smith
through reduced dilution, higher in-situ grades and greater
mining recoveries. The enhancement of Granny Smith’s
process plant recovery from around 88% to 93% through
improved process flow controls and replacement of larger
cyclones with smaller cyclones – in line with the lower volumes
– also contributed to improved output from the mine
• Integration of the Agnew and adjacent Lawlers mines to
realise processing synergies – including the channelling of
ore from Lawlers to Agnew’s processing plant, and the placing
of Lawlers’ own processing plant into care and maintenance.
Merging the two mines also allowed on-site overheads to be
reduced
• The rightsizing at Darlot with reduced tonnage at higher
grades than previous years
In 2014, the Australia region’s AIC improved by 7% to
US$1,015/oz (2013: US$1,094/oz). This was mainly due to:
• A strong cost performance by Granny Smith with both mining
costs and processing costs lower than in previous years
• Lower capital expenditure at St Ives
• Staff redundancies across all four mines
SOUTH AFRICA
The South Deep mine in South Africa, which has one of the
largest known gold ore bodies in the world, represents a
key opportunity for the Group to create long-term value for
shareholders. Indeed, with the rest of the Group’s portfolio
performing to expectations, the successful delivery of South
Deep – which accounts for 59% of the Group’s Mineral
Resources and 73% of Mineral Reserves – is Gold Fields’
top priority.
2014 has been a challenging year for South Deep with the
project’s build-up interrupted by an unplanned four-month long
ground support remediation intervention, necessitated by safety
considerations – as well as three fatal accidents.
To enable the delivery of South Deep, Gold Fields has adopted
a focussed ‘getting the basics right’ programme aimed at
addressing the key obstacles that have prevented South Deep
from realising its full potential. Mechanised mining at depth
has limited industry precedent globally and by necessity the
operating model continues to evolve as mining processes and
practices are refined. The key components of this programme,
which is discussed in more detail below, are:
• A prioritised focus on delivering short-term objectives instead
of long-term build-up targets
• The adoption of specific key deliverables for 2015, the most
important of which is to urgently address the critical shortage
of mechanised mining and supervisory skills
• Achieve cash breakeven during the latter half of 2016
2014 operating performance
During 2014 production decreased 34% to 200,500 ounces
(2013: 302,100 ounces) and AIC dropped 2% to
US$1,732/oz, against guidance for the year of 360,000 ounces
at an AIC of US$1,290/oz. The significant drop in production was
mainly attributable to:
The Gold Fields Integrated Annual Report 2014 60
PiLLAr: oPtiMiSing our oPErAtionS
4.1 Ensuring our mines deliver (continued)
• The introduction, late in May, of the extensive safety-related
ground support remediation intervention, effectively limiting
access to 70% of the current mining areas, from which a
significant proportion of current production is sourced.
This intervention led to the deferral of approximately
48,225 ounces of production and will have a knock-on effect
for production in 2015.
• The tragic death of three employees in May and July 2014
(p26) led the Department of Mineral Resources (DMR) to
impose Section 54 stoppages to investigate the causes of
the fatalities. This led to the deferral of about 16,000 ounces
of production. Gold Fields also instituted comprehensive
reassessments of working practices to ensure that these type
of accidents are avoided in future.
As a result of the ground support remediation intervention and
the Section 54 orders:
• In aggregate 64,225 ounces of production was deferred
during 2014
• Destress mining fell by 46% during 2014 from 53,700m2 to
29,000m2
• The opening up of long-hole open stopes was delayed, as
was the ancillary backfill programme
Both production and the level of destress mining recovered
again during Q4 2014 by 16% and 200% respectively.
Despite the lower production during 2014, South Deep made
significant progress with the restructuring of its cost base, with
operating costs reduced by about 14% to R2.66 billion. The cost
savings were driven primarily by:
2014 intervention
Late in 2013 Gold Fields, supported by a team of mechanised
mining experts from Australia and a Canadian engineering firm
specialising in mechanised mining, concluded a comprehensive
mine-wide review of all aspects of the mine, including all safety
protocols, procedures and standards.
The key finding of the review was that, while the ore body
was well understood and the physical infrastructure on the
mine was of high standards, the transition of the mine from
the development phase to the operational phase was being
impeded by:
• A lack of specialised mechanised mining and supervisory
skills in South Africa
• The inadequate availability and utilisation of the mining fleet
• Ore handling and logistical constraints underground
The review concluded that significant short term interventions
were required to achieve long term production targets.
Following the review South Deep implemented a comprehensive
transformation process aimed at addressing the shortcomings
identified during the review.
In order to address the immediate skills shortage at South Deep,
the following three-pronged strategy was adopted:
• The appointment of a new management team, supported by
26 mechanised mining specialists from Australia in training
and mentorship roles in various mining-related disciplines.
• A medium-term strategy of recruiting skills from the limited
• A voluntary separation programme – agreed to with the
mechanised mining skills pool in South Africa, was adopted.
trade unions – through which 529 employees (or 14% of the
workforce) opted for voluntary retrenchment
• Adoption of an intensive mechanised mining training
programme to address the mine’s long-term skills
• Rationalisation of the underground fleet by removing surplus
equipment and vehicles, leading to lower maintenance costs,
consumables and contractor costs
Other developments during 2014 and Q1 2015 included:
• A revision of South Deep’s shift roster to improve productivity
and safety performance, following an agreement with the trade
unions. This led to the reinstitution of the 7-2/7-5 (seven days
on, two days off followed by seven days on, five days off)
work roster
• Completion of the centrally located mega-workshop on
93-level during Q1 2015, which will help to improve equipment
availability and reduce maintenance-related transit times
in future
• Upgrading of underground haulage roads
• The completion of a new ore pass from 95-level down to
100-level
• A comprehensive review of the regional support pillar
configuration to ensure appropriate mine design and layouts
• Modelling of pilot mining projects to assess the potential
future application of the 4.5m x 4.5m destress and incline
slot mining methods.
requirements
The Australian intervention had a number of positive outcomes,
in particular the rationalisation of the mining fleet; the rightsizing
of the employee complement; and the identification of the need
for the safety-related ground support remediation programme.
Its success, however, was limited by a lack of acceptance of the
Australian team by South Deep’s various stakeholder groups.
It was therefore decided to accelerate the recruitment of
leadership skills from South Africa’s mechanised mining skills
pool. By the end of 2014 a new management team, with
extensive mechanised mining experience in the South African
platinum sector, was recruited, headed by Nico Muller as
Executive Vice-President of the South Africa region. In addition,
we have retained a small part of the Australian team to assist
with ongoing training and skills transfer.
A compelling business case
The South Deep mine remains a strategic imperative for Gold
Fields. Since obtaining full ownership of South Deep in April
2007, Gold Fields has significantly advanced its understanding
of and confidence in the ore body.
The Gold Fields Integrated Annual Report 2014 PiLLAr: oPtiMiSing our oPErAtionS
61
In addition, South Deep is almost fully capitalised. Since 2007,
• Cash burn reduction: During 2014 South Deep had a
Gold Fields has built most of the infrastructure needed to
negative cash flow of US$116 million. By achieving the
support the build-up to full production. Of the initial project
above production and cost targets, the cash burn for 2015 is
capital expenditure of approximately R9 billion approved in
expected to reduce, assuming rand gold prices in early 2015
2009, 85% has been spent. Approximately R1.2 billion in 2009
continue to prevail for the remainder of the year. The objective
money terms (R1.7 billion in 2015 terms (US$170 million))
is to work towards cash breakeven in the latter part of 2016.
remains to be spent over the next 10 years.
The impediments to the build-up of South Deep therefore
do not relate to the integrity of the ore body or the installed
infrastructure, but rather to the mining and production
processes. The focus during 2015 and 2016 will be on fixing the
inputs to these processes, such as the availability of adequate
mechanised mining skills and the improvement of front-line
supervision.
This will in turn feed into improved production systems and
processes such as fleet maintenance and availability, destress
mining, and opening up of the ore body. Once these basic
building blocks have been put in place and are performing to
standard, we will have better resolution on what is possible in
terms of the medium to long-term build-up. Until then though
South Deep will not provide any production forecasts beyond a
one-year guidance.
• Short-term skills recruitment: With the senior leadership
team now in place, South Deep will seek to hire middle
management and supervisory skills with the appropriate
mechanised mining skills and experience
• Medium to long-term skills pipeline: Establish industry-leading
training capacity to provide a pipeline of appropriate skills,
which will also be impacted by the growing competition for
mechanised mining skills in South Africa
• Mining discipline: Instil a disciplined mechanised mining
culture with greater understanding of and adherence to the
appropriate systems and processes
WEST AFRICA
In 2014, production at Gold Fields operations in Ghana
decreased 6% to 736,000 ounces (2013: 785,300 ounces).
This performance reflected further restructuring of the Tarkwa
and Damang mines during 2014, to maximise cash generation
by focussing on lower volume, higher-margin mining and
The key performance indicators for the mine management team
processing.
for 2015 are the following:
• Production: A 15% increase in production to approximately
230,000 ounces and reducing the AIC by 15% from US$1,732/oz
to about US$1,470/oz. This guidance for 2015 does not assume
any productivity improvements beyond what was realised in 2014.
Strict cost control measures and retrenchments at both
operations helped reduce AIC in the West Africa region. In 2014,
AIC improved 19% to US$1,094/oz (2013: US$1,343/oz).
Crushed ore stock pile at Damang Gold Mine in Ghana
The Gold Fields Integrated Annual Report 2014 62
PiLLAr: oPtiMiSing our oPErAtionS
4.1 Ensuring our mines deliver (continued)
Optimising production at Tarkwa
4.1.3 Energy and carbon management
During 2014, production at Tarkwa – the largest gold producer in
the Group – decreased 12% to 558,300 ounces (2013: 632,200
ounces). This reflected:
• The cessation of all heap leach operations at the mine – with
all ore now being processed through Tarkwa’s existing, high-
recovery Carbon-in-Leach (CIL) plant
• Higher-than-average rainfall during Q1 2014, which reduced
total tonnes mined from Tarkwa’s open-pits
• A shortage of blasted ore at Tarkwa due to poor drill rig
availability between Q1 and Q3 2014 – with performance
recovering in Q4 2014
This was partly offset by an overall improvement in process
plant performance – including throughput of 13.4 million
tonnes against a plan of 12.3 million tonnes, and an increase in
recovery to 97.2%.
In 2014, AIC at Tarkwa dropped by 17% to
US$1,068/oz (2013: US$1,291/oz). This was mainly due to
optimisation of the CIL plant, enhanced contractor management
and effective cost controls.
Sustained recovery at Damang
Damang experienced a significant improvement in operational
performance during 2014, following extensive restructuring at
the mine to ensure its commercial sustainability. As a result,
Total Group energy cost increased to US$361 million in 2014
(2013: US$305 million), comprising 21% of Group operating
costs in 2014 (2013: 18%). This proportion is likely to rise in a
global context of increasing energy demand and constraints on
supply. As such, energy management remains a top priority – in
terms of controlling both costs and carbon emissions as well as
ensuring security of supply.
INTEGRATED ENERGY AND CARBON MANAGEMENT
STRATEGY
Gold Fields integrates energy and carbon management into
all aspects of its business through its Integrated Energy and
Carbon Management Strategy. This strategy seeks to ensure
energy security; decrease carbon emissions; explore immediate-
and long-term energy efficiency opportunities; and investigate
viable sources of alternative energy.
Gold Fields remains committed to renewable energy solutions at
both its operations as well as new mine developments. For the
latter, we have set a target of an average of 20% renewable
energy generation for all new mine developments.
Energy and carbon performance was integrated into the
balanced scorecards of senior and line management in 2014,
while energy security – including the evaluation of renewable
energy – is contained in the Group Scorecard for 2015 (p23).
production at Damang increased 16% to 177,800 ounces
During 2014, each region was required to:
(2013: US$153,100 ounces), while AIC decreased 25% in 2014
to US$1,175/oz (2013: US$1,558/oz). This was mainly due to:
• Establish energy and carbon baselines
• Set targets for reducing energy consumption and carbon
• A focus on high-quality mining
• A higher head grade, which was up from 1.3 g/t to 1.5g/t, as a
emissions until 2016 and develop strategies to achieve those
targets
result of improved mining and reduced dilution
• Improved recovery as a result of the installation of an
additional CIL tank
• Transition from a three-shift mining system to a two-shift mining
system – with a commensurate reduction in the workforce by
around 130 employees
• Lower capital expenditure
In 2014, mining activity at Damang was focussed on areas with a
lower-strip ratio – while production levels were maximised by
reducing dilution and focussing on the optimum cut-off grades
over the lifespan of the mine. Despite these interventions, in
2014 Damang’s mine grade was still below the estimated reserve
grade. In addition, production was affected by unplanned mill
stoppages in Q2 and Q3 2014, resulting in the temporary
shutdown of all processing at the mine for seven days.
Despite these challenges, Damang consolidated its return to
profitability in 2014 – following a loss-making position in 2013.
It is now expected to generate cash flow at current gold prices
for at least the next few years.
• Integrate performance indicators based on energy and carbon
performance into the balanced scorecards of management
In line with these requirements, the regions finalised new energy
and carbon emission baselines in 2014 – as well as associated
energy and carbon reduction targets (with defined strategies to
achieve them). The regions’ 2014 energy performances, as well
as their targeted reductions (which were subject to an external
review), are set out below:
• Americas: During 2014, Cerro Corona achieved a reduction
in diesel consumption intensity of 12% (TJ/MT mined) against
a target of 12% and a reduction in electricity consumption
intensity of 6% (TJ/MT processed) against a target of 8%,
leading to savings of US$4.3 million in energy costs.
Actual diesel consumption (in TJ) was reduced by 24% to
357 TJ and electricity consumption (in MWh) by 3% to 143,441
MWh. A total reduction in carbon dioxide emissions of 13.6%
was achieved against a target of 15.5%. All targets are
against a baseline year of 2013.
• Australia: As a result of the acquisition of the Yilgarn South
Assets in October 2013, net diesel consumption increased by
129% in 2014 to 2,696 TJ and electricity consumption by 27%
to 296,989 MWh.
The Gold Fields Integrated Annual Report 2014 PiLLAr: oPtiMiSing our oPErAtionS
63
But the elimination of marginal mining at the Australian
operations and campaign milling at Granny Smith
have already led to significant improvements in energy
efficiency. A 9% (GJ) reduction in energy (electricity and
diesel) consumption and a 7% reduction in carbon emissions
by 2016 have been targeted for the region (using a 2012
baseline year for St Ives and a 2013 baseline year for Agnew/
Lawlers, Granny Smith and Darlot). Energy savings of
A$10 million were achieved for 2014. Of this A$6 million was
a result of mine optimisation while A$3.9 million resulted from
specific energy efficiency projects.
• west Africa: At our two Ghanaian mines net diesel
consumption declined by 21% in 2014 to 2,926 TJ and
electricity consumption dropped by 6% to 420,878 MWh.
Targets for an 8.5% (GJ/oz) reduction in energy (electricity
and diesel) consumption and a 5% reduction in carbon
emissions have been set for the Tarkwa and Damang mines
for 2016 (using a 2014 baseline year). Energy savings in
2014 amounted to US$4.7 million as a result of energy
efficiency initiatives.
As South Deep is still in development, the project has not yet set
reduction targets under the strategy. Nonetheless, as production
ramps up:
Cerro Corona was particularly successful in reducing its overall
energy consumption and associated costs, with the mine’s
strong performance being driven by a number of initiatives,
including the replacement of some of its heavy mining fleet with
smaller trucks and excavators and the reduction in the amount
of ore, waste rock and quarry material being moved at the
mine. Nevertheless, Cerro Corona’s future energy consumption
is expected to rise due to increased ore hardness and greater
hauling distances.
The Australia region also delivered a strong performance in
2014 in term of reducing energy consumption, which was
largely the result of a reduction in energy demand at St Ives’
processing plant due to more efficient dilution processes – as
well as improved energy efficiency at Granny Smith due to
campaign milling.
Meanwhile, the implementation of a fuel management system
helped to reduce diesel consumption in the West Africa region.
This involved the modification of pit water pumps and pit
lighting plants, the collection and utilisation of fuel data, and the
implementation of new diesel flow meters.
REGIONAL ENERGY SECURITY
• The energy consumption and the carbon emissions are likely
to increase by a compound annual growth rate (CAGR) of 4%
from a 2013 actual to a 2016 forecast.
Given the relatively energy-intensive nature of mining and
processing, it is essential that each of Gold Fields’ mines
benefits from a stable and affordable supply of power. This
• Over the same period the intensity per ounce is likely to
is explicitly recognised in Gold Fields’ Integrated Energy and
decrease by 12% and intensity per ton mined/milled by 6%,
while emissions per ounce are likely to decrease by 13% and
per ton mined/milled by 7%.
Carbon Management Strategy. Energy security is a particular
challenge in more remote locations – and where operations
compete with other commercial and domestic users for finite
Actual electricity consumption last year declined by 13% to
476,767 MWh as a result of lower production at the mine.
reGionAl enerGy eFFiciency initiAtiveS
The combination of the lower gold price, rising energy costs in
most regions and the implementation of carbon taxes in some
countries means it is imperative for Gold Fields to reduce its long-
term energy consumption. In 2014, each of Gold Fields’ regions
implemented a range of energy efficiency initiatives – in line with
the Integrated Energy and Carbon Management Strategy.
supplies.
Each region has been tasked with submitting a five-year
energy security plan during 2015. The potential for renewable
energy generation at each operation will again be reviewed as
part of these plans, as renewable energy is becoming more
cost-effective and an increasingly competitive alternative to
conventional power sources. The use of renewable energy is
also considered a key aspect of reducing the Group’s carbon
emissions.
FIGURE 4.5: Group direct and indirect energy consumption
TJ (terajoules)
FIGURE 4.6: Group energy intensity
GJ (Gigajoules)
12,000
10,000
8,000
6,000
4,000
2,000
0
5,834
5,593
6,180
4,984
4,976
4,817
5.50
4.40
3.30
2.20
1.10
0
5.11
5.26
4.56
0.05
0.05
0.07
2012
2013
2014
2012
2013
2014
Indirect
Direct
GJ/Tonnes mined
GJ/oz mined
The Gold Fields Integrated Annual Report 2014 64
PiLLAr: oPtiMiSing our oPErAtionS
4.1 Ensuring our mines deliver (continued)
The Americas
South Africa
In 2014, Gold Fields extended its electricity supply agreement
South Deep remains reliant on public energy utility Eskom for
with private utility Kallpa to supply power to the mine until
100% of its power supply. However, Eskom continues to face
2027 – significantly increasing Cerro Corona’s long-term
power supply constraints, due to:
energy security.
Australia
The remoteness of Gold Fields’ Australian operations means
they have limited power supply options. In June 2014, a power
purchasing agreement (PPA) was finalised with BHP Nickel West
for Agnew/Lawlers – which will guarantee the energy supply until
31 May 2019.
St Ives has a 10-year PPA with BHP Nickel West – which will
guarantee the energy supply of the mine until 2023. Under the
PPA, Gold Fields purchases power from BHP Nickel West at a
higher price than that set previously, reflecting higher natural gas
prices. The structure of the PPA allows for the pursuit of cost
efficiencies through a reduction in the fixed demand charge.
It also provides flexibility in terms of connecting additional points
of supply. This includes, for example, the Cave Rocks operation
at St Ives, which currently uses diesel generators.
• Historical under-investment in generating capacity
• A maintenance backlog on the ageing generation fleet of
power stations
• Delays in the construction of the Medupi and Kusile coal-fired
power stations
In this context, Eskom carries out load-shedding across the
national grid whenever their available generation capacity cannot
meet national demand. South Deep has entered into a load-
curtailment programme with Eskom (rather than being subject
to load-shedding). This requires South Deep to reduce demand
by up to 25% – depending on the severity of the shortage – for
a specified period of time when the national grid is unable to
maintain its load. As South Deep is not operating at full capacity
it delays rock hoisting by storing ore underground and delays
milling until after those load curtailment periods. As such the
mine managed to maintain essential mining activities without
interruption and the impact on production and development
The PPAs at St Ives and Agnew/Lawlers are based on gas-
was limited.
generated electricity, which will help reduce the carbon intensity
of these mines. This is also the case for Darlot. Meanwhile,
Granny Smith is expected to receive its future energy supply
from a new gas pipeline, which has been constructed by the
nearby Tropicana mine to supply gas to its operations. Access
to this pipeline is subject to the construction of a gas power
station, successful negotiations on gas supply and regulatory
approval. This is scheduled to be completed by mid-2016 and
will significantly reduce costs and carbon emissions relative to
the current diesel generators on site.
Eskom is expected to increase its energy prices by around 13%
in 2015. South Deep will seek to mitigate the impact of any such
price rise through further energy efficiency improvements and
investigating the long-term feasibility of renewable and other
alternative energy sources. This will form part of its five-year
energy security plan that will be developed during 2015.
West Africa
Tarkwa and Damang continue to source their power from the
Volta River Authority (VRA) and the Electricity Company of
Ghana (ECG). Power supply in Ghana remains constrained due
to several factors. These include:
FIGURE 4.7: Group CO2 emissions - Scope 1, 2, 3
Tonnes
FIGURE 4.8: Emission intensity (Scope 1 and 2 only)
Tonnes CO2-e/oz
2,000,000
1,830,509
1,731,337
1,694,044
1,500,000
1,000,000
500,000
0
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
0.58
0.61
0.55
2012
2013
2014
2012
2013
2014
Scope 1 GHG emission
Scope 2 GHG emission
Scope 3 GHG emission
The Gold Fields Integrated Annual Report 2014 PiLLAr: oPtiMiSing our oPErAtionS
65
• Rising demand for electricity from industry in southern Ghana
• Seasonal fluctuations in rainfall, which can disrupt hydro-
• The taxes increasingly attached by governments to non-
renewable energy consumption
electric power generation
• Delays in the completion of Ghana’s planned Atuabo natural
gas processing plant
• Reduced gas imports via the West African Gas Pipeline due to
growing domestic demand in Nigeria
• Maintenance challenges at thermal power plants
In this context:
Historically, the company’s South African operations
accounted for the bulk of its carbon emissions. This was due
to its previous ownership of the power-intensive, deep-level
underground Beatrix and KDC mines – as well as Eskom’s
reliance on carbon-intensive coal generation.
Following the unbundling of Beatrix and KDC – as well as the
acquisition of the Yilgarn South Assets – the Group has a lower,
• Daily load-shedding of between 25% – 30% of the mines’
more ‘balanced’ carbon profile. Gold Fields is undertaking
electricity consumption was introduced during Q4 2014 and
a number of carbon and climate change management and
could persist well into 2015
reporting initiatives – in addition to its broader efforts to reduce
• Both the VRA and ECG are expected to impose further
its overall energy consumption and carbon emissions (p62 – 63).
increases to the electricity tariff
• The ECG has implemented controlled load-shedding,
Carbon disclosure and renewable energy
requiring Damang to use on-site diesel generators during
Gold Fields responds on an annual basis to the international
specific periods
Such challenges are likely to grow in the medium term, given
that electricity demand in Ghana is expected to surpass national
generation capacity by 2020.
To address the current load-shedding requirements Tarkwa and
Damang initiated a number of actions:
• Securing additional surplus power (5 – 7MW) from Unilever
• Making more extensive use of generators, amid lower diesel
prices
• Implementing a load-shedding schedule to optimise power
consumption
In the medium to long term Gold Fields has entered into a
10-year PPA with independent US-based power producer
Genser Energy. Under the PPA, Genser will commission a
near-site clean coal power-generation facility at Tarkwa in 2016.
The delivery of power will begin in Q2 2015 from an alternative
Genser plant while the new facility is being completed. It will
eventually replace all or a significant proportion of Tarkwa and
Carbon Disclosure Project’s (CDP) climate change and water
questionnaires. This information – along with that of other
organisations – is aggregated to produce the Carbon Disclosure
Leadership Index (CDLI) and Carbon Performance Leadership
Index (CPLI).
In 2014, Gold Fields achieved a disclosure score of 96% in the
CDLI and obtained a ‘B’ rating in the CPLI. The rating represents
a decline from previous years – including an ‘A’ rating in 2013.
This decline in performance is due to:
• The 2014 rebasing of energy and carbon management targets
due to Group restructuring in 2013 – as well as temporary
delays to associated energy efficiency projects
• The loss of the Beatrix methane project and the biomass-to-
energy project at KDC following the Sibanye Gold unbundling
• The discontinuation of a planned 30MW biomass power plant
project at Tarkwa for economic reasons
Gold Fields continues to examine potential renewable energy
opportunities, in light of:
Damang’s current supply from the VRA and ECG. During the
• Challenges posed by remote, off-grid growth projects, such
first two years of operation, Genser will supply 51MW of power,
as Salares Norte in Chile
representing Gold Fields’ total electricity demand in Ghana.
Over the 10-year contract, the PPA could potentially save around
• Improving renewable energy economics, which are being
driven by technological advances – as well as growing
47% on the cost of power currently supplied by the VRA and
economies of scale within the sector
ECG. The PPA will, however, increase the Company’s carbon
• The ability of a diversified energy mix to enhance operational
emissions, by replacing electricity currently generated through
energy security
hydropower with coal-generated electricity.
• The potential for offsetting future carbon taxes and/or
CARBON EMISSIONS AND CLIMATE CHANGE
Carbon emissions and climate change represent a material issue
for Gold Fields. This is due to:
generating carbon credits
• The ability of renewable energy projects to offer positive
legacies to local communities and create Shared Value
Carbon taxes
• The long-term risks posed by climate change both to its own
operations and to wider society
Governments around the world are considering the benefits of
increased carbon regulation and taxation, as demonstrated in
• Growing efforts to regulate carbon emissions in a range of
Australia and South Africa.
jurisdictions
The Gold Fields Integrated Annual Report 2014 66
PiLLAr: oPtiMiSing our oPErAtionS
4.1 Ensuring our mines deliver (continued)
Australia
South Africa
In July 2014, Australia’s new coalition government repealed
The South African government continues to pursue plans to
the Carbon Pricing Mechanism (CPM) – which had been
impose a carbon tax on mining and other carbon-intensive
implemented under the previous administration in 2012. Under
industries, but has not provided a detailed plan to date. Under
the CPM, the Agnew/Lawlers, Granny Smith and St Ives mines
the government’s draft Carbon Tax paper, the tax will be
had faced reductions of their diesel rebates – which would have
implemented in early 2016 at a starting price of R120 (US$11)
significantly increased their energy costs. Darlot exceeded the
25 000 tonne CO2 emission threshold for 2014. As such Gold
Fields will offset that liability through the purchase of carbon
per tonne, but offers as yet unspecified relief measures.
Based on our analysis of the draft bill, if South Deep is liable
to pay carbon tax, this is expected to be done over 40% of
units at a total cost of A$608 555. Although the carbon tax
the mine’s Scope 1 emissions (direct emissions that are the
legislation is no longer applicable, we need to settle our account
result of its operations). On this basis the potential tax liability
for the period July 2013 to June 2014. Although Gold Fields
in 2016 is estimated at R335,000 (US$30,000). The industry
supports efforts to reduce global carbon emissions, it believes
continues to engage with government on alternative ways to
that more economically sustainable approaches to carbon
positively address carbon emissions.
management in Australia are appropriate.
Laboratory testing of metal concentrations at Granny Smith in Australia
The Gold Fields Integrated Annual Report 2014
PiLLAr: oPtiMiSing our oPErAtionS
67
4.2 Pursuing Zero Harm
Gold Fields continues to uphold its promise, “if we cannot mine
GROUP SAFETY PERFORMANCE
safely, we will not mine”. This reflects the need to minimise
any potential negative impact on people, maintain operational
continuity and protect the Company’s reputation. Gold Fields’
Group annual performance bonus contains a 20% safety
component. Furthermore, maintaining safe and healthy working
conditions is a key compliance issue for the Company.
As stated in its Occupational Health and Safety Policy, Gold
Fields strives for ‘Zero Harm’ at all of its operations – and to
minimise occupational health and safety hazards. All of the
Group’s operations are now certified to the OHSAS 18001
international health and safety management standard. This
FiGure 4.9: Group safety performance
TRIFR1
Fatalities
Lost Time Injuries2
Restricted Work Injuries3
Medically Treated Injuries4
Total Recordable Injuries
Man-hours
2014
4.04
3
75
84
38
200
49,456,833
2013
4.14
2
52
73
54
181
43,767,818
follows the 2014 certification of Granny Smith and Darlot – both
of which were acquired from Barrick Gold in Q4 2013. The
1 Total Recordable Injury Frequency Rate (TRIFR) Group safety metric was
introduced in 2013. TRIFR = (Fatalities + Lost Time Injuries + Restricted Work
Injuries + Medically Treated Injuries) x 1,000,000/number of man-hours worked.
Lawlers mine, also acquired from Barrick, was certified through
2 A Lost Time Injury (LTI) is a work-related injury resulting in the employee or
its merger with Agnew. In addition, all Gold Fields operations are
now fully compliant with the requirements of the International
Cyanide Management Code (ICMC).
All of Gold Fields’ regional operations are required to implement
health, safety and wellness strategies, together with associated
action plans. These address:
• Occupational safety
• Occupational health
• Employee wellness
• Community health and wellbeing
In addition, these strategies and action plans define relevant
management structures, resource allocations and reporting
requirements.
4.2.1 Health and safety performance
contractor being unable to attend work for a period of one or more days after the
day of the injury. The employee or contractor is unable to perform any of his/her
duties.
3 A Restricted Work Injury (RWI) is a work-related injury sustained by an employee
or contractor which results in the employee or contractor being unable to perform
one or more of their routine functions for a full working day, from the day after the
injury occurred. The employee or contractor can still perform some of his/her
duties.
4 A Medically Treated Injury (MTI) is a work-related injury sustained by an employee
or contractor which does not incapacitate that employee and who, after having
received medical treatment, is deemed fit to immediately resume his/her normal
duties on the next calendar day, immediately following the treatment or
re-treatment.
During the reporting period, the Group’s overall TRIFR improved
3% to 4.04 per million man-hours (2013: 4.14). This reflected:
• Improved safety performance at South Deep (although this
was partly linked to slowdown in production during the four-
month remediation programme)
• Improved safety performance in Australia following the
implementation of a behavioural-based health and safety
MEASURING PERFORMANCE
strategy
In 2014, Gold Fields continued to focus on implementing
its Group Safety Reporting Guideline, which is based on
the International Council on Mining and Metals (ICMM)
guidelines.1 Since 2013, Gold Fields has aligned its health and
safety metrics with those of the ICMM, headed by the total
• Improved safety performance in West Africa, following the
implementation of a range of interventions (p68 – 69)
4.2.2 Safety management
Details of specific regional safety initiatives implemented in 2014
recordable injury frequency rate as a key metric (TRIFR). Gold
are set out below.
Fields’ peer companies tend to use the TRIFR metric, which
assists with benchmarking Group performance against the
THE AMERICAS
wider sector.
In 2014, Cerro Corona placed particular focus on improving
contractor safety. This followed the death of a contracted worker
at the mine in 2013. As a result, Cerro Corona extended its
employee Behaviour Change Programme to include contractors.
Relevant initiatives applied in 2014 included a review of
1
See ICMM, January 2014, Health and safety performance indicators – www.icmm.com/publications/safety-data
The Gold Fields Integrated Annual Report 2014
68
PiLLAr: oPtiMiSing our oPErAtionS
4.2 Pursuing Zero Harm (continued)
contractors’ safety programmes and improvement of the safety
induction process for contractors. The mine’s TRIFR rose slightly
• The integration of a Health and Safety Management System
into the new induction processes introduced at South Deep,
in 2014 to 0.38 per million man-hours (2013: 0.34).
following the major review process – as well as the standard
AUSTRALIA
induction process. The system is being audited on a quarterly
basis, with the first audit completed in Q1 2015
During 2014, the Australia region implemented a safety strategy
• The mine reverted to a 7-2/7-5 roster system – in part, to
focussing on best practice tools, programmes and processes.
address concerns about fatigue-related safety risks caused
It also focussed on achieving OHSAS 18001 international health
by the recently introduced 24/7, 12-hour shift system. This
and safety certification at its Yilgarn South Assets. This resulted
transition was supported by a five-day training programme for
in the successful certification of both Granny Smith and Darlot to
each new roster cycle to ensure employees and contractors
OHSAS 18001. Lawlers was certified in Q4 2014 under Agnew’s
were sufficiently trained to work safely within the new roster
certification.
system
The region implemented an innovative behaviour-based safety
programme called ‘Vital Behaviours’ for all employees and
contractors. Vital Behaviours engages the workforce through
participatory workshops aimed at promoting safe workplace
behaviour. Participants share experiences (on a confidential
basis), whilst analysing and reflecting on past cases where they
may have acted in an unsafe or non-compliant way. In parallel
with this process, the Australia region rolled out the ‘Visible Felt
Leadership’ programme in 2014. This involves training senior
managers to engage with their teams on safety issues.
The implementation of these two programmes appears to have
played a role in the dramatic improvement of the region’s safety
performance in 2014 – with the TRIFR decreasing to 17.04 per
million man-hours (2013: 23.471). This represented the region’s
best performance to date – and took place at the very time that
the region was integrating the Yilgarn South Assets.
SOUTH AFRICA
In 2014, two employees and one contractor at South Deep
were tragically killed in workplace accidents (p15; 26). These
• Workers were provided with general refresher safety courses
as they returned to work following the Section 54 safety
shutdowns – as well as role-specific modules. This also
included training on the new roster system
• The installation of proximity detection systems, which help
personnel avoid danger zones when working near heavy
mining equipment
• The installation of new rail-bound equipment, including the
Rovic auto-coupler which eliminates the need for personnel to
manually couple and uncouple rolling stock
In addition, the mine continued to carry out substance testing.
A total of 5,127 employees and contractors were tested for the
use of cannabis, with 99 of those tested found to be positive
(2% of the total). A total of 51,500 alcohol tests were carried
out among employees and contractors, of which 57 yielded
positive results. The positive cases were referred to Gold Fields’
Employee Assistance Programme (EAP) – where first offenders
received counselling and other assistance to address substance
use. Repeat offenders were dismissed due to the potential safety
risks they posed to the workplace.
deaths – all of which occurred underground – related to two
In 2014, South Deep’s TRIFR improved by 10% to 4.65 per
workshop accidents and a machinery incident. On 27 May 2014,
million man-hours (2013: 5.19).
the DMR imposed a Section 54 notice on the mine, following a
review of the circumstances surrounding the first two fatalities.
WEST AFRICA
The notice placed a moratorium on all workshop-related
Despite already achieving some of the best safety performances
activities, effectively bringing production to a halt.
across the Group, West Africa instituted a number of enhanced
The notice was lifted on 30 May 2014 after Gold Fields filed a
report to the DMR confirming compliance with the Mines Health
safety measures following a lost time incident in September 2014
at Tarkwa’s CIL plant. These included:
and Safety Act (Section 11(5)). Simultaneously, South Deep
Tarkwa
implemented a wide range of safety-based remedial actions,
including the completion of secondary support in older parts of
the mine – as prompted by the February 2014 review (see p60).
This secondary support work was completed in October 2014.
A fatality in July 2014 also led to a Section 54 stoppage
being imposed for about a week in the affected areas, before
being lifted.
Gold Fields remains committed to eradicating residual safety
risks at South Deep by instituting further safety management
initiatives. In 2014, these included:
• The drive to reduce vehicle-related incidents continued with
74,970 breathalyser tests conducted
• The 100 Injury Free Day Challenge safety campaign was re-
energised
• Senior managers’ night and dawn visits to selected working
sites commenced to create safety awareness during the
Festive season
1
The relatively high TRIFR for Australia is partly due to higher number of restricted work injuries (RWI) reported relative to other regions. This reflects more conservative injury
classifications being employed by local medical practitioners, who are concerned about the possibility of injury severity escalations
The Gold Fields Integrated Annual Report 2014 PiLLAr: oPtiMiSing our oPErAtionS
69
Damang
• The Safety Referee Policy, which involves the issuance of
colour-coded cards to offenders of safety rules, was also
revised and is now being implemented to boost the overall
safety performance of the mine
• Simulation drills were conducted to test the readiness of the
emergency response team
• 13,684 employees were randomly tested for alcohol
The implementation of these safety initiatives helped improve the
region’s TRIFR, which decreased 20% to 0.75 per million man-
hours (2013: 0.94).
4.2.3 Health and wellness management
All operational employees are subject to entry and exit medical
assessments – and in certain operations, employees also
undergo annual medical assessments that aim to prevent,
identify and treat occupational diseases. These assessments,
which are – at a minimum – aligned with the legal requirements
of each operating jurisdiction, focus on operation and role-
specific health risks. Employees are also offered quantitative,
confidential health risk assessments. These not only address
occupational diseases, but also general health and lifestyle
issues such as hypertension, diabetes, cholesterol, diet and
mental health.
In 2014, 49 new cases of cardiorespiratory tuberculosis (CRTB)
(2013: 42) were recorded. This increase can be attributed to
the fact that during the year South Deep enhanced its efforts
to identify CRTB cases. There was therefore an increase in the
total number of patients screened, and the final number of CRTB
cases identified.
Wellness is a material issue given the location of Gold Fields’
mines, the nature of employees’ working patterns and the
lifestyle challenges associated with the sector. All of Gold
Fields’ regions run dedicated wellness programmes, tailored to
both the national and local context of each mining operation.
These programmes aim to identify and manage chronic medical
conditions within the workforce – whilst also maximising its
productive capacity and reducing absenteeism.
occupAtionAl heAlth
Gold Fields is committed to reducing the exposure of its
employees to occupational health risks – including those
associated with air quality, Silicosis, tuberculosis and hearing
loss. As such, each region has implemented management plans
for diesel particulates, silica dust, radiation and noise. These
provide for ongoing and regular monitoring of exposure levels at
all operations. Particular emphasis is placed on managing the
underground working environments in Gold Fields’ Australian
and South African operations – due to the heightened health
risks that underground mining poses to workers.
In 2014, the number of occupational health cases submitted for
Noise
compensation was as follows:
• 13 cases of Noise-Induced Hearing Loss (NIHL) (2013: 8)
• 15 cases of Silicosis (2013: 12)
We await a final outcome of the assessments that are conducted
as a matter of course by the Medical Bureau for Occupational
Disease (MBOD) and the Rand Mutual Association (RMA), which
will determine the final number of cases accepted.
We remain committed to further reducing noise levels at South
Deep. New targets have been set by the national Mine Health
and Safety Council (MHSC), which were adopted in November
2014 and require that total noise emitted by all mining equipment
should not exceed 107 (A-weighted) decibels (dB(A)) by 2025.
Throughout 2014, the mine met the current MHSC target of not
more than 110 dB(A). Silencing of underground fans and the
application of noise management measures to the underground
mining fleet played a key role in helping the mine meet
this target.
Nurse at medical station at South Deep in South Africa
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PiLLAr: oPtiMiSing our oPErAtionS
4.2 Pursuing Zero Harm (continued)
To further reduce employee exposure to noise levels exceeding
Diesel particulate matter
the statutory requirements of 85 dB(A) over an eight-hour shift,
the mine piloted new moulded hearing protection devices in
2014. These are custom fitted for each employee’s ear and were
distributed to all 500 identified high-risk employees. It should be
noted that the measurement of exposure levels above 85 dB(A)
do not take into account the protection afforded by hearing
Gold Fields undertakes regular monitoring and analysis of the
concentration of diesel particulate matter at all of its operations.
This issue is particularly material at Gold Fields’ underground
mines in Australia and South Africa – due to the potential
concentration of particulates in specific working areas.
protection devices, which are issued to all employees working
While there are no regulatory limits, the Australia region
in high exposure areas.
Silica dust exposure
implemented a strategy in 2014 designed to reduce exposure
to Diesel Particulate Matter (DPM) with a focus on fitting filters
to equipment, refining maintenance schedules, ensuring
South Deep continued to implement improved dust control
the correct levels of ventilation and to provide appropriate
measures, in accordance with MHSC requirements. Examples of
procedural controls. Sampling programmes have indicated
actions taken in 2014 include:
the success of this initiative with a dramatic decline in
• Real-time dust monitoring
• The fitting of water mist sprays at dust sources
• Dust management controls on footwalls and internal tips
• Installation of manually controlled water blasts in all working
areas
Throughout 2014, South Deep stayed within the 5% threshold for
the proportion of individual silica dust measurements exceeding
the occupational exposure limit (OEL) of 0.1mg/m3 – as set by
the MHSC. The average percentage sample above the OEL at
the mine in 2014 was 4.9% (2013: 3.8%).
Gold Fields is continuing its efforts to eliminate the incidence of
Silicosis and tuberculosis through improved underground dust
management and a number of other measures.
In November 2014 Anglo American South Africa, AngloGold
Ashanti, Gold Fields, Harmony and Sibanye formed an industry
working group to address issues relating to compensation and
medical care for occupational lung disease in the gold mining
industry in South Africa. The companies intend to engage
all stakeholders to work together to design and implement a
comprehensive solution that is both fair to past, present and
future gold mining employees, and also sustainable for the
sector. The companies are already engaging with a number of
stakeholders as part of an intensive engagement process during
2015 intended to lead to a comprehensive solution.
The companies believe that fairness and sustainability are
necessary to any comprehensive solution. The companies are
among respondent companies in a number of lawsuits related
to occupational lung disease. The five companies do not believe
that they are liable in respect of the claims brought, and they are
defending these. They do, however, believe that they should work
together to seek a solution to this South African mining industry
legacy issue.
The companies active in gold mining have been working for
many years to try to eliminate the incidence of occupational lung
disease. These efforts continue.
DMP levels underground, to a point where only 2% of samples
have exceeded the internal target of 70ug/m3. This is in line
with targets recommended by the Australian Institute for
Occupational Hygienists.
In South Africa, the DMR has developed a draft regulatory
framework to establish a DPM OEL. This proposal, published
in February 2014, recommends a four-year ‘step-in-approach’
starting at 350ug/m3 – and systematically decreasing to
160ug/m3 by January 2018. In response, Gold Fields carried
out a study to establish current exposure levels at South Deep,
which found that in a number of areas the 2015 exposure levels
were exceeded by 4.5% and the 2018 levels by 26%. As such,
Gold Fields recognises that more work is needed for South Deep
to comply with the proposed OEL for DPMs.
Q3 2014 saw the finalisation of a new fuel supply contract with
Sasol through which South Deep now receives only ultra-low
sulphur content diesel (10 ppm). Sampling suggests this
has helped reduce airborne DPMs by up to 45% depending
on location.
Gold Fields will continue to research the benefits of exhaust
treatments at South Deep – including diesel particulate filters.
Furthermore, it is likely that the mine’s DPM performance will
automatically improve with time due to the ongoing acquisition
of more advanced engine technology. Indeed, the introduction
of ultra-low sulphur diesel extends the range of engines that
can be employed at the mine.
Radiation
Underground mining – including that carried out at South
Deep – has the potential to expose workers to latent radiation.
South Africa’s National Nuclear Regulator Act stipulates that the
maximum permissible personal exposure from ionising radiation
is 100 millisievert (mSV) in aggregate per five consecutive years
– and may not exceed 50mSV in a single year over a five-year
period. Occupational monitoring at South Deep showed that the
annual exposure limit of 50mSV was not exceeded at any point
in 2014 and that average exposures were between 3 – 6mSV
between 2010 and 2014.
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HIV/AIDS AND TUBERCULOSIS
FiGure 4.10: Occupational disease in the South Africa region
HIV/AIDS management is integrated into Gold Fields’
(Rate per 1,000 employees)
mainstream health services to improve worker participation and
minimise stigmatisation. Voluntary Counselling and Testing (VCT)
takes place during regular employee health assessments. This
has the added benefit of directly addressing the interaction
of HIV/AIDS with related health issues such as tuberculosis
(TB) and sexually transmitted infections (STIs).
Gold Fields’ workforce in South Africa faces a particular risk of
exposure to HIV/AIDS, in a national context where an estimated
19.1% of adults (aged 15 to 49) live with the disease (latest
available data).1 Gold Fields is committed to lowering the
HIV/AIDS prevalence rate at its South African operations, which
is around 12% as 152 employees of 1,320 tested positive in
Noise-induced Hearing
Loss (NIHL)1
Cardio-respiratory
tuberculosis (CRTB)
Silicosis1
Chronic obstructive
airways disease (COAD)1
SA workforce
2014
2013
2012
0.15
0.06
0.07
0.93
0.27
0.08
5 246
0.65
0.19
0.00
6 466
0.48
0.21
0.04
8 286
1 Based on the number of cases submitted for compensation
2014. The region’s integrated HIV/AIDS, STI and TB Strategy
MALARIA
(HAST Strategy) directly addresses interactions between these
The workforce in Ghana faces a high risk of exposure to Malaria.
diseases. It is based on four key pillars:
• Promotion: This includes regular publicity campaigns and
condom distribution at all workplaces
• Prevention: VCT is provided to all employees, contractors, their
partners and family members on a confidential basis. In 2014,
the region’s VCT participation rate was 25% (2013: 16%)
In 2012, for example, Ghana recorded 3.76 million Malaria cases
country-wide (latest available data).3 Furthermore, Gold Fields’
Ghanaian mines are in an area of elevated Malaria exposure.4
In 2014, there were 681 workplace Malaria cases that tested
positive at the Ghanaian operations (2013: 708), none of which
proved fatal.
• Treatment: Free Highly Active Anti-retroviral Treatment (HAART)
Gold Fields has a comprehensive Malaria strategy in place in
is provided to HIV-infected employees through onsite,
Ghana, that incorporates education, prevention, prophylaxis and
doctor-staffed clinics. In 2014, 58 employees joined the South
treatment. This includes spraying accommodation (both on-mine
Africa region’s HAART programme (2013: 53). This takes the
and within the community), fitting anti-mosquito screens in mine
total number of active participants to 262 (2013: 253) – with
accommodation, support for community health facilities and
435 cumulatively enrolled since the HAART programme began
rapid diagnosis and treatment.
in 2004. Employees’ dependants can also receive HAART via
the Company’s medical aid schemes
EBOLA
Although no Ebola cases were recorded in Ghana in 2014, Gold
Fields took proactive steps to prepare for potential infection.
This included the development of a formal Ebola Management
Strategy and Plan, which addresses:
• The monitoring of infections across West Africa
• Capability-building for members of the Employee Wellbeing
team, staff at the Tarkwa Mine Hospital and local volunteers
• Additional resourcing to support potential control protocols –
including screening, isolation and treatment
• Support: This includes doctor-based primary healthcare,
psychological counselling and social services for all
employees and contractors
In addition – and in recognition of the potentially close
relationship between HIV/AIDS in the workplace and local
communities – South Deep supports a number of community-
based HIV/AIDS projects.
Gold Fields’ workforce also faces exposure to HIV/AIDS in
Ghana, where an estimated 1.3% of adults (aged 15 to 49)
live with the disease (latest available data).2 All employees and
contractors have access to a confidential VCT programme
which employees receive free of charge. This programme
had a 45% participation rate in 2014 among employees and
contractors, while the employee participation rate on its own was
78%. Anyone testing positive is provided with free treatment in
line with the government’s national HIV treatment programme
which supplies drugs free of charge. Gold Fields also
implements community-based HIV/AIDS programmes in Ghana
– including awareness-raising (via radio and trained community
health educators) and condom distribution.
1 UNAIDS, 2014, South Africa: HIV and AIDS estimates (2013)
2 UNAIDS, 2014, Ghana: HIV and AIDS estimates (2013)
3 World Health Organization, 2014, Global Health Observatory Data Repository
4
See Malaria Atlas Project, 2014, Ghana – www.map.ox.ac.uk/explore/countries/GHA/
The Gold Fields Integrated Annual Report 2014
72
PiLLAr: oPtiMiSing our oPErAtionS
4.3 Promoting environmental stewardship
The potential environmental risks associated with industrial
mining are obvious – both for the environment and for local
stakeholders. Furthermore, environmental incidents can
materially impact Gold Fields’ reputation – as well as its ability to
comply with its contractual and regulatory obligations. As such,
Gold Fields remains committed to the continual improvement
of its environmental performance. Key areas of focus
include water stewardship (p74); Acid Mine Drainage (AMD)
management (p74); Tailing Storage Facilities (TSF) management
(p76); a proactive approach to mine closure; the reduction of
carbon emissions and energy consumption; energy security; and
climate change (p62 – 66).
4.3.1 Managing impacts across the lifecycle
Gold Fields’ approach to environmental management is defined
by relevant local legislation and regulations, its sustainable
development framework, as well as the ISO 14001 international
environmental management standard, the ten principles of the
ICMM and the UN Global Compact. Following the successful
certification of Granny Smith and the inclusion of Lawlers
in the Agnew certification process in 2014, all the Group’s
• Americas: US$57 million (15% of total)
• Australia: US$213 million (54% of total)
• South Africa: US$32 million (8% of total)
• West Africa: US$89 million (23% of total)
The funding methods used to make provision for the required
portion of the mine closure cost liabilities, in accordance with
in-country legislation, are:
• Ghana: reclamation bonds underwritten by banks, and
restricted cash
• South Africa: contributions into environmental trust funds and
guarantees
• Australia: due to legislative changes in Western Australia
becoming effective in July 2014, companies are now required
to pay an annual levy to the State of 1% of the total mine
closure liability. This levy goes into a State-administered fund
known as the Mine Rehabilitation Fund which will be used to
rehabilitate legacy sites or sites that have been prematurely
closed or abandoned.
• Peru: bank guarantees
operations are now certified to ISO 14001. During 2014, the
Amendments to South Africa’s National Environmental
Group spent US$27 million on environmental management
Management Act in 2014 further broadened the scope of Gold
(2013: US$32 million). Total gross closure liabilities in 2014 were
Fields’ potential liability exposure. These amendments stipulate
estimated at US$391 million (2013: US$355 million), broken
that directors could potentially be held personally liable for their
down as follows:
company’s negative environmental impact.
FiGure 4.11: Group environmental performance
Group
Environmental incidents (Level 2)
Environmental incidents (Level 3)
Water withdrawal (Mℓ)1
Water discharge (Mℓ)
Gross closure costs (US$m)
CO2 emissions (scope 1 and 2) ('000 tonnes)
CO2 emissions (scope 3) ('000 tonnes)
Carbon intensity (tonnes CO2-e/oz)3
Electricity (MWh)1
Diesel (TJ)1
NOx, SOx and other emissions (tonnes)
Cyanide consumption (tonnes)
Mining waste ('000 tonnes)
Waste materials ('000 tonnes)
2014
58
4
2013
49
3
2012
43
6
30,207
30,302
23,688
11,6202
391
1,258
436
0.55
1,338,074
6,065.94
5,176
10,660
138,522
144
2,526
355
1,235
496
0.61
1,382,105
5,509.48
5,504
13,660
190,007
176
6,229
249
1,233
597
0.58
1,384,459
5,697.59
5,692
16,226
176,272
217
1 The numbers disclosed only include our operations, as head offices are not considered to be material
2 Granny Smith discharges water into Lake Carey and Tarkwa treats and discharges the water from its heap leach facilities into the environment
3 Scope 1 & 2 only
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73
In 2014, Gold Fields implemented several new Group guidelines
to ensure the effective and coherent management of key
environmental issues across the Group – whilst allowing for a
degree of local flexibility. These issues include:
4.3.2 Water management
FiGure 4.12: Group water withdrawal
FIGURE 4.X: Group water withdrawal
Million litres
• Water management
• Mine closure management
• Energy and carbon management
• Community relations and stakeholder engagement
A summary of the corporate guidelines can be found on the
Gold Fields website.
Corporate guidelines: www.goldfields.com/sus_guide.php
ENVIRONMENTAL INCIDENTS
Gold Fields reports environmental incidents using an internal
scale ranging from Level 1 (the most minor) to Level 5 (the
most serious).1 No Level 4 or Level 5 incidents were recorded
across the Group in 2014. However, South Deep experienced
four Level 3 environmental incidents (2013: 3), all of which were
reported to the relevant regulatory authorities. Details of these
are set out below:
30,302
30,207
23,688
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2012
2013
2014
Water management is a critical long-term issue for the mining
industry as a whole. In part, this is because:
• Water is an important vector for the potential spread of
pollution (whether as a result of an immediate incident or the
gradual build-up and movement of contaminants over time)
– making it a key compliance issue
• February 2014: A surface portion of an underground hydraulic
pipe transporting oil burst, spilling about 2,000 litres of oil. The
• Mining can require large volumes of water – and often takes
place in locations that are already water-stressed
damaged piece of pipe was replaced and the spill completely
• Poor water management can have significant social and
cleaned up
• March 2014: The pollution control dam and the return water
dam overflowed into adjacent rivers after excessive average
rainfalls and amid lower production levels, which raised the
mine’s water balance. The mine’s water management plan
contains medium-term solutions that seek to minimise the
potential for dam overflows
• June 2014: Discharges of process water occurred via
an unauthorised installed pipeline at the backfill plant.
The pipeline was closed and there have been no further
unauthorised discharges from this area
• July 2014: Water seepage was identified at the Doornpoort
return water dam. The mine is currently conducting a blast
curtain trial – in addition to the existing seepage collection
trenches – to contain future seepages at the dam
political consequences, where local communities are affected
by, for example, water scarcity, high levels of agricultural
activity and a lack of effective water infrastructure
In this context, Gold Fields remains committed to responsible
water stewardship – both for the benefit of host communities and
for its own operations. In practice, this means:
• Measuring and reporting on water management performance
• Integrating water management into mine planning
• Leaving an enduring, positive legacy
Reflecting these commitments, each operation implements an
Environmental Management System (EMS), through which it
assesses, manages, monitors and reports on water use and the
quality of its discharges (where these occur).
The increase in serious water-related environmental incidents
at South Deep in the first half of 2014 prompted a thorough
review of key water management issues at the mine, leading to
a comprehensive water management action plan that was rolled
In 2014, water withdrawal across the Group fell marginally to
30.207Mℓ (2013: 30.302Mℓ), despite the integration of the
Yilgarn South Assets. This decrease was largely due to:
out in Q3 and Q4 2014. (See details on p75 – 76.) Following the
1. Significant decrease at St Ives in pit dewatering during 2014
roll-out of the plan, no further water-related Level 3 incidents
were recorded between July 2014 and 31 December 2014.
2. Tarkwa sent the rainfall on the heap leaches directly to
the reverse osmosis (RO) plants for discharge, rather than
Gold Fields’ grievance mechanism allows stakeholders to
allowing the water to enter the mine circuit
address environmental issues and complaints.
3.
Installation of RO plants at South Deep to reduce Rand
Water Board consumption
1 Levels 1 and 2 involve minor incidents or non-conformances, with negligible or limited impact. A level 3 incident is a limited non-conformance or non-compliance with a limited
environmental impact (often a repeat of the same incident). Level 4 and 5 incidents include major non-conformances or non-compliances, which could result in long-term
environmental harm, with company or operation-threatening implications and potential damage to company reputation
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PiLLAr: oPtiMiSing our oPErAtionS
4.3 Promoting environmental stewardship (continued)
MANAGING EACH MINE’S WATER BALANCE
Effective water management requires a full understanding of the
inflow into and outflow from each operational area. This involves
quantifying:
• Water inflows, including rainfall
• Operational water requirements
• Onsite water storage capacity
• Water use and discharges
Whether mines are water-positive, water-balanced or water-
negative depends on a number of dynamic variables. These
include climatic variables such as seasonal rainfall and
evaporation rates, the volume of water entering underground
workings or open-pits (e.g. via aquifers and surface run-off
respectively) and the type of processing employed (e.g. heap
leach or Carbon-in-Leach processing).
Gold Fields applies the following measures to manage the water
balance at its mines, and to promote water stewardship:
• Regional application of the new Corporate Water
Management Guideline (a summary is available online at
www.goldfields.com/sus_guide.php) – including the
development and implementation of well-defined Water
Management Action Plans
• Implementation of physical measures to manage stormwater
run-off – and keep clean water and mine water separate
• Maintenance of water containment capacity (including the
containment of inflow surges)
• Water treatment – including reverse osmosis
• Water reuse and recycling
• Dynamic and predictive water modelling to support short-,
medium- and long-term water-related risk and opportunity
management
ACID MINE DRAINAGE
Gold Fields implements a range of measures to prevent or
contain Acid Mine Drainage (AMD) at its operations – and takes
effective remedial action where incidents are identified. There
were no material cases of AMD reported in 2014.
Nonetheless, South Deep has – in the context of broader
historical AMD legacy issues in the Gauteng area – taken a
proactive approach to long-term AMD management through its
comprehensive water management plan. This involves ongoing
water monitoring, containment of any AMD generation on the old
tailings facilities and water-treatment solutions that purify surplus
fissure and process water to a potable standard. In 2015,
additional technical studies are planned to develop a solution for
managing AMD generation in the underground workings at mine
closure. Underground AMD generation is well managed during
the operational phase by ongoing pumping to surface of the
underground water.
Cerro Corona’s tailings and waste rock facilities were designed
to avoid and mitigate the risks of AMD. In addition, the mines
closure plan contains various strategies, which are updated at
least every two years as new technical information becomes
available.
Although Gold Fields has commissioned various technical
studies to identify the steps required to prevent or mitigate the
potentially material AMD impacts at its Cerro Corona and South
Deep operations, none of these studies has allowed Gold Fields
to generate a reliable estimate of the total potential impact on
the Company.
Immaterial levels of AMD have been identified at the Tarkwa,
Damang and St Ives mines.
4.3.3 Regional water initiatives
AMERICAS
Water security poses a significant long-term challenge at Cerro
Corona due to its remote, high-altitude location. Furthermore, the
mine operates in a national context of poorly developed water
infrastructure, water quality degradation and serious water-
related activism at both a local and regional level. Although
Cerro Corona has not as yet been materially affected by such
activism – this has had a serious impact on other operators in
the Cajamarca region. As such, Cerro Corona has proactively
implemented a range of responsible water management
initiatives, including:
• Rainwater storage and reuse: Rainwater is stored at Cerro
Corona’s TSF within a closed-circuit water system, treated
and reused by the operation. This enhances the mine’s own
water supply, whilst also minimising both the amount of water
discharged and the amount of local groundwater abstracted
• Community water supplies: Cerro Corona has committed to
providing local communities with additional, potable water
during the dry season and has completed a number of
projects focussed on water provision to nearby communities
as well as improving existing municipal water systems (p115)
• Water monitoring: Cerro Corona works closely with
community-elected representatives to monitor water quality
and quantity at the Las Tomas Spring. Iron and manganese
levels at the spring – which sits inside the ‘final’ future footprint
of Cerro Corona’s TSF – have improved since the mine began
operating
Such approaches have – in combination with effective
community engagement practices and the generation of shared
local value – played a key role in protecting Cerro Corona
from the kinds of social tensions affecting other nearby mining
operations.
AUSTRALIA
In 2014, the Australia region implemented a new water
management strategy to support the integration of the Yilgarn
South Assets. This also involved extensive analysis of the water
balances at Agnew and St Ives. The strategy is based on:
• The integration of water management into business objectives
• Sound water management planning and practices
• The measurement and reporting of the water impacts of each
operation and associated mitigation measures
Nevertheless, water security poses a potentially significant
challenge for the region’s mines – all of which are based in arid
areas of Western Australia. In Q3 2014, Gold Fields commenced
legal proceedings against Nickel West, operated by BHP Billiton.
The Gold Fields Integrated Annual Report 2014 PiLLAr: oPtiMiSing our oPErAtionS
75
These proceedings relate to the supply of potable water to the
R300,000/month from July 2015
St Ives operations, which was agreed when Gold Fields acquired
the St Ives assets in 2001. Late in Q4 2014, St Ives reached an
in-principle agreement with Nickel West to settle all outstanding
disputes relating to the ongoing supply of water (including the
proceedings), and will continue working towards finalising these
arrangements in early 2015.
SOUTH AFRICA
Water management remains a sensitive public issue in South
Africa. Significant parts of the country suffer from water stress,
whilst the Gauteng area (in which South Deep is situated)
suffers from the historical environmental legacy of more than a
century of intensive, deep-level gold mining. This legacy means
that there are high-levels of AMD in and around Johannesburg
– most of it caused by now-defunct companies and operations.
Whilst not contributing to local AMD, there are concerns that
South Deep’s long life will mean that the mine is the ‘last man
standing’ as Gauteng’s AMD issues become more acute – and
social as well as regulatory pressure to act on the issue grows.
Furthermore, South Deep experienced four Level 3
environmental incidents (p73), of which three related to water
issues. This prompted a comprehensive review of water
management issues at the mine and the implementation of a
number of water stewardship initiatives as part of the mine’s
water management plan. Key initiatives included:
• RO plants: This project uses two RO plants, installed in 2014,
to purify surplus fissure and mineralised service water to a
potable standard. This is then reused by the mine. In 2014
the amount of water treated by the RO plants improved from
8Mℓ/month in January to 40Mℓ/month in December. In 2015
it is envisaged that the RO plant capacity at South Deep will
increase to about 150Mℓ/month. This approach:
– Cuts the mine’s water purchase costs by an estimated
– Increases overall supply for other local water users
– Reduces the overall amount of water in the mine’s water
system – reducing the risk of overflows from the mine’s
dams during periods of heavy rain
• Stormwater management plan: In 2014, South Deep
commenced with the implementation of a stormwater
management plan that included the construction of concrete
channels to separate clean stormwater in the surrounding
catchment from water running off the backfill plant area and
surrounding areas. This project is scheduled for completion
by Q2 2015 and will help to minimise the risk of unplanned,
off-footprint water discharges from the old return water
dams during the rainy season due to the diversion of clean
stormwater away from the dams. The project, together with
the installation of the RO plants, is already demonstrating
success – during the heavy rains experienced in Q4 2014,
no overflows were recorded from our return water dams into
the environment.
The next phase of the project is the construction of a new,
lined return water dam at the old TSFs, which is scheduled
for completion in early 2016. The new dam has been sized to
accommodate the inflows of any excess stormwater from the
backfill plant area as well as the run-off from the old TSFs.
Until the construction is complete, any overflows from the backfill
plant during storms will be collected in a concrete sump, which
has already been constructed, and will be pumped back into
the mine water circuits. Any overflow from the sump will be
channelled via the newly installed concrete trenches to the old
return water dam, via a new attenuation dam.
• AMD and water quality management: As part of its ongoing
efforts to manage AMD and prevent pollution, South Deep
implemented a number of additional measures in 2014
regarding its waste rock dumps and old TSFs. These included:
– Revision of plume movement models around the old TSFs.
Gold Fields is committed to responsible water stewardship – for the benefit of its own operations as well as for host communities
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4.3 Promoting environmental stewardship (continued)
During 2015, plume movement mitigation measures will be
initiated
the International Cyanide Management Code (ICMC). ICMC
certification also extends to Gold Fields’ transport providers.
– Removal of the old South Shaft Waste Rock Dump (to be
completed during 2015)
– Initiated further rehabilitation of the mine’s onsite TSFs
(through re-vegetation)
– Ongoing surface and groundwater monitoring
– Blast curtain trials at Doornpoort TSF
During 2014, South Deep spent around R19 million
(US$2 million) on water-related initiatives, and has allocated
R60 million (US$6 million) capital expenditure which is estimated
to be spent during 2015 and 2016 on the new lined return
water dam. This is in addition to other planned capital and
operational water management-related expenditure.
WEST AFRICA
Gold Fields’ Ghanaian operations – and Tarkwa in particular –
face a number of challenges with respect to water management,
including:
• Intense periods of precipitation, particularly during southern
Ghana’s two rainy seasons (March to July and September to
November)
• The significant footprint of the Tarkwa mine, meaning that
there is a large watershed to manage
• The extensive surface area of Tarkwa’s North and South
Heap Leach facilities. While both facilities are now closed,
a significant amount of interaction continues to take place
between rainwater and the stacked ore. This will only be
addressed once the facilities are fully rehabilitated through the
application of a soil layer and revegetation
• Production of concentrated brine, an unintended
consequence of the operation of RO water treatment plants at
the heap leach facilities (established at the behest of Ghana’s
Environmental Protection Agency). The treated water is
discharged into the local water system, while the concentrated
brine is collected by each plant and temporarily stored
onsite in the TSFs
Gold Fields is looking at the potential feasibility of two options
– with a decision expected during 2015 – for processing the
concentrated brine produced by the RO plants:
• Installation of an industrial-scale treatment plant
• The processing of the brine to produce nitrate solutions that
can be used to irrigate and fertilise rubber and oil palm trees.
An area south of Tarkwa is being used for an irrigation trial,
with 750 trees planted in 2014
4.3.4 Materials and waste management
The most significant output materials of Gold Fields’ operations
are tailings, waste rock, chemical waste and hydrocarbon
waste, all of which are responsibly managed. Gold mining
requires large volumes of blasting agents, hydrochloric acid,
lime, cyanide, cement and caustic soda (sodium hydroxide),
all of which it uses on an ongoing basis. Of these, cyanide
represents the most potentially hazardous substance. All Gold
Fields operations are fully compliant with the requirements of
All Gold Fields’ operations have Life-of-Mine tailings
management plans. All TSFs and associated pipeline and
pumping infrastructure are subject to ISO 14001 certification,
external tailings audits, as well as regular inspection and
formal annual reporting. TSFs are also subject to inspection
for technical integrity by independent experts at least once
every three years – or more frequently where required by local
circumstances or regulations. A Group-wide tailings facility
audit – which included all 15 operational and 10 dormant TSFs
– was undertaken during the latter half of 2014. Ordinarily, these
audits are conducted on a three-yearly basis. However, mining
companies globally increased their commitment to ensuring
the safety of their tailings facilities following a major breach of
Imperial Metals’ copper and gold tailings pond at Mount Polley in
British Colombia in August 2014. Gold Fields therefore initiated
its Group-wide TSF audit earlier than usual.
The audit, which was conducted by Golder Associates, reviewed
all key aspects of tailings facility management, with a focus
on TSF stability, compliance and environmental management.
All TSFs were found to be well-managed and are either already
aligned with global leading practice, or have concrete plans in
place for alignment. In general the Gold Fields TSFs are within
the top quartile of industry leading practice in terms of design,
operation, and management.
Specific measures to minimise the risks posed by TSFs to the
environment include:
• Pollution containment facilities to capture run-off water from
the TSF surfaces, together with solution trenches to capture
shallow groundwater seepage
• Recycling systems to allow the reuse of tailings water in
metallurgical processes
• Monitoring of groundwater plume quality and migration
(where applicable) and, where pollution is detected, installing
measures to contain plumes
• Planting vegetation, installing netting and applying chemical
suppressants on slope faces to control dust and erosion
More broadly, Gold Fields is taking proactive steps to anticipate
constraints relating to the development of future TSFs and
the replacement of existing ones. Production activities are
dependent on a mine having sufficient TSF capacity. Securing
new TSF capacity can involve lengthy permitting processes with
local environmental agencies – and can also require negotiations
with local communities.
In 2014, the Group took the following steps to ensure that its
operations continued to enjoy a sustainable TSF pipeline to
support future production:
• The Americas: Technical solutions were devised to
accommodate more tailings in the existing TSF (such as
increasing the TSF crest and drilling into deep parts of the
TSF to release excess water )
• Australia: Agnew/Lawlers is seeking ways to extend the life
of TSF3 – including through the potential raising of one of its
cells
The Gold Fields Integrated Annual Report 2014 PiLLAr: oPtiMiSing our oPErAtionS
77
• West Africa: Gold Fields concluded lengthy negotiations
with the EPA over the development of future TSFs at both
Tarkwa and Damang. This resulted in Gold Fields securing
formal, written permission during 2014 to raise two of the
existing TSFs at Tarkwa (TSF1 and TSF2) – as well as written
permission to raise the East TSF at Damang. Although Tarkwa
is still awaiting permission for a new tailings facility (TSF5), the
extensions of TSF1 and TSF2 will provide adequate tailings
capacity over the next two years – and possibly beyond.
Similarly, Damang’s East TSF will provide adequate capacity
until 2017 – by which time the mine plans to have the new New
Far East TSF operational.
In addition, Gold Fields continued to focus on the responsible
management of potential environmental issues linked to its TSFs:
• Gold Fields carried out a study at the Doornpoort TSF to
assess the potential effectiveness of a new methodology
to safely consolidate potentially contaminated groundwater
from multiple sources within the TSF – and pump it out of the
ground and back into the lined return water dams
• The Granny Smith Mine in Australia constructed seepage
trenches, installed additional monitoring boreholes and
investigated alternative storage options – in response
to regulator concern over potential future groundwater
contamination at its TSF3
Meanwhile, both underground and open-pit operations produce
substantial volumes of waste rock. This is kept in managed
waste rock dumps, which are subject to comprehensive
rehabilitation through the laying of top soil and vegetation once
they are no longer in use. South Deep recycles a proportion
of waste rock for utilisation in construction projects and will
have completed the removal of the old South Shaft waste rock
dump in early 2015. The entire remaining footprint area will be
contoured, landscaped and revegetated.
Figure 4.13: Group mining waste
FIGURE 4.12: Group mining waste
Million tonnes
180
160
140
120
100
80
60
40
20
0
137.6
153.3
100.2
38.5
36.7
38.4
2012
2013
2014
Waste rock
Tailings
Revegetation of the tailings dam at the South Deep mine in South Africa
The Gold Fields Integrated Annual Report 2014 Base camp at the Salares Norte project in Chile
5.1
5.2
5.3
5.4
Redefining growth
5.1.1 A strategic shift towards quality
5.1.2 Active Portfolio Management
An integrated approach to growth
5.2.1 Bottom-up and top-down management
Earning and maintaining a social licence to operate
5.2.2
5.2.3
Supporting project divestment
Near-mine exploration performance
5.3.1 Australia
5.3.2 West Africa
Update on our remaining growth projects
5.4.1
5.4.2
4.5.3 Disposals
Salares Norte, Chile
Far Southeast, Philippines
5.5 Mineral Resource and Mineral Reserve Statement
5.5.1 Corporate governance
5.5.2 Group summary
5.5.3 Regional summary
80
80
80
82
82
82
83
84
84
87
88
88
88
89
90
90
91
94
5Gold Fields
80
PiLLAr: groWing goLd FiELdS
5.1 Redefining growth
Growing Gold Fields is not just a matter of increasing the
Group’s Mineral Resources and Mineral Reserves or boosting
• Raised approximately US$107 million through the disposal
of its holding in the Chucapaca Project in Peru, excluding
the production profile. It is about growing cash flow per ounce
future royalty contributions, the Yanfolila Project in Mali
and per share in the medium and long term.
(in Hummingbird Resources shares) and the Talas Project in
5.1.1 A strategic shift towards quality
In this context, Gold Field’s immediate growth strategy is to
generate growth in both reserves per share and in sustained
cash flow margin per ounce through a process of Active Portfolio
Management. In 2014, this resulted in:
• The cessation of all early greenfields exploration activity
• Refocussing from greenfields exploration to low-risk, near-mine
exploration and cash-generative acquisition opportunities that
are aligned with Gold Fields’ core competencies
• The disposal of growth projects that are marginal, located in
‘higher-risk’ locations and/or are primarily focussed on metals
other than gold
This has resulted in a short-term reduction in Gold Fields’ 2014
Mineral Resources (p90 – 95), which in the past would have
Kyrgyzstan (in Robust Resources shares)
In line with the major organisational restructuring process
initiated in 2013, Gold Fields has consolidated its growth
portfolio, including the selection of appropriate acquisition
targets and the disposal of assets, under the Group corporate
development department to ensure alignment with strategic
objectives. All other growth-related activities, including day-
to-day management of projects, fall under the responsibility
of Gold Fields’ regions to leverage their local expertise,
management capabilities and infrastructure.
5.1.2 Active Portfolio Management
Gold Fields’ Active Portfolio Management approach is based
on the assessment of all existing assets, near-mine exploration
opportunities and acquisition targets against three key criteria:
been a cause for concern. In light of our new focus, however,
1. The right address: Growth opportunities located in stable,
it is not only acceptable but is expected that every new ounce
‘mining-friendly’ operating environments in our existing
Gold Fields brings into production will directly support the
regions that pose only limited potential barriers to successful
delivery of superior returns to current and future shareholders,
project execution and profitable future production
and upgrade out existing portfolio. It is the starting point for a
truly cash-generative growth pipeline that is fully aligned with
Gold Fields’ current and long-term business priorities.
2. Gold focus: Growth opportunities that are well-aligned
with Gold Fields’ core competency – the identification,
development and extraction of gold-bearing ore bodies.
Beyond this, the Group will, over the next two to three years:
As such, over 50% of future output needs to be gold
• Continue to apply Active Portfolio Management – including
the application of stringent hurdle rates for all new growth
opportunities and the disposal of ‘non-franchise’ assets
• Try to repeat the successful integration of the Yilgarn South
Assets by pursuing further opportunistic, bolt-on mergers and
acquisitions – where these offer immediate cash generation
and strategic alignment
• Fund growth through equity financing, alternative financing
or the disposal of existing projects – instead of an exclusive
focus on debt funding if possible
• De-risk new growth opportunities through technical or financial
partnerships with other companies
Reflecting these priorities, in 2014 Gold Fields:
• Did not invest any funds in greenfields exploration
• Increased its near-mine exploration (Damang and Australia)
spend by 71% to US$58 million (2013: US$32 million)
• Reduced its total growth-related expenditure by 78% to
US$36 million (2013: US$122 million)1, of which the bulk was
spent on the Salares Norte Project in Chile
3. Commercial sustainability: Growth opportunities that can
ultimately offer a 15% free cash flow margin at a gold price
of US$1,300/oz and upgrade our portfolio
The ultimate aim of this approach is to improve the quality of
Gold Fields’ portfolio on an ongoing, long-term basis. In this
context, Gold Fields disposed of a number of growth assets
that failed to meet these three criteria (p88 – 89). Nonetheless,
two growth assets were found to be of sufficient quality to justify
their retention:
• The Salares Norte Project in Chile (p88)
• The Far Southeast Project in the Philippines (p88)
Key strategic focus areas being pursued under the Active
Portfolio Management approach are set out below.
FOCUS 1: MAINTAIN PORTFOLIO qUALITY THROUGH
DIVESTMENT
The Active Portfolio Management approach has required Gold
Fields to take a hard look at the ability of its existing assets
to generate sufficient cash – and to support the Company’s
broader strategic objectives. Where such assets appear unable
to meet these criteria, they have been disposed of or are
1 Spending on the following projects: Far Southeast, APP, Yanfolila, Chucapaca, Woodjam, Salares Norte
The Gold Fields Integrated Annual Report 2014 PiLLAr: groWing goLd FiELdS
81
earmarked for disposal. This approach will ensure that we retain
and upgrade the quality of the portfolio.
• Knowledge of its ore bodies – which supports its ability
to identify additional ore bodies within common, nearby
Gold Fields’ significant investment in greenfields exploration over
the last 15 years has not yet delivered any new mines. Instead,
all new mines brought into the Company’s production portfolio
have been through acquisition – with Gold Fields adding
subsequent value through the optimisation of their operations.
geological systems
• Operational capabilities – including its proven ability to
effectively develop and mine orogenic ore bodies
• Regional and operational infrastructures – including its existing
processing plants and regional management teams
As well as adding to Gold Fields’ Mineral Resource and Mineral
FOCUS 2: ACqUIRE HIGH-qUALITY PRODUCING
Reserve base, near-mine exploration:
OPERATIONS
In light of this, and given current market conditions, the
acquisition of operating gold mines is a preferred option for
Gold Fields to grow cash-generative production. Amid current
low gold prices a number of peer companies are trying to
divest themselves of their non-core assets to reduce heavy debt
burdens, but it does not necessarily mean that these disposals
are at pricing levels that would meet our cash-generative targets.
It certainly will be difficult to replicate the success of the
US$262 million acquisition of the Yilgarn South Assets in
October 2013. The acquisition – which was criticised by many
observers at the time – has since received high levels of praise.
This is because the new mines – in combination with Gold Fields’
subsequent management efforts:
• Have helped the Australia region expand its cash-generative
production to the point where it now contributes 45% of Gold
Fields’ total produced ounces
• Extends the life of the Group’s existing mines – whilst
maintaining and/or increasing their value
• Ensures each region can continue to leverage its existing
infrastructure
• Provides a robust platform for regional growth
The benefits of effective near-mine exploration can be seen
in the historical sustainability of the Agnew and St Ives mines.
In 2002, at the time of their acquisition, the mines had a
combined Mineral Reserve of 2.9 million ounces. Since then,
the mines have produced over 8.0 million ounces – and their
combined Mineral Reserves remain mostly unchanged. Gold
Fields believes that most of its mines in Australia (which share
similar orogenic ore bodies) will be able to repeat this success.
Orogenic ore bodies offer a number of advantages in this
respect, making this a priority region for near-mine exploration.
• Are likely (all other things being equal) to have paid for
FiGure 5.1: How we filter potential acquisitions
themselves by the end of 2015 – a timescale that is almost
unheard of in the industry especially as it has been achieved
in a low gold price environment
The success of the acquisition can be ascribed to:
• Barrick Gold’s willingness to dispose of the Darlot, Granny
Smith and Lawlers mines as non-core assets – and the
willingness of Gold Fields to wait until the right acquisition
became available at the right price
• The immediate synergies that could be exploited – including
the merger of the Agnew and Lawlers mines and the
subsequent closure of Lawlers’ processing plant, as well as
the leveraging of Gold Fields’ existing regional management
team
• The familiarity of Gold Fields’ regional team with local geology,
particularly the kind of orogenic ore bodies found at all of
Gold Fields’ Australian mines
Any new acquisitions will be subject to a strict screening
process – with only a small number of opportunities ever likely to
satisfy its requirements. This process ultimately aims to ensure
that all new acquisitions actively upgrade the profile of Gold
Fields’ long-term portfolio.
FOCUS 3: GROW GOLD FIELDS’ EXISTING ASSETS
Gold Fields recognises that in addition to favourable acquisitions,
near-mine exploration offers one of the best opportunities for
cash-generative growth. This is due to the synergies offered by:
PHASE 1
ScrEEn
critEriA
PHASE 1
ScrEEn
critEriA
PHASE 1
ScrEEn
critEriA
PHASE 2
oPErAting
ASSESSMEnt
PHASE 2
oPErAting
ASSESSMEnt
PHASE 3
oPPortunity
SHortLiSt
LOCATION
Australia, Ghana. Mali.
Burkina Faso, Canada. US, Peru,
Mexico, Brazil, Chile
GOLD ASSETS
PRODUCING
ASSETS ONLY
AVERAGE AIC
LESS THAN
US$1,000/oz over Life-of-Mine
AVERAGE
FCF MARGIN
15% over Life-of-Mine
CASH FLOW/OZ
and Reserves/Share accretive
The Gold Fields Integrated Annual Report 2014 82
PiLLAr: groWing goLd FiELdS
5.2 An integrated approach to growth
As with production, Gold Fields integrates sustainability into all
By building in the highest standards from the start, our regional
of its growth activities. This is due to its:
growth teams are able to ensure that good-practice operational
• Desire to be seen – as a result of its actions, track record and
stakeholder relationships – as the ‘partner of choice’ for host
governments, local communities and peer companies
• Recognition that the success or failure of major growth
projects (as well as the sale value that they can command)
increasingly depends on how well companies manage
sustainable development issues, particularly relationships
with host communities
5.2.1 Bottom-up and top-down management
Gold Fields’ integrated approach to growth is driven by each
region’s management team – in line with Group-level standards.
This ensures a consistent approach towards integrated growth
management, whilst also allowing requisite flexibility for locally
appropriate and project-specific decision-making.
REGIONAL ACTION
In this context, Gold Fields’ regional growth teams continue to:
• Apply Group-level best-practice sustainability standards
(tailored to suit local circumstances) across all growth projects
• Apply ‘integrated’ risk management to all growth activity
– covering financial, technical, political, social and
environmental issues and dynamics likely to influence project
success
• Integrate the creation of Shared Value into core project
management is built into the ‘DNA’ of any new mines that may
ultimately be delivered, as is the case for the Group’s existing
operations. It also means purchasers of Gold Fields’ growth
assets can be confident that any potential legacy issues have
been identified and responsibly managed from inception to
disposal. This is an increasingly important factor as it is a
growing trend that projects have their social liabilities factored
into their pricing.
5.2.2 Earning and maintaining a social licence to
operate
The value offered by an integrated approach to growth is
most apparent with respect to the securing and maintenance
of a strong political and social licence to operate. Indeed,
companies’ licence to operate can – in many jurisdictions –
be the key determinant of project success. This is true both
in higher-risk, ‘frontier’ operating environments, as well as the
kind of better-established, lower-risk growth environments that
Gold Fields is increasingly targeting.
Gold Fields places strong emphasis on ‘getting it right from
the start’ on projects it wishes to pursue. This means operating
in a way that generates trust and confidence amongst local
stakeholders – and ensuring that each project has the kind of
early political and social backing that will ultimately support its
long-term execution and operation.
development activities from the very start
One of the advantages of Gold Fields’ strategic refocussing
• Work with Group sustainability and risk management experts
on near-mine exploration is that its existing local communities
to ensure the smooth transition of growth opportunities
are generally already very supportive of mine regeneration
through the project lifecycle
and expansion. This is because these communities are often
• Implement comprehensive crisis management plans across all
directly or indirectly economically reliant on the continued and
growth projects
GROUP GUIDANCE
profitable operation of Gold Fields’ mines. As such, most of Gold
Fields’ engagement efforts in this regard are focussed on their
remaining advanced projects.
Our regional growth teams are supported in this respect by
Group-level guidance based on international best practice,
STAKEHOLDER ENGAGEMENT AROUND OUR GROWTH
which can be found at www.goldfields.com/sus-guide.php
PROJECTS
This includes:
• The ISO 14001 and OHSAS 18001 Certified Environment,
Health and Safety Management Systems
• Gold Fields’ Community Policy
• Gold Fields’ Community Relations Handbook
• Gold Fields’ Community Relations and Stakeholder
Engagement Guidelines
• Gold Fields’ Shared Value strategy (p114 – 115)
• Gold Fields’ Energy and Carbon Guideline
• Gold Fields’ Water Management Guideline
1 AA 1000 AccountAbility Principles Standard 2008
Gold Fields’ approach to growth-focussed stakeholder
engagement is based on our Community Relations Handbook
and Guidelines, which are aligned to the AA 1000 principles
of inclusivity, materiality and responsiveness1. This includes
extensive and ongoing engagement with, among others:
• Local community members
• Local traditional representatives
• Local and national government officials
• Local and national non-governmental organisations (NGOs)
The Gold Fields Integrated Annual Report 2014 PiLLAr: groWing goLd FiELdS
83
More specifically, this approach is supported by:
5.2.3 Supporting project divestment
• The installation of community relations experts at each project
• Ongoing stakeholder mapping, analysis and monitoring
• Detailed risk analysis – and the implementation of effective
risk management action plans
KEY STAKEHOLDER ISSUES IN 2014
Some of Gold Fields’ key interactions between its regional
growth teams and local stakeholders in 2014 include those
relating to:
• Water availability and access for the Salares Norte project,
which is located in an arid, relatively unpopulated part of the
Atacama region of Chile. A formal water rights application was
made to the local authorities in Q1 2014
• The finalisation of an officially recognised agreement for the
Free, Prior and Informed Consent (FPIC) of the Kankana-ey
community for the progression of the Far Southeast project in
the Philippines (p88)
• The creation of local value at the Far Southeast Project –
including capacity-building for local community members.
This is to ensure they are able to positively contribute to this
process and benefit from its outcomes as the project develops
• Ongoing engagement with local indigenous groups at the
Agnew/Lawlers, Granny Smith and St Ives mines in Australia
regarding land access for near-mine drilling and the protection
of cultural heritage
Aside from supporting our own growth activities, a proactive
sustainability approach also supports Gold Fields’ ability to
divest itself of unsuitable growth projects – a key issue in the
context of Active Portfolio Management. Project divestment can
place particular pressure on relations with local communities,
due to frustrated expectations around employment creation
and revenue generation, as well as Gold Fields’ withdrawal
from hard-won stakeholder relationships. In this context, the
Company’s regional growth teams actively work with community
relations specialists to:
• Explain the transition process
• Mitigate the impacts of our withdrawal
• Honour our existing commitments
Examples of key interactions in this regard include:
• The development of environmentally sensitive work plans
for the Arctic Platinum Project – to support the subsequent
renewal of the project’s water permit in Q1 2015. Retention of
the water permit will play an important part in the divestment
process
• Investment in school infrastructure at the Yanfolila Project in
Mali, which the buyer of the project, Hummingbird Resources,
has undertaken to continue
This helps to ensure Gold Fields can maintain the value of its
divested assets by handing over a secure political and social
licence to purchasers. Furthermore, the Company actively
seeks out purchasers who will not undermine its own reputation
through their subsequent operational standards and approach to
stakeholder relations.
Exploration drilling at the Salares Norte project in Chile
The Gold Fields Integrated Annual Report 2014 84
PiLLAr: groWing goLd FiELdS
5.3 Near-mine exploration performance
Gold Fields
believes
that its
mines in
Australia
are key
targets for
near-mine
exploration.
Gold Fields believes that near-mine exploration
offers the best route to low-cost growth that can
generate cash in the short and medium term.
In 2014, Gold Fields raised its total near-mine
exploration expenditure by 81% to US$58 million
(2013: US$32 million) in pursuit of this strategy.
This budget supported a total of 349,511 metres of
near-mine drilling (2013: 250,158 metres).
Much of this activity was focussed on the Australia
and West Africa regions where the six mines in the
Gold Fields portfolio have strong growth potential.
5.3.1 Australia
Gold Fields believes that its mines in Australia (and
the areas around them) offer considerable upside
potential – making them key targets for near-mine
exploration. In the immediate term, such activity
will seek to capitalise on the extensive and highly
prospective tenement areas currently held, and the
proven ability to replace the ounces extracted on a
year-on-year basis. In the medium to longer term,
near-mine exploration activity will focus on adding
net ounces to the Mineral Resources and Mineral
Reserves of each mine.
This approach is informed by Gold Fields’ historical
experience with both the Agnew and St Ives mines.
Over the past 12 years, both mines have produced
over 8 million ounces of gold – and are still going
strong. Given the similar orogenic gold geology
at each of our Western Australian mines, Gold
Fields hopes to deliver similar performance from
its recently acquired Yilgarn South Assets over
time – and to continue leveraging their existing
processing plant capacity.
In this context, Gold Fields invested a total
of A$60 million (US$54 million) in near-mine
exploration at its Australian mines. Plans are
in place to increase this figure to A$85 million
(US$75 million) in 2015 – demonstrating Group
commitment in this regard.
WESTERN AUSTRALIA
Agnew/Lawlers
Darlot
Granny Smith
St Ives
PERTH
The Gold Fields Integrated Annual Report 2014 PiLLAr: groWing goLd FiELdS
85
AGNEW/LAWLERS
Mineral Resources added in 2014
Mineral Reserves added in 2014
Ounces produced in 2014
Exploration spend in 2014
Exploration budget for 2015
Exploration metres drilled in 2014
224,000 ounces
209,000 ounces
271,000 ounces
A$15.1 million
A$20.0 million
56,137 metres
The Agnew/Lawlers mine is seeking to replicate the success it
has enjoyed with the Kim ore body – which, after eight years of
mining, is nearing its end. As such, current focus is on growing
known resources.
In this context, there are several key target areas that are likely to
underwrite the longevity and sustainability of Agnew/Lawlers:
• FBH: This newly defined, high-grade underground ore body
sits immediately to the south of the Kim ore body. FBH
currently offers around 600,000 ounces in Mineral Resources
at an average grade of more than 9g/t. Development of the
FBH ore body started in 2014. It will supplement production
from the Kim ore body in the second half of 2015.
• Waroonga North and Kath: These targets are located north of
the Kim ore body and drilling to date has yielded encouraging
results. Exploration will continue to better define the extent of
these targets in 2015. In addition, drilling was carried out on
the New Holland ore body in 2014.
DARLOT
Mineral Resources added in 2014
Mineral Reserves added in 2014
Ounces produced in 2014
Exploration spend in 2014
Exploration budget for 2015
Exploration metres drilled in 2014
112,000 ounces
48,000 ounces
84,000 ounces
A$7.5 million
A$7.0 million
50,154 metres
Darlot’s 2014 priority was to self-fund an exploration programme
to replace production depletion and to extend the LoM through
discovery of a ‘game changer’ ore body able to deliver a
15% free cash flow margin. The Lords South Lower (LSL) and
Centenary Depth Analogue (CDA) areas were targeted with the
aim of providing new mining fronts. Another years’ production
was profiled at LSL creating an extended window for continued
exploration within the present mining area and near-mine. The
emphasis will however remain at CDA, where a well mineralised
sequence with similar characteristics to the previously mined
Centenary deposit shows potential for development of a new
production area.
2014 Mineral Reserve Reconciliation (koz)
1,000
953
209
865
800
600
400
200
0
297
Reserves
2013
Depletion &
Resource
Modelling
Discovery
& Inclusions
Reserves
2014
2014 Mineral Reserve Reconciliation (koz)
155
200
150
100
50
0
48
85
117
Reserves
2013
Depletion &
Exclusions
Discovery
Reserves
2014
The Gold Fields Integrated Annual Report 2014
86
PiLLAr: groWing goLd FiELdS
5.3 Near-mine exploration performance (continued)
GRANNY SMITH
Mineral Resources added in 2014
1,474,000 ounces
Mineral Reserves added in 2014
Ounces produced in 2014
Exploration spend in 2014
Exploration budget for 2015
Exploration metres drilled in 2014
406,000 ounces
315,000 ounces
A$13.0 million
A$16.9 million
77,433 metres
Granny Smith offers significant near-mine exploration potential.
This includes targets in and around the existing Wallaby
underground operation – as well as the mine’s wider 61,000ha
tenement area. These cover a geologically well-endowed area of
gold mineralisation and offer the potential for additional deposits
to be discovered, adding important and additional ore sources
to Granny Smith. Many of these areas (including Lake Carey)
have been historically underexplored – something Gold Fields
is keen to rectify. Immediate near-mine exploration will focus on
continuing drilling and extending the Wallaby ore body at depth,
as well as exploring for new, multi-million ounce ore bodies within
the tenement area.
ST IVES
Mineral Resources added in 2014
Mineral Reserves added in 2014
Ounces produced in 2014
Exploration spend in 2014
Exploration budget for 2015
Exploration metres drilled in 2014
271,000 ounces
345,000 ounces
362,000 ounces
A$24.8 million
A$41.1 million
133,765 metres
The St Ives mine continues to offer considerable upside
potential. In the near term, the key source of this upside
potential is the new, high-grade Invincible deposit, which has a
Mineral Resource of 1.03 million ounces and a Mineral Reserve
of 628,000 ounces. Given that Invincible will have grades of
between 3g/t – 4g/t, these ounces will significantly enhance
the cash-generation potential of the mine. It will also help extend
the life of the mine as production from the Athena underground
operation comes to an end in 2015. Start of production is
planned for mid-2015.
Importantly, the planned open-pit is the ‘anchor point’ for a wider
22km gold-bearing Speedway trend that extends along the Lake
Lefroy salt lake and will be the key focus areas for near-mine
exploration in 2015. In addition, St Ives started production on the
Neptune deposit in 2014. The deposit has a Mineral Resource of
508,000 ounces and Mineral Reserve of 267,000 ounces.
2014 Mineral Reserve Reconciliation (koz)
1,000
838
406
872
800
600
400
200
0
372
Reserves
2013
Depletion
& Costs
Resource
Modelling &
Stockpile
Reserves
2014
2014 Mineral Reserve Reconciliation (koz)
2,400
2,022
2,000
1,600
1,200
800
400
0
345
1,803
565
Reserves
2013
Depletion,
Resource
Modelling,
Exclusions & Costs
Discovery
Reserves
2014
The Gold Fields Integrated Annual Report 2014
PiLLAr: groWing goLd FiELdS
87
5.3.2 West Africa
Although both of Gold Fields’ mines in Ghana offer potential
near-mine exploration opportunities, 2014 has seen most activity
focussed on the Damang mine.
TARKWA
Mineral Resources added in 2014
Mineral Reserves added in 2014
Ounces produced in 2014
Exploration spend in 2014
Exploration budget for 2015
Exploration metres drilled in 2014
457,000 ounces
782,000 ounces
558,000 ounces
US$0.18 million
US$1.50 million
Samples only
An extensive soil sampling programme carried out at Tarkwa in
2014 indicates the presence of hydrothermal deposits near to
its existing processing plant. An initial infill-drilling programme
will commence in Q1 2015 to establish the down-dip extension
of the hydrothermal deposit. In addition, plans are in place to
extend future near-mine exploration on Tarkwa’s mining lease,
in areas which had not been subject to drilling for more than
a decade.
DAMANG
Mineral Resources added in 2014
Mineral Reserves added in 2014
Ounces produced in 2014
Exploration spend in 2014
Exploration budget for 2015
Exploration metres drilled in 2014
16,000 ounces
362,000 ounces
178,000 ounces
US$3.8 million
US$2.9 million
26,155 metres
Damang – which had until recently been facing potential closure
(p62) – continues to offer significant growth potential. This
includes potential extensions to the existing Juno pit, combining
Huni and Saddle into a single pit, as well as at Tomento North
and Amoanda.
The mine is also focussing its longer-term near-mine exploration
activity on potential ore sources within a 17km mineralisation
trend running from the Damang pit to the Rex pit. This is with
the aim of adding additional Mineral Resources and Mineral
Reserves over the next three years, substantially extending
Damang’s Life-of-Mine.
2014 Mineral Reserve Reconciliation (koz)
8,000
7,273
782
7,491
564
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Reserves
2013
Depletion
Model changes,
Pit design,
Pillar inclusion
& Cut-off Grade
Reserves
2014
2014 Mineral Reserve Reconciliation (koz)
1,400
362
1,235
1,073
200
1,200
1,000
800
600
400
200
0
Reserves
2013
Depletion
Inclusions,
Mine Call Factor,
Marginal Ore
& Cut-off Grade
Reserves
2014
The Gold Fields Integrated Annual Report 2014
88
PiLLAr: groWing goLd FiELdS
5.4 Update on our remaining growth projects
In 2014, Gold Fields continued – through its Active Portfolio
Collectively, these qualities mean Salares Norte offers significant
Management approach – to build on its efforts to maximise cash
potential in terms of future cash generation. As such, the
generation through a serious rationalisation of its exploration
decision has been made to retain it within Gold Fields’ growth
and growth projects. This has not only improved the quality of
portfolio – and to explore its potential further. Indeed, an
the Group’s growth portfolio (e.g. in terms of cash-generation
exploration budget of US$23 million has been made available
potential), but also significantly reduced expenditure on the
for further drilling work in the first half of 2015 – with a potential
maintenance and development of growth projects that are not
pre-feasibility study to commence in Q4 2015.
ultimately aligned with Gold Fields’ strategic objectives.
Nonetheless, the Active Portfolio Management approach did
identify two advanced growth projects that justified continued
inclusion in Gold Fields’ growth portfolio. Salares Norte in Chile
meets all of the key criteria. It is in ‘the right address’, offers the
right metal and is commercially sustainable. Far Southeast in the
Philippines offers a world-class copper-gold deposit with the
potential to deliver substantial strategic benefits to the Group
in the long term. Further details about the two growth projects
– both of which sit within Gold Fields’ existing regions – are
outlined in this section.
5.4.1 Salares Norte, Chile
5.4.2 Far Southeast, Philippines
The Far Southeast Project is a proposed underground gold-
copper porphyry mine located in northern Luzon – 250km
north of Manila. The project is one in which Gold Fields has a
40% interest, with an option to increase its stake to 60%, and
is focussed on an existing mining operation with established
infrastructure. Lepanto Consolidated Mining of the Philippines
holds the remaining 60% interest. Far Southeast is a 900 million
tonne copper/gold porphyry with grades of approximately 0.7g/t
gold and approximately 0.5% copper. At end-December 2012 it
declared an Inferred Mineral Resource of 19.8 million ounces of
gold and 9,921Mlb of copper.
The Salares Norte advanced drilling project is 100% Gold
The ultimate execution of the project will require the Free, Prior
Fields owned and is focussed on a gold-silver deposit in the
and Informed Consent (FPIC) of local Kankana-ey indigenous
Atacama region of northern Chile. Mineralisation is contained
people. Under the laws of the Philippines, the FPIC of the
within a high-sulphidation epithermal system – offering high-
Kankana-ey is a prerequisite for the ultimate granting of a
grade, shallow oxides. The project is located within a core 900ha
Financial or Technical Assistance Agreement (FTAA) to Gold
concession area – and Gold Fields enjoys an option to purchase
Fields. The FTAA is a regulatory instrument that allows for
two adjoining concessions that would add a further 2,100ha.
majority foreign ownership of mining projects – and is subject to
In 2013, Gold Fields reported a maiden 23.3 million tonne
a lengthy administrative process.
Inferred Mineral Resource of 3.1 million ounces of gold
In this context, Gold Fields signed a formal Memorandum of
at a grade of 4.1g/t, and 34 million ounces of silver at an
Agreement with the Mankayan Council of Elders – the body that
average grade of 45g/t. Preliminary indications, supported by
offers the FPIC of the Kankana-ey community. This builds on a
metallurgical test work, suggest Carbon-in-Leach processing
strong demonstration of support by the Council of Elders for the
could deliver recovery rates of around 90%. Furthermore, the
development of the project during a high-profile vote in Q2 2013.
project is located in a highly favourable mining jurisdiction and
sits in a remote location far from any communities.
The FPIC process continues to be supported by Gold
Fields’ efforts to leverage its positive economic impacts –
Water security is not expected to pose a material challenge to
through the establishment of a strategic ‘development hub’ in
project execution and operation. But it is an issue that requires
the area. Ongoing community projects include, for example,
proactive management. In Q1 2014, Gold Fields filed a water
the establishment of an interactive library and community
rights application with the regulatory authorities for a nearby
information centre, enterprise and livelihood training for food
reservoir that could potentially yield 166 litres per second
security in agriculture and livestock and water infrastructure.
– which would be more than sufficient for future operations.
The holding costs of this project have been reduced to
The remote location of the site means there will be minimal
approximately US$400,000 per month, related mainly to
community impacts. Although there is a small possibility that
community engagement work as well as activities to support the
indigenous Colla ancestral lands are present in the project area,
permitting process.
this does not appear to be a material issue.
The Gold Fields Integrated Annual Report 2014 PiLLAr: groWing goLd FiELdS
89
5.4.3 Disposals
In 2014, Gold Fields continued to dispose of a number of growth
assets – as set out in the figure below. This is in line with the
Group’s strategy of focussing on growing cash flow on a per
ounce basis.
Further material development of the project will be dependent
on the granting of an FTAA and majority ownership by Gold
Fields (with these prerequisites unlikely to be in place before
2016). Although initial focus was on the potential development
of a major new mine at the site, current focus is (in line with
current strategies) on the development of a less capital-
intensive, higher-grade scoping study that can generate cash
in the nearer term. A scoping study is underway that should
be completed in the first half of 2015. If the project proceeds
sometime in the future, Gold Fields is likely to integrate additional
project partners.
FiGure 5.2: Disposal of exploration and growth projects
yanfolila (mali)
woodjam (canada)
100% held
85% to Hummingbird Resources
Arctic platinum project (Finland)
US$20m (in Hummingbird shares)
100% held
Not a majority gold project
Does not fit with growth strategy
Not a gold project
wooDJAm (cAnADA)
Arctic plAtinum proJect (FinlAnD)
tAlAS (kyrGyZStAn)
yAnFolilA (mAli)
ASoSA (ethiopiA)
FAr SoutheASt
(philippineS)
chucApAcA (peru)
SAlAreS norte (chile)
chucapaca (peru)
Asosa (ethiopia)
talas (kyrgyzstan)
51% to Buenaventura
56%
100% to Robust Resources
US$81m + 1.50% royalty on future gold,
Cash and shares
silver and copper production
Does not fit with growth strategy
Higher-risk operating environment
US$2m plus US$10.3m in Robust
Resources shares – since cashed out
for A$5m + 2% royalty
Does not fit with growth strategy
eXplorAtion proJectS
• toodoggone, canada
51%
Sale pending
• Australian exploration portfolio
(five projects)
• tacna, peru
100%
100%
Sale pending + JV
Sale pending
KEY
Sold
Retain/Reconfigure
Sale pending
The Gold Fields Integrated Annual Report 2014 90
PiLLAr: groWing goLd FiELdS
5.5 Mineral Resource and Mineral Reserve
Statement
Gold Fields’ Mineral Resource and Mineral Reserve strategy has
been focussed on cash flow maximisation, which includes the
implementation of a number of key interventions:
• The elimination of marginal mining at all operations
• Rationalisation of corporate, regional and operational
structures in conjunction with the strengthening of the
regionalised model. As a result the West Africa, Americas and
Australia regions are now appropriately resourced to focus on
building a sustainable business
• Capital rationalisation and prioritisation (without undermining
the future integrity of the operations)
• Divestment of growth projects that are not fully aligned
with our business objectives
A Mineral Resource gold price of US$1,500/oz and Mineral
Reserve price of US$1,300/oz have been used for this
declaration. This equates to A$1,570/oz and A$1,370/oz and
R480,000/kg and R420,000/kg respectively. The gold price used
for the Mineral Reserve declaration of US$1,300/oz is within
the guidelines of the US Securities and Exchange Commission
(SEC), as it is lower than the three-year trailing average price
of US$1,450/oz. The copper price used for Mineral Resource
estimation is US$3.50/lb and US$3.0/lb for Mineral Reserves.
Although the gold price used for the reserves is higher than
the current spot price, our focus on strategically positioning the
operations to deliver leading AIC, AISC and cash flow margins
underpins their resilience to gold prices periodically trending
lower. Business planning, over the next five years, entails the
selection of cut-off grades, optimised pit shells, pit staging and
stope sequencing with the objective of ensuring that operations
are sustainable and cash generative in the short to medium term
at lower gold prices. Our commitment to ongoing exploration and
resource to reserve conversion aims to ensure a quality pipeline
of reserves that will maintain operational flexibility and assist in
sustaining margins at varying gold prices going forward. Annual
production’s alignment to relevant Mineral Reserve head grades
shows that, notwithstanding our focus on cash flow margins, we
ensure retention of the longer term Life-of-Mine integrity.
This section represents a condensed and consolidated
overview of Gold Fields’ Mineral Resource and Mineral Reserve
Supplement. The Supplement contains a comprehensive
review of our Mineral Resources and Mineral Reserves as at
31 December 2014, including additional detail on individual
operations with respect to location, mine infrastructure, key
operating statistics, geology, mining, processing, projects and
sustainable development. It is available on the Gold Fields
website at www.goldfields.com/inv_rep_ar.php.
5.5.1 corporate governance
The Group’s December 2014 Mineral Resource and Mineral
Reserve Statement has been prepared in accordance with the
requirements of the South African Code for the Reporting of
Exploration Results, Mineral Resources and Mineral Reserves
(the SAMREC Code, 2007 edition, as amended in 2009) and
Industry Guide 7 for reporting to the SEC. Other relevant
international codes are recognised where geographically
applicable.
In line with our commitment to sound corporate governance,
this statement has been internally reviewed by regional and
corporate technical and financial experts and, where applicable,
also reviewed by leading, independent mining consultancies.
This declaration has been found to fulfil the requirements of
the relevant reporting codes, and the procedure followed in
producing the statement is aligned to the guiding principles of
the United States’ Sarbanes-Oxley (SOX) Act of 2002.
The headline Mineral Resource and Mineral Reserve Statement
as at 31 December 2014 is compared to the 31 December 2013
declaration in Figures 5.4 and 5.5. The Mineral Resource and
Mineral Reserve figures are estimates at a point in time, and will
be affected by fluctuations in the gold price, US Dollar currency
exchange rates, costs, mining permits, changes in legislation
and operating factors. All metal commodities are reported
separately. As a result, no gold equivalents are stated to avoid
potential anomalies generated through year-on-year metal
price differentials.
Although all permits may not be finalised and in place at the
time of reporting, there is no reason to expect that these will
not be granted. However, the length of the approval process
for such permits may have an impact on the schedules stated.
All financial models are based on current tax regulations as
at 31 December 2014.
All Mineral Resource and Mineral Reserve figures are managed
unless otherwise stated. Mineral Resources are reported
inclusive of Mineral Reserves and stability pillars when
appropriate. The estimated volumes are reported in metric
tonnes (t).
The respective operation-based Mineral Resource managers
and relevant project managers have been designated as the
competent persons in terms of SAMREC and take responsibility
for the reporting of the Gold Fields Mineral Resources and
Mineral Reserves. Corporate governance on the overall
regulatory compliance of these figures has been overseen
and consolidated by the Gold Fields Competent Person,
Tim Rowland, who consents to the disclosure of this Mineral
Resource and Mineral Reserve Statement. Mr Rowland is Vice-
President, Mineral Resource Management and Mine Planning,
Pri-Sci Nat No 400122/00, BSc (Hons) Geology, MSc Mineral
Exploration, GDE Mining Engineering and FSAIMM, FGSSA and
GASA), with 29 years’ relevant experience in the mining industry.
He is a permanent employee of Gold Fields.
The Gold Fields Integrated Annual Report 2014 PiLLAr: groWing goLd FiELdS
91
5.5.2 Group summary
At 31 December 2014, Gold Fields had total attributable
gold and copper Mineral Resources of 108.3 million ounces
(December 2013: 113.4 million ounces) and 6,873 million
pounds (December 2013: 7,120 million pounds), respectively.
Attributable gold and copper Mineral Reserves are 48.1 million
ounces (December 2013: 48.6 million ounces) and 620 million
for underground mining. These changes, together with mine
design enhancements, the sale of the Chucapaca and
Yanfolila projects, as well as mining depletion for the year, were
primarily responsible for the reduction in the Mineral Resources
(-8.5 million ounces gold), while Mineral Reserves (-500,000
ounces gold) remained fairly constant, despite mining depletion
of 2.3 million ounces of gold across the Group.
pounds (December 2013: 708 million pounds) respectively, net
The respective gold and copper Mineral Resource figures
of mined depletion.
The unchanged (year-on-year) metal prices and generally
increased mining costs used for this year’s resource modelling
and Life-of-Mine planning has resulted in marginally smaller
pit shells for surface mining and optimised stope designs
(December 2014) are inclusive of all eight operating mines,
as well as the APP, Salares Norte, Woodjam and Far Southeast
projects. Other commodities and by-products that are reported
as part of the Mineral Resource (platinum, palladium, nickel
and silver) are contained in the Mineral Resource and Mineral
Reserve Statement Supplement.
FiGure 5.3: Managed gold Mineral Resources
FIGURE 5.2: Managed gold Mineral Resources
Moz
Growth projects
(4,43)
Americas region
Australia region
West Africa region
South Africa region
(0,30)
(1,48)
(2,04)
(0,21)
28,70
24,27
3,32
3,02
11,52
10,04
16,87
14,83
(10)
0
10
20
30
40
50
60
70
Variance
Dec 2013
Dec 2014
76,25
76,05
80
90
The South Africa region accounts for 59% of our managed gold Mineral Resources, West Africa 12%, Australia 8%, the Americas 2%
and our growth projects 19%.
FiGure 5.4: Managed gold Mineral Reserves
FIGURE 5.2: Managed gold Mineral Reserves
Moz
Americas region
Australia region
West Africa region
(0,27)
(0.34)
2,03
1,76
3,97
3,63
0,38
South Africa region
(0,21)
8,35
8,73
(5)
0
5
10
15
20
25
30
35
Variance
Dec 2013
Dec 2014
38,22
38,02
40
45
The South Africa region accounts for 73% of our managed gold Mineral Reserves, West Africa 17%, Australia 7% and the
Americas 3%.
The Gold Fields Integrated Annual Report 2014 92
PiLLAr: groWing goLd FiELdS
5.5 Mineral Resource and Mineral Reserve Statement (continued)
FIGURE 5.5: Gold Fields Mineral Resource and Mineral Reserve Statement as at 31 December 20141
heADline numberS
Gold only
Total Operating Mines
Total Projects
total operating mines
managed mineral resources
Attributable ounces
31 Dec 2014
31 Dec 2013
31 Dec 2014 31 Dec 2013
tonnes
(mt)
903.9
1 164.6
Grade
(g/t)
3.58
0.65
Au
(moz)
103.925
24.271
Tonnes
(Mt)
975.0
1 291.4
Grade
(g/t)
3.44
0.69
Au
(Moz)
107.958
28.705
Gold
(moz)
96.187
12.104
Gold
(Moz)
100.049
13.344
and projects
2 068.6
1.93
128.196
2 266.4
1.88
136.663
108.291
113.393
operAtionAl SummAry
managed mineral resources
Attributable ounces
Gold
Australia operations
Agnew/Lawlers
Darlot
Granny Smith
St Ives
total Australia region
South African
operations
South Deep
total South Africa
region
peru operation
Cerro Corona
total Americas region
Ghana operations
Damang
Tarkwa2
total west Africa region
operations – total Gold
31 Dec 2014
31 Dec 2013
31 Dec 2014 31 Dec 2013
tonnes
(mt)
Grade
(g/t)
Gold
(koz)
Tonnes
(Mt)
Grade
(g/t)
Gold
(koz)
resource
(koz)
Resource
(koz)
13.8
1.1
17.4
30.1
62.4
5.79
7.17
6.61
3.63
5.00
2 570
263
3 696
3 508
10 037
19.2
1.6
36.2
38.4
95.4
5.92
5.3
2.8
3.51
3.75
3 657
271
3 254
4 340
2 570
263
3 696
3 508
3 657
271
3 254
4 340
11 521
10 037
11 521
382.4
6.19
76 046
382.8
6.20
76 249
69 804
70 042
382.4
6.19
76 046
382.8
6.20
76 249
69 804
70 042
115.2
115.2
85.3
258.7
344.0
903.9
0.81
0.81
1.92
1.15
1.34
3.58
3 015
3 015
5 260
9 568
14 827
103 925
125.3
125.3
95.8
275.7
371.5
975.0
0.82
0.82
2.14
1.16
1.41
3.44
3 318
3 318
6 579
10 291
16 870
107 958
3 001
3 001
4 734
8 611
13 345
96 187
3 303
3 303
5 921
9 262
15 183
100 049
Attributable
Attributable
copper
(mlbs)
1 001
Copper
(Mlbs)
1 119
(peru) – cerro corona
copper
tonnes
(mt)
Grade
(% cu)
copper
(mlbs)
Tonnes
(Mt)
Grade
(% Cu)
Copper
(Mlbs)
Copper (Cu) only
108.0
0.42
1 006
118.3
0.43
1 124
1 Managed unless otherwise stated
2 Includes 65Mt of surface stockpiles at an ore grade of 0.43g/t
The Gold Fields Integrated Annual Report 2014
PiLLAr: groWing goLd FiELdS
93
FIGURE 5.6: Gold Fields Mineral Reserve Statement as at 31 December 20141
heADline numberS
managed mineral reserves
Attributable ounces
31 Dec 2014
31 Dec 2013
31 Dec 2014 31 Dec 2013
Gold only
tonnes
(mt)
Grade
(g/t)
Au
(moz)
Tonnes
(Mt)
Grade
(g/t)
Au
(Moz)
Gold
(moz)
Gold
(Moz)
Total Operating Mines
558.1
2.90
52.123
563.2
2.90
52.564
48.122
48.608
total operating mines
and projectsz
558.1
2.90
52.123
563.2
2.90
52.564
48.122
48.608
operAtionAl SummAry
Gold
Australia operations
Agnew/Lawlers
Darlot
Granny Smith
St Ives
total Australia region
South African
operations
South Deep
total South Africa
region
peru operation
Cerro Corona
total Americas region
Ghana operations
Damang
Tarkwa2
total west Africa region
total Gold
managed mineral reserves
Attributable ounces
31 Dec 2014
31 Dec 2013
31 Dec 2014 31 Dec 2013
tonnes
(mt)
Grade
(g/t)
Gold
(koz)
Tonnes
(Mt)
Grade
(g/t)
Gold
(koz)
reserve
(koz)
Reserve
(koz)
3.6
0.4
4.5
17.8
26.3
7.44
7.36
6.02
3.14
4.28
865
85
872
1 803
3 625
4.2
1.0
4.1
20.7
30.0
7.05
5.07
6.34
3.03
4.11
953
155
838
2 022
3 968
865
85
872
1 803
3 625
953
155
838
2 022
3 968
223.2
5.30
38 016
224.4
5.30
38 224
34 896
35 113
223.2
5.30
38 016
224.4
5.30
38 224
34 896
35 113
60.5
60.5
25.7
222.4
248.1
558.1
0.90
0.90
1.49
1.05
1.09
2.90
1 757
1 757
1 235
7 491
8 725
52 123
67.1
67.1
22.8
218.8
241.6
563.2
0.94
0.94
1.46
1.03
1.07
2.90
2 025
2 025
1 073
7 273
8 346
1 749
1 749
1 111
6 742
7 853
52 564
48 122
2 016
2 016
966
6 546
7 512
48 608
Attributable
Attributable
(peru) – cerro corona
copper
tonnes
(mt)
Grade
(% cu)
copper
(mlbs)
copper (cu) only
60.5
0.47
623
Tonnes
(Mt)
67.1
Grade
(% Cu)
0.48
Copper
(Mlbs)
712
copper
(mlbs)
620
Copper
(Mlbs)
708
1 Managed unless otherwise stated
2 Includes 65Mt of surface stockpiles at an ore grade of 0.43g/t
The Gold Fields Integrated Annual Report 2014
94
PiLLAr: groWing goLd FiELdS
5.5 Mineral Resource and Mineral Reserve Statement (continued)
5.5.3 regional summary
AmericAS
operations
The Americas region has a declared managed gold
Mineral Resource of 3.0 million ounces at December 2014
(December 2013: 3.3 million ounces) and a gold Mineral
Reserve of 1.8 million ounces (December 2013: 2.0 million ounces).
In addition, it has a managed copper Mineral Resource and
Mineral Reserve of 1,006 million pounds (December 2013:
1,124 million pounds) and 623 million pounds (December 2013:
712 million pounds), respectively. Of this, 99.5% is attributable to
AuStrAliA
operations
The Australia region has a declared managed gold Mineral
Resource of 10 million ounces (December 2013:
11.5 million ounces) and a gold Mineral Reserve of 3.6 million
ounces (December 2013: 4.0 million ounces) and is 100%
attributable to Gold Fields. These figures are net of 1.0 million
ounces from mined depletion. A key highlight for 2014 was that
production from the region exceeded the one million ounce
mark. St Ives is also planning to bring the Invincible pit into
production during the first half of 2015.
Gold Fields.
Far Southeast project
These figures are net of 153,600 ounces of gold and around
71 million pounds of copper from mined depletion.
woodjam project
The total declared Mineral Resource for the Woodjam Project
in British Columbia, Canada, remains unchanged at 584,000
ounces of gold and 1,705 million pounds of copper. The project
is 51% attributable to Gold Fields and has been put up for sale.
Salares norte project
Gold Fields holds a 100% interest in the Salares Norte Project,
which is situated in the Atacama region in northern Chile. The
project has an Inferred Mineral Resource of 3.1 million ounces
gold and 34 million ounces silver.
An Inferred Mineral Resource for the Far Southeast deposit
was declared in September 2012 – this remains unchanged
as at December 2014. This reported 891.7Mt at 0.7g/t Au and
0.5% Cu for 19.8 million ounces of gold and 9,921Mlb of copper,
inside a mining constraint which assumed an eventual non-
selective, bulk underground mining method. The classification
of Inferred was applied based on drill hole spacing, estimation
quality, geological continuity and geological understanding of
the deposit in early 2012 and is compliant with the SAMREC
Code. A total of 40% of this Mineral Resource is attributable
to Gold Fields.
Exploration drilling at Woodjam project in Canada
The Gold Fields Integrated Annual Report 2014 PiLLAr: groWing goLd FiELdS
95
South AFricA
operations
weSt AFricA
operations
The South Africa region has a total declared managed gold
The West Africa region has a declared managed gold Mineral
Mineral Resource of 76.0 million ounces (December 2013:
Resource of 14.8 million ounces (December 2013: 16.9 million
76.2 million ounces) and a gold Mineral Reserve of 38.0 million
ounces) and a gold Mineral Reserve of 8.7 million ounces
ounces (December 2013: 38.2 million ounces), of which, 91.8%
(December 2013: 8.3 million ounces), which are 90% attributable
is attributable to Gold Fields, in line with the agreed phase-in
to Gold Fields. These figures are net of 736,000 ounces from
participation of BEE partners over 20 years. Ultimately the BEE
mined depletion.
partners’ stake will be 10%. These resource and reserve figures
are net of 200,500 ounces from mined depletion during 2014.
Damang is currently bedding down the improved quality of
production and is reviewing further opportunities within its lease
At South Deep all mining-related activities were severely
area. The mine is also focussing its medium-term near-mine
curtailed for most of 2014 due the introduction of an extensive
exploration activity on potential ore sources within an 8km
ground support remediation programme. A review of South
mineralisation trend running from the Damang pit complex to
Deep’s current mining layout and methodology as well as
the Amoanda pit. The Mineral Reserve of 1.2 million ounces is
the geotechnical regime, commenced in 2014. The need for
steady compared to that of December 2013 (1.1 million ounces)
a fundamental change in the regional pillar configuration of
with positive cash flows forecast for the current six-year
260 x 60 metres has been recognised, which will require more
Life-of-Mine.
mining corridors as mining moves deeper.
Importantly, this currently remains work in progress and
geotechnical modelling and final independent peer review is
time. Several hydrothermal prospects are being reviewed as
possible additional sources of ore that can potentially extend the
Tarkwa’s figures are inclusive of the Teberebie pillar for the first
scheduled for 2015 to validate the work being completed by
life of the mine.
external consultants. Further optimisation and the tailoring of
selected pillar layouts to adapt to local conditions across the
proJectS For DiSpoSAl
mine will still be necessary. Final approval and sign-off of the
Arctic platinum project (App)
The total Mineral Resource figures for APP remain unchanged
year-on-year. APP in Finland has a Mineral Resource of
786,000 ounces of gold, 2.4 million ounces of platinum and
9.8 million ounces of palladium – as well as 1,034 million pounds
of copper and 438 million pounds of nickel. Of this 100% is
attributable to Gold Fields. The project has been put up for sale.
new pillar configuration impacting the Life-of-Mine plan can
realistically only be expected during the course of 2015.
In addition, two alternative mining methods are under review.
The first method is the 4.5 x 4.5 metre destress method and
the second is the Inclined Mining Slot method. Both of these
methods, if successful, could significantly de-risk the South
Deep build-up plan and future production profiles, and could
have a meaningful positive impact on costs and the schedule.
The destress method will be piloted in discrete areas of the mine
during 2015. It is too early to assess whether either of these
methods could be commercially deployed.
Concurrent with the review of the geotechnical layout, Gold
Fields is undertaking a wholesale strategic review of the
operation with the objective of achieving self-funding as soon as
possible – likely at the end of 2016 at current rand gold prices –
and deliver consistent free cash flow margins.
Given the material influence of these studies, a holding pattern
has been adopted with regard to the Mineral Resource and
Mineral Reserve declaration for December 2014 in that the
December 2013 model will merely be depleted for annual
production and not be supported by a new design and
schedule. In 2015 we will however focus on a new mining
strategy which is aligned to the new pillar configuration, once
finalised, and new mine designs and schedules will inform the
December 2015 Mineral Reserves.
The Gold Fields Integrated Annual Report 2014 Livestock improvement project near the Cerro Corona mine in Peru
6.1 Gold Fields as an employer of choice
6.1.1 Our workforce
6.1.2
6.1.3
Employee development
Industrial relations
6.2 Government and social relations
Public policy
Total value distribution
6.2.1
6.2.2
Community relations
6.3.1
6.3.2 Community value distribution
6.3.3
Social licence to operate
Shared Value
6.3
98
98
100
101
102
102
106
108
108
111
114
6future responsibly
98
PiLLAr: SEcuring our FuturE rESPonSibLy
6.1 Gold Fields as an employer of choice
Gold Fields’ People Strategy drives a high-performance culture
In total during the year, the workforce decreased 8% to
across all operations. Despite the challenges posed by the
15,440 (2013: 16,852). This total comprised 8,954 employees
current low gold price, Gold Fields remains committed to being
(2013: 10,167) and 6,486 (2013: 6,685) contractors.
an employer of choice. This means ensuring that employees:
• Receive market-aligned pay and benefits
• Have access to a wide range of training and development
opportunities
• Work in a safe, productive and respectful environment
• Are acknowledged and recognised for their role in value
creation
6.1.1 Our workforce
In line with its new, cash-generative production profile and low-
cost operating model – the Group has established a leaner, more
efficient and better skilled workforce. This has driven increased
emphasis on employee efficiency, accountability and rewards;
and enhanced training for key personnel – with particular
emphasis on further developing mechanised mining skills at
South Deep.
LABOUR SIZE AND PROFILE
These reductions were effected through both voluntary and
involuntary retrenchments – as well as through natural attrition.
A regional breakdown of retrenchments is set out below:
• The Americas: 47 (2013: 57)
• Australia: 98 (2013: 228)
• South Africa: 529 (2013: 51)
• West Africa: 628 (2013: 17)
• Corporate head office: 3 (2013: 52)
• Denver office: 4 (2013: 57)
The ongoing rightsizing of Gold Fields’ workforce has played an
important role in ensuring the Group’s long-term sustainability in
the wake of continued cost pressures, and supports the ability to
generate free cash flow despite a very challenging gold price.
Following the reduction in its headcount, Gold Fields has
focussed on ensuring that employees and contractors are:
The comprehensive restructuring of Gold Fields since 2013 – in
• Effectively deployed to operate efficiently and safely across
particular the unbundling of Sibanye Gold in 2013 – has led
the remaining production base
to a significant reduction in the size of the workforce but also
• Incentivised in-line with the Company’s sustainable cash-
to a change in the workforce profile, which now predominantly
generation targets
comprises labour-efficient mechanised mining skills.
• Equipped with the appropriate skills to achieve a world-class
mechanised mining performance
These processes continued during 2014, driven by:
• The re-basing of production and development at South Deep
• The integration of the Yilgarn South Assets, which
included workforce rationalisation at Agnew/Lawlers
• The closure of Tarkwa’s North Heap Leach facility and
workforce restructuring at Damang
FiGure 6.1: Group human resources performance
category
Total employees (excluding contractors)
Contractors
HDSA employees in South Africa (%)¹
HDSA employees in South Africa (%) (Senior Management)¹
National employees in Ghana (%) (excluding contractors)
Minimum wage ratio²
Female employees (%)
Ratio of basic salary of men to women
Employee wages and benefits (US$m)
Average training (hours per employee)
Employee turnover (%)4
2014
8,954
6,486
71
47
99
1.7
14
1.1
468
181
20.2
2013
10,167
6,685
70
44
99
3
11
1.2
595
97³
10.0
2012
9,684
8,961
68
31
98
3
12
1.4
780
142³
8.0
1 Excluding foreign nationals, but including white females and corporate office; HDSAs – Historically Disadvantaged South Africans
2 Entry level wage compared to local minimum wage. The narrowing of the ratio reflects a sharp rise in the minimum wage in Ghana
3 Figures do not include Yilgarn South Assets
4
Includes voluntary and involuntary turnover
The Gold Fields Integrated Annual Report 2014 PiLLAr: SEcuring our FuturE rESPonSibLy
99
FiGure 6.2: Workforce breakdown
Employee accommodation
total
Different accommodation options are offered to South Deep
employees below middle management level. These include
workforce employees contractors
upgraded single-unit hostel accommodation for 845 employees,
Australia
Ghana
Peru
South Deep
Corporate functions
Total
BENEFITS
2,270
6,132
1,710
5,246
82
15,440
1,564
3,344
450
3,514
82
8,954
706
2,788
1,260
1,732
0
6,486
Gold Fields remains committed to attracting and retaining
motivated, high-calibre employees. This requires the right
balance of guaranteed pay, employee benefits and both short-
and long-term incentives. In 2014, the average guaranteed pay
for employees increased 5% (2013: 5%). These rates of increase
are lower than those seen historically in the gold industry, and
partially reflect reduced competition for scarce skills in the
mining sector amid weaker commodity markets. Gold Fields
continues to provide employees (where relevant) with retirement
savings, healthcare assistance, life and disability insurance,
housing assistance and personal accident cover.
Senior managers and executives
In 2014, the Company reconfigured the balanced scorecards
and long-term incentive schemes for senior management – to
bring about closer alignment with shareholders’ interests in
the immediate and medium term. Important changes included,
inter alia:
• Explicit emphasis on cash generation
• Revision of the long-term incentive scheme to one that
rewards focus on total shareholder returns and free cash flow
margin generation
South Deep
In South Africa, in addition to the Company’s normal
benefit schemes, a lot of emphasis is also placed on the
accommodation of employees as regulated under the Mining
Charter (p104 – 105).
family unit and housing accommodation for 1,148 employees
and their families, or a living-out allowance of R2,000 (US$170)
per month, with which employees can finance their own private
accommodation.
In accordance with the Mining Charter obligations, Gold Fields
has achieved one person per room for its mine accommodation
by 31 December 2014.
The Company remains committed to ensuring that mine
accommodation affords employees privacy, dignity and a
decent living environment. In a key change to its housing
strategy during 2014, South Deep has decided to team up with
a property development firm to construct and manage 1,000
new homes between 2015 and 2018 at an average cost of about
R400,000 each. These houses will either be sold or leased to
employees. Employees who want to buy a house within a 10-year
lease period will have the option to use the South Deep home
ownership programme, comprising a housing allowance and a
subsidy in the form of an interest free loan. This programme is
set to be rolled out during 2015.
EMPLOYMENT OF NATIONALS
Gold Fields is committed to employing nationals (and in South
Africa, HDSAs) where possible, as this maximises the impact
of its operations on host societies in terms of economic value
generation and skills transfer. Gold Fields’ approach aims to:
• Enhance the local skills base, build local capacity and foster
international employment standards
• Contribute to local development through the direct/indirect
economic impacts from workers’ salaries
• Meet relevant national regulatory requirements
FiGure 6.3: Proportion of nationals per region
region
Peru
Australia
South Africa
Ghana
2014
99.2%
98%
84%1
99%
2013
99.9%
97%
83%
99%
1 71% HDSAs in management in South Africa (excludes foreign nationals, but includes
white females and corporate office)
The Gold Fields Integrated Annual Report 2014
100
PiLLAr: SEcuring our FuturE rESPonSibLy
6.1 Gold Fields as an employer of choice (continued)
6.1.2 Employee development
The provision of world-class training and skills development
is central to driving a high-performance culture. It enables the
Group to attract and retain the best talent; enhance employee
productivity and safety; and achieve its strategic objectives.
In 2014, approximately US$13.4 million – 1% of our revenue –
was spent on training and skills development across the Group
(2013: US$16 million – 1% of our revenue). This was invested
chiefly in the delivery of fit-for-purpose technical training,
comprehensive leadership development programmes and
training to ensure global alignment with the new Gold Fields
culture.
• Artisan upskilling: Highly skilled artisans from Australia were
brought to South Deep to coach and mentor our local artisans.
A foreman training programme was also developed to ensure
that supervisors were able to support artisans on the job.
• Specialist training in mechanised mining: As previously
planned, a team of highly qualified mechanised mining
experts were brought in from Australia. This was with the aim
of transferring their technical mechanised mining expertise
and supporting the establishment of international mechanised
mining standards at the mine – whilst remaining sensitive to
the mine’s history and context. The majority of this team has
since left South Deep after assisting with the ongoing training
and skills transfer programmes. Furthermore, 12 South Deep
employees visited our Australian mines and teamed up with
Extensive technical training was carried out in all regions.
their counterparts at these operations.
This included bespoke programmes targeting supervisors and,
at South Deep, a particular focus on mechanised mining skills
• Skills and leadership training for managers: Gold Fields
assessed the competency of all employees at D-band and
development. On the leadership development front, all regions
above. This included a series of psychometric and literacy
rolled out a management development programme.
tests, as well as ‘in-basket’ and roleplay exercises. The results
Around 86% of employees underwent training in the Gold
Fields ‘DNA’ – an internal programme that defines the Gold
Fields culture, values, strategic objectives, ways of working and
engagement with stakeholders.
SKILLS DEVELOPMENT AND TRAINING AT SOUTH DEEP
A major independent review at South Deep identified a number
of shortfalls in the mine’s workplace culture, practices and skills
base. These relate to a shortage of advanced underground
mechanised mining skills, the challenging nature of the project
itself, unsafe behaviour and workforce legacy issues. It is of
strategic importance that these challenges are addressed as
they are acting as a key barrier in the journey of the mine from
development to full production.
In this context, Gold Fields undertook the following initiatives in
2014:
are informing future training needs of individual employees –
and of the management team as a whole. The first Gold Fields
management development programme was run for middle- to
senior managers
• Training on the new operating model: An intensive training
programme was implemented to support the safe and
effective shift to the 7-2/7-5 roster. The focus here was not only
on the new roster schedule but also on launching
a) a new safety induction training programme, b) Gold Fields’
DNA campaign, c) mechanised mining awareness
programme, d) basic supervisory skills, e) performance and
talent management processes and procedures, f) health
key tips and how to ask for support, and g) update of all
personnel records and data clean up
• Recognition of prior learning programme: This programme
enables employees to receive formal qualifications linked to
their current employment profile
• Review of job profiles: Around 30 core job profiles were
• Operator skills assessment and training: All operators
were reassessed to better understand their skill levels. In
revised to better suit the needs of underground mechanised
mining. This included the review of role profiles for all mine
response, a competency programme was implemented to
executives, operators, artisans, business critical positions
ensure every operator had a valid licence to operate relevant
and future positions
mining equipment – and additional training was also delivered
to operators and artisans working with new specialised
mechanised mining equipment. Where appropriate English
language literacy was lacking, operators were offered Adult
Basic Education and Training (ABET) courses to improve
their literacy.
In addition, a wider training strategy is being developed to
meet the future needs of the mine. The focus in 2014 was on
operators and artisans and ensuring key and critical roles had
highly skilled employees.
The Gold Fields Integrated Annual Report 2014 PiLLAr: SEcuring our FuturE rESPonSibLy
101
6.1.3 industrial relations
WEST AFRICA
During 2014, Gold Fields continued to focus on improving
relations with the Ghana Mineworkers Union (GMWU), following
illegal strikes at the Tarkwa and Damang mines in 2013. The
Group engaged closely with the GMWU over the retrenchment
of workers at both Damang and Tarkwa. Constructive dialogue
focussed on the specific challenges posed by the low gold price
– and the potential implications for each operation. As a result,
the retrenchment process was carried out without disruptions to
the operations.
Around three-quarters (73%) of Gold Fields’ workforce is
unionised – though patterns of union activity vary considerably
between the regions:
• The Americas: 12% (2013: 14%)
• Australia: 0% (2013: 0%)
• South Africa: 93% (2013: 91%)
• West Africa: 96% (2013: 95%)
Maintaining constructive industrial relations is particularly
important in Ghana and South Africa. In these countries Gold
Fields includes trade unions and other labour organisations
in key decision-making processes, including those relating
to compliance, health and safety, and training. This inclusive
and collaborative approach has contributed to the fact that
there were no incidents of industrial action in 2014 – legal or
otherwise.
SOUTH AFRICA
In recent years, the South African mining sector has been
affected by high-profile labour unrest. The length and magnitude
of the resulting strikes have severely affected the sector, in
particular the platinum industry. Although Gold Fields was not
affected by these issues in 2014, the risk of industrial action –
ahead of the 2015 wage talks in the gold mining sector and the
emergence of new unions in the industry – is significant and
needs to be closely and constructively managed.
Gold Fields actively engages with senior representatives from all
unions present at the mine. The National Union of Mineworkers
(NUM) is the majority union at South Deep, representing around
83% of employees. Another 10% of employees is represented
by the United Association of South Africa (UASA). Although the
Association of Mineworkers and Construction (AMCU), which
played a pivotal role in the 2014 platinum industry strikes, has
not yet gained formal recognition status at South Deep, it is
playing an increasingly influential role in the gold mining sector.
In February 2015 Gold Fields took a decision to conduct
Company-specific negotiations with organised labour around
the 2015 wage talks. While these negotiations will still be held
under the auspices of the South African Chamber of Mines, it is
not anticipated thay they will form part of the centralised wage
negotiations conducted by the Chamber on behalf of other the
gold producers operating in South Africa.
This decision was taken because, while Gold Fields shares many
of the broader socio-economic circumstances of the South
African gold producers, its only South African operation – South
Deep – has a significantly different operating model and labour
profile to the other gold mining companies. South Deep is the
only fully mechanised gold mining operation in South Africa and
it employs a small highly skilled workforce, with unique skills not
necessarily found in the gold sector – its wage structure needs
to attract and retain these specialised skilled employees.
Twin shafts at the South Deep mine in South Africa
The Gold Fields Integrated Annual Report 2014 102
PiLLAr: SEcuring our FuturE rESPonSibLy
6.2 Government and social relations
6.2.1 Public policy
As the issuer of mining licences, developers of policy and
overseers of regulation, host governments are among Gold
Fields’ most important stakeholders. Engagement with national
governments typically takes place on a collective basis through
local chambers of mines. Gold Fields also regularly engages
with regional regulatory authorities and municipal authorities
in its host communities. Gold Fields does not provide financial
contributions to political parties and lobby groups, unless
explicitly approved by the Gold Fields Board of Directors.
TAXATION AND THE MAXIMISATION OF NATIONAL MINERAL
BENEFITS
It is natural and right that governments seek to maximise the
social benefits that accrue from the extraction of scarce natural
resources. As a matter of policy Gold Fields fully complies with
the fiscal and taxation regulations and laws of the countries
it operates in, understanding that these fiscal contributions
are critical to fund governments, its employees and public
sector infrastructure and projects. Nonetheless, attempts to
secure these benefits through higher levels of targeted taxation
can – in the long term – have the opposite effect. Indeed, the
weak commodities market – including the low price of gold
– is throwing into sharp focus just how damaging short-term
attempts to secure a greater proportion of companies’ earnings
can be. Mining investment is falling, new growth projects are
being left undeveloped and existing projects are facing closure
– even without additional fiscal uncertainty. The implications
for longer-term national and host community development
are obvious.
Boilermaker at work at Tarkwa mine in Ghana
The Gold Fields Integrated Annual Report 2014 PiLLAr: SEcuring our FuturE rESPonSibLy
103
FISCAL CHALLENGES IN GHANA
In Ghana, Gold Fields continues to remain disproportionately
exposed to the consequences of a heavier fiscal regime for
the mining sector. This follows a range of fiscal measures
taken in recent years to address public budgetary challenges.
These include:
In July 2014, Australia’s new coalition government repealed
the Carbon Pricing Mechanism (CPM) – which had been
implemented under the previous administration in 2012
(p65 – 66). Gold Fields believes that the repeal of the CPM
will allow for the pursuit of more economically sustainable
approaches to carbon management in Australia.
• Increased corporate income tax rates and royalties
• A much reduced capital allowance
• Increased customs duties on mining items
• Increased ‘stool tax’ – a local tax calculated on the size
BLACK ECONOMIC EMPOWERMENT IN SOUTH AFRICA
The mining sector is regulated by the Mineral and Petroleum
Resources Development Act of 2002, which requires mining
companies to facilitate meaningful and substantial participation
of all exploration and mining lease areas
of Historically Disadvantaged South Africans (HDSAs) in
Gold Fields remains one of the largest individual contributors
to public revenues in Ghana – paying US$142 million in taxes
and other contributions last year. Whilst proud of making
the mining industry. To provide guidance on this open-
ended requirement, the Mining Charter, as revised in 2010,
was published.
such a substantive contribution to national development, this
The Mining Charter guides mining companies in their
contribution continues to be disproportionate to that of its
empowerment initiatives by providing for a range of
in-country peers.
In 2014, these commercial pressures – in combination with the
low gold price – helped influence Gold Fields’ decision to reduce
empowerment actions and a corollary time frame target
(March 2015) for their respective implementation. Our Mining
Charter Scorecard is on p104 – 105.
exploration activity to near-mine activities only and to postpone
Gold Fields’ Black Economic Empowerment ownership
the potential expansion of the Damang mine.
transactions are detailed on the Company’s website at
www.goldfields.co.za/reports/annual_report_2013/integrated/
Gold Fields continues to constructively engage with the
Government of Ghana regarding the potential introduction of
sec-ethics.php
a common taxation framework that would be equally applicable
Gold Fields, through its membership of the South African
to all gold mining companies. The first formal engagements with
Chamber of Mines, is an active participant in the Mining Industry
the Government’s Mining Review Committee in terms of a new
Growth, Development and Employment Task Team (MIGDETT).
stability agreement were held in late 2014. A level playing field
The MIGDETT is a vehicle used by the South African Department
with a supportive and globally competitive tax regime would
of Mineral Resources, companies and trade unions to promote
significantly improve fiscal predictability for the mining sector,
sustainable growth and meaningful transformation of the
which is critical for long-term investment planning.
mining sector.
PROPOSED REVIEW OF ROYALTIES IN WESTERN
AUSTRALIA
The current Government of Western Australia is reviewing
royalties charged on mining – with suggestions that gold mining
royalties could potentially be increased. Gold Fields has joined
with its peers in the region to highlight the threats posed by
such a change to the shared value that the industry generates
for a broad base of stakeholders – particularly given the current
low gold price. This includes active participation in the ‘Heart of
Gold’ publicity campaign to highlight the benefits of the industry.
A decision on the mining royalty review is expected in the first
half of 2015.
The Gold Fields Integrated Annual Report 2014 104
PiLLAr: SEcuring our FuturE rESPonSibLy
6.2 Government and social relations (continued)
FIGURE 6.4: Mining Charter Scorecard
In September 2010, the South African Department of Mineral Resources (DMR) amended the Mining Charter (the Charter) by
proclamation in the Government Gazette.
All mining rights holders (including South Deep as the mining rights holder) are required to submit an annual compliance assessment
to the DMR on progress made against meeting the annual targets in the Charter. Gold Fields had submitted its 2012 and 2013 annual
assessment report in accordance with these requirements. In early 2015, the DMR requested all mining rights holders
ELEMENT
DESCRIPTION
MEASURE
REPORTING
Report on the level of compliance with the
Revised Charter for the calendar year
Documentary proof of receipt from the DMR
OWNERSHIP
Minimum target for effective HDSA ownership
Meaningful economic participation
HOUSING AND
LIVING CONDITIONS
PROCUREMENT
AND ENTERPRISE
DEVELOPMENT
Conversion and upgrading hostels to attain the
occupancy rate of one person per room
Percentage reduction of occupancy rate towards 2014
target
Occupancy rate of one person per room
Hostels: South Deep has completed 100% of the planned hostel upgrades. At the end of December 2014, the
occupancy rate averaged one person per room, thus meeting the Mining Charter compliance scorecard target
Conversion and upgrading hostels into family units
Percentage conversion of hostels into family units
Family units established
(100% complete)
Family Units: South Deep has completed the establishment of family accommodation at its hostels
Procurement spent on BEE entity
Capital goods
Services
Consumable goods
Multi-national suppliers’ contribution to the social
fund
Annual spend on procurement from multi-national
suppliers
0.5% of procurement value
0.23%. South Deep is not aware of any social fund that has been established for the mining industry and
the DMR has yet to provide clarity in this regard. The percentage is based on contributions that have been
set aside by our major multinational suppliers. South Deep’s largest multinational suppliers all operate local
subsidiaries, which are BEE certified
EMPLOYMENT EqUITY
Diversification of the workplace to reflect the
country’s demographics to attain competitiveness
Middle management
Top management (Board)
Senior management
Junior management
Core and critical skills
HUMAN RESOURCES
DEVELOPMENT
Developing requisite skills, including support for
South Africa-based research and development
initiatives intended to develop solutions in
exploration, mining, processing, technology, mining,
beneficiation as well as environmental conservation
Human resources development expenditure as a
percentage of total annual payroll (excluding mandatory
skills development levy)
MINE COMMUNITY
DEVELOPMENT
Conduct ethnographic community consultative
and collaborative processes to delineate
community needs analysis
Implement approved community projects
Up-to-date project implementation
As part of South Deep’s Social and Labour Plans, South Deep is involved in a number of community
development projects focussed on infrastructure development, job creation and poverty alleviation, with
particular emphasis on enterprise development. Despite being in a loss-making position due to South
Deep being in a ramp-up phase, the mine spent R34 million on socio-economic development in 2014.
59% of the SED spend (or R20 million) is spent on implementation of community projects approved in
the SLP. 96% of the projects were implemented in 2014
Improvement of the industry’s environmental
management
Implementation of approved environmental
management programmes (EMPs)
SUSTAINABLE
DEVELOPMENT
AND GROWTH
Improvement of the industry’s mine health and
safety performance
Implementation of tripartite action plan on health and
safety
Utilisation of South Africa-based research facilities
for analysis of samples across the mining value
Percentage of samples in South African facilities
BENEFICIATION
Contribution towards beneficiation
Added production volume contribution to local value
addition beyond the baseline
Section 26 of MPRDA (% of above
baseline)
Current regulations and guidelines are not clear in relation to the baseline levels and targets. However, Gold
Fields has made a capital-intensive investment in our smelting facility at South Deep, which adds significant
value to the gold being mined as well as creating jobs. Gold Fields also owns 2.76% of Rand Refinery, which
has established the ‘Gold Zone’. The aim is for the Gold Zone to become a major hub for precious metals
fabrication in South Africa for global export, while at the same time assisting local communities with skills
development (including beneficiation)
Annually
26%
40%
70%
50%
40%
40%
40%
40%
40%
5%
100%
100%
100%
Target met (Annual Submission)
35%
82%
73%
85%
50%
50%
63%
52%
72%
10%
100%
100%
100%
The Gold Fields Integrated Annual Report 2014 PiLLAr: SEcuring our FuturE rESPonSibLy
105
(including Gold Fields’ South Deep Mine) to re-submit the 2012 and 2013 compliance assessments and submit its 2014 compliance
assessment onto an on-line template (designed by the DMR). Gold Fields has submitted the information online as requested and
continues to engage with the DMR in this regard.
Details of South Deep’s performance against the 2014 targets are set out below.
MINING CHARTER COMPLIANCE
TARGET BY 2014
PROGRESS AGAINST 2014 MINING CHARTER TARGET
Capital goods
Services
Consumable goods
Top management (Board)
Senior management
Junior management
Core and critical skills
REPORTING
Report on the level of compliance with the
Revised Charter for the calendar year
Documentary proof of receipt from the DMR
OWNERSHIP
Minimum target for effective HDSA ownership
Meaningful economic participation
Annually
26%
Target met (Annual Submission)
35%
Conversion and upgrading hostels to attain the
occupancy rate of one person per room
target
Percentage reduction of occupancy rate towards 2014
Occupancy rate of one person per room
Hostels: South Deep has completed 100% of the planned hostel upgrades. At the end of December 2014, the
occupancy rate averaged one person per room, thus meeting the Mining Charter compliance scorecard target
Conversion and upgrading hostels into family units
Percentage conversion of hostels into family units
Family units established
Family Units: South Deep has completed the establishment of family accommodation at its hostels
(100% complete)
Multi-national suppliers’ contribution to the social
Annual spend on procurement from multi-national
fund
suppliers
0.5% of procurement value
0.23%. South Deep is not aware of any social fund that has been established for the mining industry and
the DMR has yet to provide clarity in this regard. The percentage is based on contributions that have been
set aside by our major multinational suppliers. South Deep’s largest multinational suppliers all operate local
subsidiaries, which are BEE certified
40%
70%
50%
82%
73%
85%
HOUSING AND
LIVING CONDITIONS
PROCUREMENT
AND ENTERPRISE
DEVELOPMENT
Procurement spent on BEE entity
EMPLOYMENT EqUITY
Diversification of the workplace to reflect the
country’s demographics to attain competitiveness
Middle management
HUMAN RESOURCES
DEVELOPMENT
Developing requisite skills, including support for
South Africa-based research and development
initiatives intended to develop solutions in
exploration, mining, processing, technology, mining,
beneficiation as well as environmental conservation
Human resources development expenditure as a
percentage of total annual payroll (excluding mandatory
skills development levy)
40%
40%
40%
40%
40%
5%
50%
50%
63%
52%
72%
10%
MINE COMMUNITY
DEVELOPMENT
Conduct ethnographic community consultative
and collaborative processes to delineate
community needs analysis
Implement approved community projects
Up-to-date project implementation
As part of South Deep’s Social and Labour Plans, South Deep is involved in a number of community
development projects focussed on infrastructure development, job creation and poverty alleviation, with
particular emphasis on enterprise development. Despite being in a loss-making position due to South
Deep being in a ramp-up phase, the mine spent R34 million on socio-economic development in 2014.
59% of the SED spend (or R20 million) is spent on implementation of community projects approved in
the SLP. 96% of the projects were implemented in 2014
Improvement of the industry’s environmental
management
Implementation of approved environmental
management programmes (EMPs)
SUSTAINABLE
DEVELOPMENT
AND GROWTH
Improvement of the industry’s mine health and
Implementation of tripartite action plan on health and
safety performance
safety
Utilisation of South Africa-based research facilities
for analysis of samples across the mining value
Percentage of samples in South African facilities
100%
100%
100%
100%
100%
100%
BENEFICIATION
Contribution towards beneficiation
Added production volume contribution to local value
addition beyond the baseline
Section 26 of MPRDA (% of above
baseline)
Current regulations and guidelines are not clear in relation to the baseline levels and targets. However, Gold
Fields has made a capital-intensive investment in our smelting facility at South Deep, which adds significant
value to the gold being mined as well as creating jobs. Gold Fields also owns 2.76% of Rand Refinery, which
has established the ‘Gold Zone’. The aim is for the Gold Zone to become a major hub for precious metals
fabrication in South Africa for global export, while at the same time assisting local communities with skills
development (including beneficiation)
The Gold Fields Integrated Annual Report 2014 106
PiLLAr: SEcuring our FuturE rESPonSibLy
6.2 Government and social relations (continued)
6.2.2 Total value distribution
Gold Fields generates significant value for all the societies in which it operates – some of which can be quantified and some which
cannot. The most important means by which Gold Fields generates quantifiable value is outlined below:
IN 2014, THE VALUE WE
DISTRIBUTED TO OUR HOST
COUNTRIES AMOUNTED TO:
US$2.65 billion
US$m
Government
Business
Employees/
contractors
SEd
Capital providers
Total value
distribution
Americas
Australia
South Africa
West Africa
Total Gold Fields
62
64
2
66
194
168
819
212
625
1,8351
42
185
125
116
468
1 Total includes US$10.6 million for exploration expenses
8
2
3
3
16
80
0
2
55
137
359
1,070
344
866
2,6501
PAYMENTS INCLUDE
• Mining royalties and land-use payments
• Income taxes, including taxes paid to government on
the basis of profitability
GOVERNMENT
• Taxes, duties and levies related to the procurement of
goods and services
• Dividends (where government holds an equity stake
in our business, such as in Ghana)
BUSINESS
Payments to business, including both operational and
capital procurements
EMPLOYEES/
CONTRACTORS
Payments to employees and contractors, such as
wages, benefits and bonus payments (including shares
and payroll taxes)
SED
Socio-Economic Development (SED) spending,
including on infrastructure, health and wellbeing,
education and training, local environmental initiatives
and donations
CAPITAL
PROVIDERS
Payments to providers of capital, including interest and
dividend payments to shareholders
WHY THESE
STAKEHOLDERS MATTER
• Government provides us with access
to ore bodies by granting mining and
other licences. They also deliver the
infrastructure necessary to build and
maintain our mines, including roads,
electricity and water supply.
• Our supply chain businesses provide
the equipment and services needed to
develop and maintain our operations.
• The technical skills, experience, and
manpower of our people drive the day-
to-day operations of our business, while
their intellectual capital contributes to
our strategy.
• Host communities provide us with
our social licence to operate, and are
the source of a large portion of our
workforce
• Financial institutions, shareholders
and bond holders invest with us, thus
enabling us to fund the development,
maintenance and growth of our
operations.
FIGURE 6.5: National value distribution – Americas 2014 (US$m)
FIGURE 6.6: National value distribution – Australia 2014 (US$m)
62
168
42
8
80
Government
Business
Employees/contractors
SED
Capital providers
64
819
185
2
0
Government
Business
Employees/contractors
SED
Capital providers
FIGURE 6.7: National value distribution – South Africa 2014 (US$m)
FIGURE 6.8: National value distribution – West Africa 2014 (US$m)
2
212
125
3
2
Government
Business
Employees/contractors
SED
Capital providers
66
625
116
3
55
Government
Business
Employees/contractors
SED
Capital providers
The Gold Fields Integrated Annual Report 2014 PiLLAr: SEcuring our FuturE rESPonSibLy
107
PAYMENTS IN TAXES, ROYALTIES, DUTIES AND LEVIES
Gold Fields recognises that the payment of taxes, royalties,
dividends and other sums to host governments is vital if national
mineral wealth is to be converted into broad-based, sustainable
development. In 2014, the Company’s payments in this regard
amounted to US$194 million (2013: US$380 million).
Gold Fields is currently recognised as one of the largest
taxpayers in Ghana – a status it has now held for the last four
years. This is despite the lower gold price – as well as lower
production levels at Damang and Tarkwa. In part, this reflects
the fact that Ghana’s current tax stability agreements have
protected other gold mining companies in the country from the
impact of its evolving fiscal regime. In addition, Gold Fields paid
the Ghanaian government US$10 million in dividends in lieu of
its 10% shareholding in the Ghanaian operations.
Compared to global norms, all of Gold Fields’ countries
of operation enjoy relatively strong democratic governance
standards and are considered to pose low to moderate
corruption risks by third parties. Furthermore, Ghana and
Peru adhere to the Extractive Industries Transparency Initiative
(EITI). Collectively, this helps ensure that Gold Fields’ payments
to government actively contribute to broader socio-economic
development in its host societies.
PAYMENTS TO BUSINESS
In 2014, Gold Fields spent a total of US$1,835 million on
suppliers and contractors – representing 69% of its total value
creation (2013: US$1,817 million; 61%).
Where possible, Gold Fields uses suppliers based in its
host countries. This not only helps build and sustain local
supply pools – but also enhances the Company’s socio-
economic impact and strengthens its social licence to operate.
Where local suppliers lack capacity to meet the Company’s
needs, Gold Fields will actively work with them to improve
their business processes, management approaches and
production standards.
Of total 2014 procurement expenditure, US$1.41 billion or
76% was spent on businesses based in countries where
Gold Fields has operations (2013: US$1,44 billion/79%).
Within this figure, US$600 million or 24% of total procurement
expenditure was spent on suppliers and contractors from mine
host communities (2013: US$430 million/12%). This reflects the
integration of the Yilgarn South Assets – and the overwhelming
FiGure 6.9: Local and host community procurement by country
region
Peru
Australia2
South Africa3
Ghana
reliance of Gold Fields’ Australian mines on suppliers and
contractors based in Western Australia.2 A regional breakdown
of local procurement spending is set out in Figure 6.9.
PAYMENTS TO EMPLOYEES AND CONTRACTORS
In 2014, Gold Fields paid US$468 million to employees in terms
of salaries, dividends and other benefits (2013: US$595 million).
This reflects the full integration of the workforces at the Yilgarn
South Assets. Gold Fields continues to provide employees
(where relevant) with additional benefits in terms of retirement
savings, healthcare assistance, life and disability insurance,
housing assistance and personal accident cover (p98 – 100).
PAYMENTS TO PROVIDERS OF CAPITAL
In 2014, Gold Fields paid US$137 million to providers of equity
and debt capital, mainly in the form of dividends and interest
on debt (2013: US$172 million). In addition the Group paid
down net debt by US$282 million during the year. Despite the
low gold price, Gold Fields remains committed to paying out
25% – 35% of its normalised earnings as dividends – meaning it
pays amongst the highest dividends in the gold mining industry
(expressed as a % of earnings).
During 2014 Gold Fields’ net debt was reduced by
US$282 million to US$1.45 billion (2013: US$1.74 billion).
The maturity date of US$715 million of this debt was extended,
on the same terms as before, from November 2015 to
November 2017.
SOCIO-ECONOMIC DEVELOPMENT SPEND
Gold Fields recognises that not all of the value it creates at
a national level benefits its host communities. To address this
deficit – and to maintain its social licence to operate – Gold
Fields implements a range of Socio-Economic Development
(SED) initiatives, in addition to community procurement and
employment, in its host communities. These focus on the key
priorities in these communities. In 2014, Gold Fields spent
US$16 million on SED programmes (2013: US$16 million).1
The Company is also implementing innovative Shared Value
projects (p114 – 115) in local communities. These are truly
sustainable projects that support Gold Fields’ own business
objectives – whilst also generating positive socio-economic
impacts for local people, whether in the form of skills transfers,
enterprise development, environmental rehabilitation or
employment creation.
local procurement as a
% of regional budget
host community2 procurement
as a % of regional budget
2013
91%
99%
100%
68%
2014
88%
99%
100%
72%
2013
6%
72%
12%
6%
2014
5%
69%
9%
6%
1 The SED definition is aligned to the World Gold Council definition, which excludes employee-based SED
2 Host communities are those communities living in settlement in 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
3 This figure also includes procurement spent on local subsidiaries of foreign companies
The Gold Fields Integrated Annual Report 2014
108
PiLLAr: SEcuring our FuturE rESPonSibLy
6.3 Community relations
6.3.1 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 ‘social 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 minimise the
negative impacts of its operations on local stakeholders,
The finalisation of a summary version of the Community
Relations Handbook, that will be accessible to all employees,
was completed in early 2015.
It is a Gold Fields requirement that all regions establish
grievance mechanisms through which communities can voice
their concerns and complaints with the Company, including on
environmental issues.
Our community policy and our community relations and
stakeholder engagement guidelines can be found at
https://www.goldfields.com/sus_guide.php
while also maximising the positive benefits. In current market
THE AMERICAS
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 p114 – 115) is particularly important
as it shifts the focus from spending to the actual social and
business impacts.
Despite ongoing friction between local communities and other
mining operators in the Cajamarca region – as well as tense
district, provincial and regional elections – Gold Fields’ Cerro
Corona mine so far remains largely unaffected. This was
largely due to the strength of the mine’s relations with the local
community, which is supported by:
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 and local government
• Informal community groups
• NGOs
• Organised labour
• Local businesses
Such engagement is guided by, for example:
• Applicable legislation
• South Deep’s mandated Social and Labour Plan (SLP)
• Gold Fields’ Community Policy and Guideline (including the
Community Relations Handbook). These are aligned with
a range of good international industry practice standards,
including:
– The ICMMs 10 Principles and Community Development
Toolkit – and Position Statement on Indigenous Peoples
– The International Finance Corporation (IFC) Performance
Standards
– The Equator Principles
– The UN Global Compact’s 10 Principles
– The AA1000 Stakeholder Engagement Standard
– The ISO 26000 Social Responsibility Standard
In the case of significant operational changes, relevant public
consultation processes are also defined within our Environmental
and Social Impact Assessments (ESIAs).
• Ongoing implementation of a well-established engagement
framework that helps identify and address host community
priorities – including the availability of potable water and
employment generation
• Gold Fields’ participation in the ‘Mesa de Dialogo y
Concertacion de Hualgayoc’ (a community-based, multi-
stakeholder roundtable focussed 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
• Financial and managerial 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
Gold Fields recognises that the maintenance of its social licence
to operate in this otherwise challenging region will require
sustained and ongoing efforts to pre-empt and address potential
community concerns – quickly and effectively.
AUSTRALIA
The remote location of Gold Fields’ mines in Australia – as
well as strong local socio-economic conditions – mean that
community engagement is largely focussed on local indigenous
groups. This includes engagement around native land titles on
Gold Fields’ licence areas, land access for near-mine drilling and
the preservation of indigenous heritage.
The Gold Fields Integrated Annual Report 2014 PiLLAr: SEcuring our FuturE rESPonSibLy
109
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.
Wongatha royalty claim
In Q1 2014, the Wongatha People raised an issue with Gold
Fields in relation to a historical claim of native title over land
including the Granny Smith mine. In 2002, in recognition of this
claim, the then-owner, Barrick Gold, agreed to pay the Wongatha
people a royalty of 1% of gross profits for the life of the Wallaby
mine, part of the Granny Smith mine. The Wongatha Native
Title claim was subsequently dismissed by the Federal Court
of Australia in 2007 – although Barrick Gold continued to pay
the royalty up until the sale of the mine to Gold Fields. Gold
Fields ceased royalty payments on taking ownership of the
Granny Smith assets in 2013, on the basis that the obligation
to continue payments no longer existed as the Native Title was
not recognised by the Court. The Wongatha People have since
requested that Gold Fields reinstate the royalty payments. Gold
Fields remains confident in its decision, which has been fully
communicated to the Wongatha People. The matter has not been
progressed any further by the Wongatha People.
Ngadju Native Title claim
In Q3 2014, a single judge of the Federal Court of Australia
upheld a claim made by the Ngadju People for recognition
of their Native Title rights over a large parcel of land in the
Goldfields region of Western Australia, including a number
of tenements held by St Ives. During the course of the
proceedings, the Court found that certain of St Ives’ mining
tenements, which were re-granted by the State in 2004, are
invalid to the extent that the exercise by St Ives of its rights under
those tenements is inconsistent with the Ngadju People’s Native
Title rights (such as the rights to conduct ceremonies, or hunt).
The Court’s decision does not affect the underlying grant of
mining tenure to St Ives under Western Australia’s Mining Act
1978, and as the proceedings were not an action against St Ives
for failure to take certain steps, the Court had no jurisdiction to
apply any penalty against St Ives. In Q4 2014, both St Ives and
BHP Billiton Nickel West appealed various aspects of the Federal
Court decision. The appeal will be heard by the full bench of the
Federal Court (three judges) – with a hearing set for May 2015.
If necessary, Gold Fields may seek leave to appeal any adverse
decision by the full Federal Court to the High Court of Australia.
Gold Fields is continuing to liaise with the State regarding both
the Appeal and the broader implications of the decision. It is
anticipated that operations at St Ives will continue as usual
pending the outcome of the appeal process.
For further information on indigenous peoples’ rights at the Far
Southeast project in the Philippines, see p88.
Oil palm harvest at the rehabilitated South Tailings dam site near the
Tarkwa mine in Ghana
The Gold Fields Integrated Annual Report 2014 110
PiLLAr: SEcuring our FuturE rESPonSibLy
6.3 Community relations (continued)
SOUTH AFRICA
Under the 2002 Mineral and Petroleum Resources Development
Act, mining companies must submit an SLP as a prerequisite for
the granting of mining or production rights. Each SLP requires
the Company in question to implement:
• Employee development programmes, with an emphasis on
BEE
• Local Economic Development (LED) programmes – with a
focus on host communities and labour-sending areas
As such, the LED element of the SLP provides the basic
framework for Gold Fields’ engagement with host community
stakeholders in South Africa. In this context, Gold Fields
restructured South Deep’s three community trusts to:
This included a pilot study carried out by the Federation for a
Sustainable Environment (FSE), KPMG and the South Deep
Community Relations team. The study employed UK-based
Relational Analytics’ ‘Relational ProximityTM’ tool, which was
applied via community-level workshops at four of the mine’s
16 host communities.
The study, which showed a strong level of community
unhappiness with their relationship with South Deep, produced
the following key recommendations for Gold Fields:
• Engage with communities through more informal means,
including social media
• Provide more information about positive community impacts,
such as the number of host community members working at
South Deep, for example
• Refocus trust activities on the communities in and around
• Have senior management acknowledge the role of – and
South Deep
impacts on – local communities
• Endow trustees with responsibility for all trusts, to ensure that
• Empower South Deep’s Community Relations team to
they pursue common, coordinated goals
directly address specific issues – thus enabling more timely
Gold Fields works closely with Sibanye Gold on the delivery of
responses to community concerns
its LED projects in the South Deep area, due to the overlapping
Gold Fields is planning to implement these recommendations
of each company’s stakeholders and interests.
in 2015. In addition, the study will be extended to South Deep’s
Whilst Gold Fields remains committed to fulfilling South Deep’s
SLP, it is also exploring additional opportunities for insightful
stakeholder engagement. In 2014, the Company undertook
a high-profile project to measure the strength, quality and
challenges of its stakeholder relationships at South Deep.
12 remaining host communities – and potentially to other
Gold Fields regions as well.
Gold Fields Ghana Foundation constructed ICT centres at the New Atuabo Community School near the Damang mine
The Gold Fields Integrated Annual Report 2014 PiLLAr: SEcuring our FuturE rESPonSibLy
111
WEST AFRICA
6.3.2 community value distribution
In light of local socio-economic realities, community relations
are a major focus for the Damang and Tarkwa mines. However,
the mines’ lower production in 2014 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 0.5% of pre-tax profits) – as well as a
number of retrenchments, including that of employees from host
communities. As a result, Gold Fields has been carrying our
targeted engagement with key host community stakeholders to
minimise the impacts of this restructuring on both the affected
individuals themselves, and host communities more broadly.
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 2014 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 that
compensation. Gold Fields is participating in a mediation
process with the farmers, overseen by the Environmental
Protection Agency (EPA)
• Retrenchments associated with the closure of the North Heap
Leach facility, Tarkwa: Gold Fields engaged with all those
workers affected – many of whom originate from or live in the
host community – offering alternative employment and relevant
training where possible
CORE CONTRIBUTIONS
Despite its substantial economic impact on the national level, not
all of Gold Fields’ contributions necessarily ‘trickle down’ to host
communities. In order to maintain its social licence to operate,
Gold Fields is committed to more direct initiatives focussed on
the delivery of benefits to host communities. These include:
• Direct employment
• Indirect employment
• Skills development
• Educational investment
• Health investment
• Infrastructure support
Such initiatives are supplemented by Gold Fields’ Shared Value
projects, which are described on p114 – 115.
Direct employment
Gold Fields is committed to the employment of members of
host communities at all its operations – where this is feasible. By
doing so, it is able to align the interests of host communities to
those of its 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 (p112 – 113).
The number of host community members – including both
employees and contractors – working at each of Gold Fields’
regions is set out below:
• The Americas: 414 (2013: 533), with the high percentage of
local community members reflecting early and successful
• Compensation of disturbed areas at the Rex pit, Damang:
efforts to integrate members of the host community from the
Gold Fields paid US$623,000 to claimants for the loss of their
mine’s very inception
land
• Land compensation relating to the construction of the Far
East Tailings Storage Facility (FETSF), Damang: Gold Fields
• Australia: 2030 (2013: 1218)
• South Africa: 2,469 (2013: 1,965) – many of whom have been
recruited from the mine’s community-focussed Adult Basic
paid US$300,000 to claimants, resolving a dispute over land
Education and Training (ABET) courses
between Suromani and Kyekyewere – and allowing work on
the FETSF to begin
• West Africa: 3,909 (2013: 3,837) – despite the retrenchments
in early 2014, the Group’s Ghanaian mines have sought to
• Relocation of Ainoo residents, Damang: After raising concerns
about the health and safety implications of their proximity to
limit the number of community members retrenched and have
committed to employing them, where feasible, to limit the
the Lima South Pit, six residents were successfully rehoused,
economic impact on these communities.
with the process concluded in August 2014
Growth projects
For further information on community engagement around Gold
Fields growth projects, please see p82 – 83.
The Gold Fields Integrated Annual Report 2014 112
PiLLAr: SEcuring our FuturE rESPonSibLy
6.3 Community relations (continued)
Local communities near South Deep have benefited from skills development and job creation centres
Indirect employment
Where possible, Gold Fields seeks to procure goods and
services from its host communities. This serves to:
• Agricultural improvement programme, Cerro Corona:
This ongoing programme saw Cerro Corona plant 320ha of
improved dairy pasture (benefiting 350 local families) – and
provide a heifer each to 185 families in the local communities
• Enhance the local supply base, which is vitally important given
• Westonaria Bakery, South Deep: This included support –
the remote nature of some mines
• Generate employment opportunities for local people
under South Deep’s SLP – for the establishment of a bakery
franchise in the Westonaria community, which provides bread
In 2014, Gold Fields spent a total of US$600 million (2013:
US$430 million) on goods and services from suppliers in its host
communities. The impact of these contributions is most marked
at Cerro Corona, where Gold Fields has proactively developed
Hualgayoc-based suppliers to provide the mine with secondary
equipment and light transport. In South Africa, the South Deep
Business Development Centre works to identify community-
based suppliers (including for cleaning, mud loading, track
loading and track maintenance). The centre also trains local
entrepreneurs in bookkeeping, business planning and other
disciplines – enabling them to access contractor opportunities
at South Deep.
In addition, Gold Fields works with communities and government
to develop broader, more diversified local economies – primarily
by helping local people start and consolidate their own
businesses. Examples of community enterprise initiatives carried
out in 2014 include:
• Local supplier competiveness programme, Cerro Corona:
This aims to enhance the competiveness of local suppliers
and promote economic opportunities for host community
members – whilst also delivering better quality and prices
to the mine itself. In 2014, 51 existing suppliers participated
in the programme and each is applying a well-defined
improvement plan
both to the mine and host community members
• Sustainable Community Empowerment and Economic
Development (SEED) programme, Tarkwa: The ongoing SEED
programme promotes palm oil farming in the mine’s host
communities – including through the provision of seedlings,
as well as marketing and technical support. In 2014, the
programme benefited around 600 local people. The mine is
looking at donating the palm oil plantations to communities
during 2015
Skills development
Gold Fields recognises that skills development is critical for
integrating members of its host communities into its workforce –
or those of its suppliers. In 2014, specific skills development
initiatives included:
• The Americas: This includes the training – in conjunction
with Hualgayoc municipal office and contractor San Martin
– of community members as truck and excavation drivers.
The programme acts as a ‘feeder’ programme for recruitment
at both Cerro Corona and other local mines
• South Africa: Gold Fields supports the development of small-
and medium-sized local businesses by helping community
members attend courses in business law, ethics and
entrepreneurship at Monash University. In addition, eight-week
accredited vocational training courses are made available
The Gold Fields Integrated Annual Report 2014 PiLLAr: SEcuring our FuturE rESPonSibLy
113
to employees, contractors and host community members.
• The Americas: Investment in a Children’s Nutrition Programme
Graduates who subsequently set up a business are then able
for Hualgayoc, which provides education in nutrition and
to make use of the South Deep Business Development Centre
• West Africa: Both Damang and Tarkwa provide apprenticeship
programmes for local people – who are trained to operate
health. In addition, Gold Fields funded the construction of a
new hospital in Hualgayoc Health Centre. The management
of the centre will be the responsibility of the Regional Health
mining vehicles. This is supplemented by an external
Board, who will also employ doctors, nurses and provide
apprenticeship programme aimed at training local youths in
medicine.
locally marketable, non-mining skills such as car mechanics
and hairdressing
Education investment
• West Africa: Ongoing support for Tarkwa Mine Hospital, which
is state-owned but managed and partially funded by Gold
Fields. In 2014, this included extra provision to help address
a potential Ebola outbreak. During 2014 the majority (80%)
Gold Fields recognises that education is critical for the social
of the patients at the hospital were mine employees or their
and economic development of its host communities, the
dependants and 20% members of the local community.
improvement of its operating environments and the long-term
Damang also handed over a modern clinic and nurses’
integration of host community members into its workforce. In
quarters to the Bompieso community, to be operated by
2014, relevant educational initiatives included:
the Ghana Health Service. Other initiatives include the
• The Americas: The provision of 40 university scholarships
for the top-performing students in the Hualgayoc district. In
addition, Gold Fields built a new rural school in the Anexo
Chilon community as part of its commitment under the
Hualgayoc Round Table Dialogue
• Australia: Financial support for the Laverton Leonora Cross
Cultural Association which provides education to the Laverton
community near the Granny Smith mine – as well as the
Kambalda Primary School and Kambalda West District
High School (both of which service the local indigenous
community) near St Ives. In addition, Gold Fields provided
scholarships for eight indigenous students in 2014 to achieve
tertiary educations
sponsorship of a weekly local radio programme (focussed
on community health and preventative medicine) – as well as
the training of Community Health Facilitators and Community
Health and Sanitation Committees
Infrastructure support
Some of Gold Fields’ areas of operation suffer from a severe
lack of infrastructure. 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 2014, Gold Fields spent a
total of US$5 million on host community infrastructure initiatives,
including:
• South Africa: Financial support for the South Deep Education
Trust – which has a mandate to improve education at both
community and national level. In addition, Gold Fields works
• The Americas: Gold Fields funded the construction of the
Bambamarca Central Market, a US$9.4 million investment1
project that will benefit 110,000 residents. It is one of the most
with secondary and tertiary education providers by extending
modern public markets in Peru’s northern region, equipped
a range of university bursaries and directly funding the Mining
with cold rooms, laboratories for food testing, electronic scales
School of the University of the Witwatersrand
and a drinking water system
• West Africa: A total of 173 scholarships bursaries to support
attendance in the 2014/2015 academic year at local schools
• South Africa: Construction (under its SLP) of 150 new homes
in Westonaria and 13 homes in Poortjie, both adjacent to
and tertiary institutions – both directly and through the Gold
the South Deep mine. Constructed at a combined cost of
Fields Ghana Foundation. In addition, Tarkwa and Damang
R29 million (US$3 million) the homes were handed over to
helped enhance the salaries of 87 local teachers to help
the local municipality to be allocated to needy community
attract high-quality teaching talent into community schools.
members. This is in addition to the development of community
In addition, 2014 saw the construction of a junior high school
clinics at Thusanang and in the Eastern Cape labour-sending
for the Wangarakrom community, as well as a 30-seater ICT
area. Gold Fields also supported the development and/or
centre for the Huni Valley Methodist School
restoration of educational buildings including Simunye High
Health investment
Many of Gold Fields workers are drawn from host communities,
School, Bekkersdal, and Healdtown in the Eastern Cape
• West Africa: Work on the all-weather road between Samahu
and Pepesa near Tarkwa, which will cost US$2.3 million on
resulting in a high degree of interaction between the workforce
completion – is ongoing. This project – which is being carried
and the local community. The promotion of community health
out in partnership with the Ministry of Roads and Highways
is therefore not only important from the perspective of local
and the Tarkwa-Nsuaem District Council – will deliver
socio-economic development – but also employee wellbeing
significant benefits to around 5,000 community members
and operational continuity. In 2014, relevant health initiatives
along its route, in terms of their access to markets, public
included:
services and other communities
1 With US$6.9 million to be recovered in tax credits over the next four years
The Gold Fields Integrated Annual Report 2014 114
PiLLAr: SEcuring our FuturE rESPonSibLy
6.3 Community relations (continued)
6.3.3 Shared Value – Creating economic and
community value
WHAT IS SHARED VALUE?
SHARED VALUE AT GOLD FIELDS
Shared Value is created when companies take a proactive
The relatively low gold price and the restructuring of Gold
role in simultaneously addressing business and social needs.
Fields’ key operations has made maintaining historical levels of
Shared Value goes way beyond mitigating the potential harm in a
SED spending a challenge. Furthermore, it is not clear whether
Company’s value chain – it is about identifying new opportunities
SED spending is the most effective way to support long-term,
for economic success by incorporating social priorities into
sustainable community development.
business strategy and working collaboratively with multiple
stakeholders to find solutions to various socio-economic and
environmental issues. A key component of this approach is to
ensure that the value created is shared by the business and
the community. Strong local businesses and skilled individuals
contribute to the overall economic upliftment and sustainability of
communities, while delivering the goods and services that Gold
Fields needs to develop and operate its mines.
In this context Gold Fields introduced Shared Value to the
business in 2012 – making it one of the earliest adopters of this
approach. Taking a leadership role is integral to how Gold Fields
implements Shared Value – the Company facilitates collaboration
between multiple stakeholders to solve environmental issues
such as water security, which have been identified as a
community priority.
Our Shared Value approach is based on four key pillars:
1
2
Strategic interventions
to proactively address
socio-economic
challenges that can
drive community
The ‘integration’ of
business activities and
the management of
community relations
– to maximise
tensions, NGO activism
contributions to host
or more restrictive
regulation
communities and
realise business
efficiencies
3
Participation in
collaborative action
with other stakeholders
to address shared
social challenges
4
Transparency
regarding Gold Fields’
economic contributions
to its host societies,
in line with the
World Gold Council
(WGC) guidelines on
‘Responsible Gold
Mining and Value
Distribution’
IN 2015, GOLD FIELDS PLANS TO:
• Identify and implement two new Shared Value projects at South Deep and in the West Africa region
• Develop and apply a rigorous methodology to assess the impact of each Shared Value project
The Gold Fields Integrated Annual Report 2014 PiLLAr: SEcuring our FuturE rESPonSibLy
115
DAMANG MINE (GHANA)
CERRO CORONA MINE (PERU) –
Water and the environment
PROJECT
Under a two-year renewable agreement,
Damang Quarry – an independent business
– processes waste rock from the Damang
mine into smaller aggregate for use in the
construction industry.
BENEFIT
TO THE
COMMU-
NITY
Crushed waste rock is used for road and
building construction, which is expected
to reduce the cost of local construction
by between 30% – 40%, while generating
ancillary business opportunities within the
local community. Of the 50 people employed
by Damang Quarry, 35 are from the local
community.
BENEFIT
TO GOLD
FIELDS
Gold Fields receives 5% of the crushed material
for free, which will save the mine between
US$25 000 to US$30 000 a month currently
spent on aggregates. The Damang mine will
also lessen its future land requirement for waste
rock dumping, thereby reducing potential
purchase and/or compensation costs and other
related issues. In addition, the mine closure
liability will also be reduced.
SOUTH DEEP (SOUTH AFRICA) –
Maths and science
PROJECT
Edumap College partnered with South Deep to
help post-matric students who had not achieved
university exemption or had not been able to
qualify for entrance into tertiary institutions,
to improve their grades in Mathematics and
Science. They received extra tuition and life skills
training, and re-wrote matric at the end of 2014.
BENEFIT
TO THE
COMMU-
NITY
Apart from the obvious benefit derived by the
individual students, the broader community
benefits from the fact that a greater proportion of
their youth is likely to receive tertiary education
and ultimately find employment. This is
significant, given the fact that a single employed
individual in the mining industry supports on
average eight dependants.
BENEFIT
TO GOLD
FIELDS
The programme provides Gold Fields with a
much-needed local skills pipeline of individuals
with maths and science-related degrees.
PROJECT
Improving water quality and access in
Hualgayoc City through the construction of a
water pipeline from a well at Cerro Corona, a
programme to identify and repair water leaks in
the existing water infrastructure, and remediation
of legacy mining activities (not associated with
Gold Fields) that are contaminating a local
stream.
BENEFIT
TO THE
COMMU-
NITY
Close to 90% of the city’s households now have
access to sufficient clean, safe running water.
Those families whose homes are situated at an
altitude too high to be connected to the water
pipeline receive water tanks from Gold Fields,
and will receive water supply from the Company’s
reverse osmosis plant from 2015. Apart from
strengthening relationships between Gold Fields,
the regulator and our host communities, the
remediation of legacy mining sites near Cerro
Corona will significantly improve the quality of the
water in the El Tingo river, on which communities
depend for various uses.
BENEFIT
TO GOLD
FIELDS
Strengthens our social licence to operate in a
region in which other mining companies have
experienced water-related conflict with local
communities. The research being conducted to
remediate the non-Gold Fields legacy mining
sites will be used to reduce Gold Fields’ own
future mine closure costs.
CERRO CORONA MINE (PERU) –
Local suppliers
PROJECT
A project to build the competitiveness of local
suppliers has identified 83 local businesses,
each of which will benefit from an individual
improvement plan.
Individual local suppliers will derive long-
term benefit from targeted plans to help them
improve their competitiveness, while the broader
community will experience economic upliftment
and employment opportunities from having
stronger, sustainable local businesses.
Gold Fields will be able to obtain a better service
at more competitive prices from local suppliers.
BENEFIT
TO THE
COMMU-
NITY
BENEFIT
TO GOLD
FIELDS
The Gold Fields Integrated Annual Report 2014 Processing plant at the Tarkwa mine in Ghana
7.1
7.2
First party Internal Audit statement
Independent assurance report to the
directors of Gold Fields Limited
7.3
Assured data
118
119
123
7 118
ASSurAncE
7.1 First party: Internal Audit statement
Gold Fields Internal Audit (GFIA) is an independent assurance
Based on the work performed by GFIA during the year, the
provider to the Gold Fields Audit Committee on the effectiveness
Vice-President and Group Head of Internal Audit has presented
of the risk management, control and governance processes
the Audit Committee with an assessment on the effectiveness of
within Gold Fields. The risk-based annual audit plan covers
the Company’s system of internal control and risk management,
the breadth and depth of the Gold Fields value chain, which is
internal financial controls as well as the IT control framework.
approved by the Audit Committee annually.
It is GFIA’s opinion that the internal control environment and
The internal audit activities are conducted in terms of the
annually approved mandate provided by the audit committee
and is executed by either a team of appropriate, qualified and
experienced internal auditors, or through the engagement
of external practitioners on specified and agreed terms. The
Internal Audit team is based in South Africa and services all
the Gold Fields operations globally. The Vice-President and
Group Head of Internal Audit provides quarterly-feedback to the
Audit Committee and has a functional reporting line to the Audit
Committee Chair.
risk management processes are adequate within the Gold Field
business and provide reasonable assurance that the objectives
of Gold Fields will be met. This GFIA assessment, forms one
of the bases for the Audit Committee’s recommendation in this
regard to the Board.
GFIA follows a risk-based audit methodology, which is
in compliance with the Institute of Internal Auditors’ (IIA)
Shyam Jagwanth
Vice-President and Group Head of Internal Audit
“International Standards for the Professional Practice of Internal
Auditing”. Furthermore GFIA operates a quality assurance
programme that involves performing detailed quality review
assessments at an activity and functional level.
Johannesburg
South Africa
23 March 2015
The Gold Fields Integrated Annual Report 2014 ASSurAncE
119
7.2 Independent Assurance Report to the
Directors of Gold Fields Limited
report on Selected Sustainability information
We have undertaken an assurance engagement on selected sustainability information, as described below and presented in the
Integrated Annual Report of Gold Fields Limited (Gold Fields) for the year ended 31 December 2014 (the Report). This engagement
was conducted by a multi-disciplinary team of health, safety, social, environmental and assurance specialists with extensive
experience in sustainability reporting.
SUBJECT MATTER AND RELATED ASSURANCE
We are required to provide reasonable assurance on the subject matters set out in the tables below.
Subject matter a:
Selected performance data presented in compliance with Subject matter 4 of the
international council of mining and metals’ (icmm) Sustainable Development Framework:
Assurance procedure (icmm Assurance procedure), and prepared in accordance with the
Global reporting initiative (Gri) G4 Guidelines: (pages 123 – 124)
unit
environment
Total CO2 Equivalent Emissions, Scope 1 – 3
Total Energy Consumed (GJ)/ounce of gold produced
Number of environmental incidents – Level 3 and above
Electricity
Diesel
Total water withdrawal
Total water recycled/reused per annum
Water intensity
health
Number of cases of Silicosis reported
Number of cases of Noise Induced Hearing Loss reported
Number of new cases of Cardio Respiratory Tuberculosis reported
Number of cases of Malaria tested positive per annum
Number of South African and West African employees in Highly Active Anti-Retroviral Therapy
(HAART) programme
Percentage of South African and West African workforce on the voluntary counselling and
testing (VCT) programme
Safety
Total Recordable Injury Frequency Rate (TRIFR)
Number of Fatalities
Social
Tonnes CO2e
Total GJ of energy
consumed per ounce of
gold produced
Number
MWh
TJ
Mℓ
Mℓ
Kℓ withdrawn per ounce of
gold produced
Number of cases
Number of cases
Number of new cases
Number of positive cases
Cumulative
Percentage
Rate
Number
Total socio-economic development (SED) spend in US Dollars
US Dollars
The Gold Fields Integrated Annual Report 2014
120
ASSurAncE
Independent Assurance Report to the Directors of Gold Fields Limited (continued)
Subject matter b:
Selected mining charter elements prepared in compliance with the broad-based
Socio-economic empowerment charter for the South African mining and minerals
industry (bbSeec) (2002) and related Scorecard (2004): (pages 123 – 124)
unit
Number of houses built as part of the housing and hostel upgrade programme
Number of houses built
Rand value spent on LED projects in the SLP in the current reporting year
Rand value
Subject matter c:
Selected mining charter elements prepared in compliance with the Amendment to the
bbSeec (2010) and related Scorecard (2010): (pages 123 – 124)
unit
Percentage Historically Disadvantaged South Africans (HDSA) in Management (DL – FU)
Top management %
who are classified as designated groups and who are employed at management levels
(Top Management (Board), Senior, Middle, Junior, Core Skills and Total), including and
excluding Corporate and including and excluding white females
Senior %
Middle %
Junior %
Core %
Total %
Conversion or upgrading of hostels to attain an occupancy rate of one person per room by
Occupancy rate
2014
Percentage conversion of hostels to family units
Percentage
Human Resource Development (HRD) expenditure as a percentage of total annual payroll
Percentage
(excluding mandatory skills levy)
Total procurement spend from BEE entities (BBSEEC, 2010)
Rand value
Percentage procurement spend from BEE entities (in line with the Mining Charter categories of
% Capital goods
capital goods, services and consumable goods)
Percentage of samples in South African facilities
% Services
% Consumable goods
Percentage
DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for the selection, preparation
and presentation of the selected sustainability information in
accordance with the reporting criteria set out in the following
paragraph. This responsibility includes the identification of
stakeholders and stakeholders’ requirements, material issues, for
commitments with respect to sustainability performance and for
the design, implementation and maintenance of internal control
relevant to the preparation of the report that is free from material
misstatement, whether due to fraud or error.
The following reporting criteria were used in the preparation and
presentation of the respective subject matter:
• (a) Gold Fields’ reported performance during the given
reporting period for the identified material Sustainable
Development (SD) risks and opportunities (ICMM Subject
Matter 4): the Global Reporting Initiative (GRI) G4 Guidelines.
• (b) selected Mining Charter elements: the BBSEEC (2002) and
related Scorecard (2004).
• (c) selected Mining Charter elements: the Amendment to the
BBSEEC (2010) and related Scorecard (2010).
The Gold Fields Integrated Annual Report 2014 ASSurAncE
121
OUR INDEPENDENCE AND qUALITY CONTROL
We have complied with the Code of Ethics for Professional
Accountants issued by the International Ethics Standards
Board for Accountants, which includes independence and
other requirements founded on fundamental principles of
integrity, objectivity, professional competence and due care,
• Testing the processes and systems to generate, collate,
aggregate, monitor and report the selected sustainability
information.
• Inspecting supporting documentation and performing
analytical procedures on a sample basis to evaluate the data
generation and reporting processes against the reporting
confidentiality and professional behaviour.
criteria.
In accordance with International Standard on Quality Control 1,
KPMG Services Proprietary Limited maintains a comprehensive
• Undertaking physical site visits to Gold Fields’ South Deep,
Granny Smith and St Ives operations and remote reviews
of the Tarkwa, Agnew/Lawlers, Darlot, Damang and Cerro
system of quality control, including documented policies and
Corona operations.
procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory
requirements.
OUR RESPONSIBILITY
We believe that the evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions.
OPINIONS
Our responsibility is to express an opinion on the selected
In relation to the report for the year ended 31 December 2014,
sustainability information based on the evidence we have
we report
obtained. We have conducted our engagement in accordance
with the International Standard on Assurance Engagements
(ISAE 3000), Assurance Engagements Other than Audits or
Reviews of Historical Financial Information, issued by the
International Auditing and Assurance Standards Board. That
Standard requires that we plan and perform our engagement
to obtain reasonable assurance about whether the selected
a. On the selected performance data identified
In our opinion, the selected performance data identified in
(a) above have been prepared, in all material respects, in
accordance with the Global Reporting Initiative (GRI) G4
Guidelines.
sustainability information is free from material misstatement.
b. On the selected Mining Charter elements prepared in
accordance with the BBSEEC (2002) and related Scorecard
A reasonable assurance engagement in accordance with
ISAE 3000 involves performing procedures to obtain evidence
(2004)
about the quantification of the selected sustainability information
In our opinion, the selected Mining Charter elements
and related disclosures. The nature, timing and extent of
identified in (b) above have been prepared, in all material
procedures selected depend on the practitioner’s judgement,
respects, in compliance with the BBSEEC (2002) and related
including the assessment of the risks of material misstatement,
Scorecard (2004).
whether due to fraud or error. In making those risk assessments
we considered internal control relevant to Gold Fields’
preparation of the selected sustainability information.
A reasonable assurance engagement also includes:
• assessing the suitability in the circumstances of Gold Fields’
use of the criteria, as the basis for preparing the selected
sustainability information;
• evaluating the appropriateness of quantification methods
and reporting policies and internal guidelines used, and the
reasonableness of estimates made by Gold Fields; and
• evaluating the overall presentation of the selected
sustainability information and whether the information
presented in the report is consistent with our findings, overall
knowledge and experience of sustainability management and
performance at Gold Fields.
c. On the selected Mining Charter elements prepared in
accordance with the Amendment to the BBSEEC (2010) and
related Scorecard (2010)
In our opinion, the selected Mining Charter elements
identified in (c) above have been prepared, in all material
respects, in compliance with the Amendment to the BBSEEC
(2010) and related Scorecard (2010).
COMPARABILITY
Our report includes the provision of assurance on the number
of West African employees in the HAART programme,
the percentage of the West African workforce on the VCT
programme, percentage conversion of hostels to family units,
HRD expenditure as a percentage of total annual payroll
(excluding mandatory skills development levy) and Percentage
Our work included the following evidence-gathering procedures:
of samples in South African facilities data. We were previously
• Interviewing management and senior executives to obtain
an understanding of the internal control environment, risk
assessment process and information systems relevant to the
sustainability reporting process. Inspecting documentation
to corroborate the statements of management and senior
executives in our interviews.
not required to provide assurance on this selected performance
data. In addition, the prior year HDSA in management data was
provided for Gold Fields South Africa, but this year the data has
been split to show a breakdown for Corporate and South Deep,
including and excluding white females.
The Gold Fields Integrated Annual Report 2014 122
ASSurAncE
report on the icmm Assurance procedure
We are required to report our findings on the International
Council of Mining and Metals’ (ICMM) Sustainable Development
2. Gold Fields has not reported material sustainable
development risks and opportunities based on a review of its
business and the views and expectations of its stakeholders.
(SD) Framework: Assurance Procedure (ICMM Assurance
3. Gold Fields has not implemented systems and approaches
Procedure) in respect of:
to manage its material safety risks and opportunities.
1
The alignment of Gold Fields’ sustainability policies to the
other matters
ICMM 10 SD Principles and any mandatory requirements
set out in ICMM Position Statements (ICMM Subject Matter 1).
2. The reporting of Gold Fields’ material sustainable
development risks and opportunities based on a review of its
business and the views and expectations of its stakeholders
(ICMM Subject Matter 2).
The maintenance and integrity of the Gold Fields website is the
responsibility of Gold Fields management. Our procedures did
not involve consideration of these matters and, accordingly we
accept no responsibility for any changes to either the information
in the report or our independent assurance report that may have
occurred since the initial date of presentation on the Gold Fields
website.
3. The implementation of systems and approaches that
Gold Fields is using to manage its material safety risks and
restriction of liability
opportunities (ICMM Subject Matter 3).
DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for:
• The alignment of Gold Fields’ sustainability policies to the
ICMM 10 SD Principles and any mandatory requirements set
out in ICMM Position Statements.
• The reporting of Gold Fields’ material sustainable
development risks and opportunities based on a review of its
business and the views and expectations of its stakeholders.
• The implementation of systems and approaches that
Gold Fields is using to manage its material safety risks and
opportunities.
OUR RESPONSIBILITY
Our engagement included reporting on the ICMM Assurance
Procedure in respect of 1, 2 and 3 above based on the
knowledge obtained in our evidence gathering procedures in our
assurance engagement on the subject matters in (a) set out in
our ‘Report on Selected Sustainability Information’ above.
FINDINGS
Based on our evidence gathering procedures in our assurance
engagement for the year ended 31 December 2014 on
the subject matter in (a) set out in our ‘Report on Selected
Sustainability Information’ above, nothing has come to our
attention that causes us to believe that:
1. Gold Fields’ sustainability policies are not aligned with
the ICMM 10 SD Principles and any mandatory requirements
set out in ICMM Position Statements.
Our work has been undertaken to enable us to express the
opinions on the subject matters in (a), (b) and (c) in our ‘Report
on Selected Sustainability Information’ together with findings on
1, 2 and 3 in our ‘Report on the ICMM Assurance Procedure’ to
the Directors of Gold Fields in accordance with the terms of our
engagement, and for no other purpose. We do not accept or
assume liability to any party other than Gold Fields, for our work,
for this report, or for the conclusions we have reached.
kpmG Services proprietary limited
per pD naidoo
Director
Johannesburg
per c basson
Director
Johannesburg
23 March 2015
23 March 2015
KPMG Crescent
85 Empire Road
Parktown
Johannesburg
2193
KPMG Crescent
85 Empire Road
Parktown
Johannesburg
2193
The Gold Fields Integrated Annual Report 2014 ASSurAncE
123
7.3 Assured data
The following key sustainability performance information was selected by Gold Fields, for assurance
by KPMG in 2014:
parameter
level of Assurance management figure
environment
Total CO2 Equivalent Emissions, Scope
1 – 3 (in tonnes)
Reasonable
1 694 043 tonnes
Electricity (MWh)
Reasonable
1 338 074 MWh
Number of environmental incidents –
Reasonable
4 incidents
Level 3 and above
Total Water Withdrawal (Mℓ)
Diesel (TJ)
Total Water recycled/re-used per annum
(Mℓ)
Water Intensity (Kℓ withdrawn per ounce
of gold produced)
Reasonable
30 207 Mℓ
Reasonable
Reasonable
6 066 TJ
42 409 Mℓ
Reasonable
30 206 760 Kℓ/2 294 645 ounces = 13.16
Total Energy Consumed (GJ)/Ounce of
Reasonable
10 465 746 GJ/2 294 645 ounces = 4.56
gold produced
heAlth
Number of cases of Silicosis reported
Reasonable
Number of cases of Noise Induced
Reasonable
15 cases
13 cases
Hearing Loss reported
Cardio Respiratory Tuberculosis
Reasonable
49 new cases
(Number of new cases reported)
Number of cases of Malaria tested
Reasonable
690 positive cases
positive per annum
Number of South African and West
Reasonable
282
African employees in the HAART
programme (cumulative)
Percentage of South African and West
Reasonable
4 091 people on VCT / 11 398 people = 35.9%
African workforce on the voluntary
counselling and testing (VCT)
programme
SAFety
TRIFR¹
Number of Fatalities
SociAl
Reasonable
Reasonable
200 TRIs/ 49 456 833 man hours = 4.04
3
Total socio-economic development (SED)
Reasonable
US$16,387,920
spend in US Dollars²
The Gold Fields Integrated Annual Report 2014 124
ASSurAncE
7.3 Third party: Independent assurance (continued)
parameter
level of Assurance management figure
mininG chArter
employment equity
Percentage HDSA in Management
Reasonable
excluding corporate and
excluding corporate and
(DL – FU) who are classified as
designated groups and who are
employed at management levels (Top
Management (Board), Senior, Middle,
Junior, Core Skills and Total)
including white Females
excluding white Females
Top: 50%
Senior: 56%4
Middle: 63%
Junior: 52%
Core: 72%
Total: 71%
Top: 50%
Senior: 44%
Middle: 55%
Junior: 49%
Core: 70%
Total: 70%
including corporate and
including corporate and
including white Females
excluding white Females
Top: 33%
Senior: 47%
Middle: 67%
Junior: 58%
Core: 72%
Total: 71%
Top: 22%
Senior: 30%
Middle: 49%
Junior: 53%
Core: 70%
Total: 69%
housing and living conditions
Conversion or upgrading of hostels to
Reasonable
1 person per room
attain an occupancy rate of 1 person per
room by 2014
Number of houses built as part of the
Reasonable
0 houses3
housing and hostel upgrade programme
% conversion of hostels into family units
Reasonable
100%
Skills and Development
HRD Expenditure as a percentage of
Reasonable
10%
total annual payroll (excluding mandatory
skills development levy)
local economic Development
Rand value spent on LED projects in
Reasonable
R20,106,077
the SLP in the current reporting year
procurement and enterprise
Development
Procurement spend from BEE entities
Reasonable
Capital goods: 82%
(in line with the mining charter categories
of capital goods, services & consumable
goods)
Services: 73%
Consumable goods: 85%
Total procurement spend from BEE
Reasonable
R1,482,752,617
entities (BBSEEC, 2010)
Percentage % of samples in South
Reasonable
100%
African facilities
1 Per million hours worked, including employees and contractors
2 Our SED definition has been aligned to the World Gold Council definition, which excludes employee-related SED spend
3 Although no houses were built as part of the housing and hostel upgrade programme, South Deep owns 258 houses and purchased 198 from Sibanye and 489 have been rented
from third parties by Gold Fields for our employees. We are also finalising our updated housing strategy in 2015, which will focus on home ownership and rentals. The housing
strategy is being developed in addition to the requirements of the Mining Charter Scorecard element for ‘Housing and Living Conditions’, which saw the hostel conversions
resulting in the availability of 845 single unit hostels in 2014 and 203 family units.
4 The employment equity percentage (excluding corporate and including white females) for ‘senior management’ is reported in the Mining Charter scorecard (p104 – 105
of this report) as 50%. This percentage is reported to include only the percentage of HDSA’s on Exco, whereas the assured percentage of 56% is aligned to the Patterson
grading scale.
The Gold Fields Integrated Annual Report 2014 Notes
125
The Gold Fields Integrated Annual Report 2014 126
Notes
The Gold Fields Integrated Annual Report 2014 Administration and corporate information
coRpoRAte secRetARy
Lucy mokoka
Tel:
Fax:
Email:
+27 11 562 9719
+27 11 562 9829
lucy.mokoka@goldfields.co.za
InVestoR enQuIRIes
Avishkar Nagaser
Tel:
+27 11 562 9775
Mobile: +27 82 312 8692
Email:
avishkar.nagaser@goldfields.co.za
ReGIsteRed oFFIce
Johannesburg
Gold Fields Limited
150 Helen Road
Sandown
Sandton
2196
Postnet Suite 252
Private Bag X30500
Houghton
2041
Tel:
Fax:
+27 11 562 9700
+27 11 562 9829
oFFIce oF the unIted KInGdom secRetARIes
London
St James Corporate Services Limited
Suite 31, Second Floor
107 Cheapside
London EC2V 6DN United Kingdom
Tel:
Fax:
+44 20 7796 8644
+44 20 7796 8645
AmeRIcAn deposItoRy ReceIpts tRAnsFeR AGent
Bank of New York Mellon
BNY Mellon Shareowner Services
PO Box 358516
Pittsburgh, PA15252-8516
US toll-free telephone: +1 888 269 2377
+1 201 680 6825
Tel:
shrrelations@bnymellon.com
Email:
GoLd FIeLds LImIted
Incorporated in the Republic of South Africa
Registration number 1968/004880/06
Share code: GFI
Issuer code: GOGOF
ISIN – ZAE 000018123
websIte
www.goldfields.com
LIstInGs
JSE/NYSE/NASDAQ Dubai: GFI
SWX: GOLI
North America
Willie Jacobsz
Tel:
Mobile: +1 857 241 7127
Email:
+1 (617) 535-7545
willie.jacobsz@gfexpl.com
medIA enQuIRIes
Sven Lunsche
Tel:
+27 11 562 9763
Mobile: +27 83 260 9279
Email:
sven.lunsche@goldfields.co.za
tRAnsFeR secRetARIes
South Africa
Computershare Investor Services (Pty) Ltd
Ground Floor
70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown
2107
Tel:
Fax:
+27 11 370 5000
+27 11 688 5248
united Kingdom
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham Kent BR3 4TU England
0871 664 0300
Tel:
[calls cost 10p a minute plus network extras, lines are open
8.30 – 17:00 Mon – Fri] or [from overseas]
Fax:
Email:
+44 20 8639 3399
+44 20 8658 3430
ssd@capitaregistrars.com
sponsoR
JP Morgan Equities South Africa (Pty) Ltd
dIRectoRs
CA Carolus (Chair)° NJ Holland* (Chief Executive Officer)
PA Schmidt (Chief Financial Officer) K Ansah # AR Hill≠°
GM Wilson° RP Menell° DN Murray° DMJ Ncube°
*British #Ghanaian ≠Canadian °Independent Director
Non-independent Director
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150 Helen Road
Sandown
Sandton, 2169
Johannesburg
Gauteng
South Africa
Private Bag X30500
Houghton, 2041
South Africa
Telephone: (+27) (11) 562 9700
Facsimile: (+27) (11) 562 9838
Website: www.goldfields.com
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