G
o
l
d
F
i
e
l
d
s
I
n
t
e
g
r
a
t
e
d
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
8
Integrated
Annual Report
2018
About this report
Gold Fields Limited is a globally diversified gold producer with eight operating mines
(including our Asanko Joint Venture) and projects in Australia, Chile, Ghana, Peru and South
Africa, and total attributable annual gold-equivalent production of approximately 2Moz.
It has attributable gold Mineral Reserves of around 48.1Moz and gold Mineral Resources
of around 96.6Moz. Attributable copper Mineral Reserves total 691 million pounds and
Mineral Resources 847 million pounds, while silver Reserves total 39.3Moz and
Resources 43.7Moz.
Gold Fields has a primary listing on the Johannesburg Stock Exchange (JSE) Limited, with
a secondary listing on the New York Stock Exchange (NYSE).
Our integrated reporting approach aims to enable our stakeholders to make
a more informed assessment of the value of Gold Fields and its prospects.
This Integrated Annual Report (IAR) is structured around the Gold Fields’
Group balanced scorecard, which is how we measure our performance
against our strategy and the matters we consider to be most material to
the sustainability of our Group (p14). Gold Fields embraces integrated
thinking and takes an integrated approach to value creation, which is aligned
with the International Integrated Reporting Council’s (IIRC) six capitals
model.
The IAR also forms part of our adherence to the Global Reporting Initiative
(GRI) Standards and the 10 Principles of the International Council on Mining
& Metals (ICMM), whose mandatory requirements of its position statements
are presented online. We also align with the 10 Principles of the United
Nations Global Compact.
Our full 2018 IAR comprises the following:
1. IAR: Our primary report and details of the Group’s value creation story
Non-IFRS measures are used throughout the IAR. These have been defined
in the Management’s discussion and analysis of the financial statement in
the Annual Financial Report, p129 – 130.
Average exchange rates for 2018 of R13.20/US$1 and US$0.747/A$1 have
been used in this report. For 2019, forecast exchange rates of R13.61/US$1
and US$0.75/A$1 have been used.
ICMM subject matters
Gold Fields has complied with the ICMM Sustainable Development
Framework, Principles, Position Statements and Reporting Requirements
(see p129 – 130, for the assurance hereof).
Our compliance with the ICMM is addressed throughout this report and
on our website. This detail covers:
■■ The alignment of our sustainable development policies against the
10 principles and mandatory position statements
■■ The process for identifying specific sustainable development risks and
over the short, medium and long term
opportunities
2. Annual Financial Report: Our full Corporate Governance Report, Board
and Board subcommittee reports, Directors’ Report, Remuneration
Report and our Annual Financial Statements, fulfilling our statutory
financial reporting requirements
3. The Mineral Resources and Mineral Reserves Supplement: Detailed
technical and operational information on our mines and growth projects
4. The Notice of Annual General Meeting: The resolutions to be tabled to
shareholders at our Annual General Meeting
5. The Gold Fields GRI Report 2018
Forward looking statements
This report contains forward looking statements within the meaning
of section 27A of the U.S. Securities Act of 1933, as amended, or the
Securities Act, and section 21E of the U.S. Securities Exchange Act of
1934, as amended, or the Exchange Act, with respect to Gold Fields’
financial position, results of operations, business strategies, operating
efficiencies, competitive position, growth opportunities for existing services,
plans and objectives of management, markets for stock and other matters.
Refer to the full forward looking statements on www.goldfields.com.
Report scope and boundary
This report covers the reporting period from 1 January 2018 to
31 December 2018 and provides an overview of our eight operations
(including our Asanko JV) in Australia, Ghana, Peru and South Africa, as well
as our exploration and business development activities. Details on the exact
location of each operation and project can be found on p2 – 3.
Non-financial data for 2018 only covers our seven operating mines and
excludes exploration activities and projects. Data from Darlot, which was
sold, is included for the January to October 2017 period.
This report has been compiled in accordance with the GRI Standards: core
option and the International Integrated Reporting Council Framework. Gold
Fields also references a broad range of additional codes, frameworks and
standards in compiling the report, including the King IV Code on Corporate
Governance (King IV). The full list can be found in the Annual Financial
Report (p15 – 16). We consider that this IAR, together with additional
documents held online, complies with the requirements of the GRI
Standards.
■■ The existence and implementation of systems and approaches for
managing sustainable development risks and opportunities
■■ Gold Fields’ performance across a selection of identified material
sustainable development risks and opportunities. Our disclosures
in accordance with the GRI Standards can be accessed at
www.goldfields.com>sustainability.
Assurance
ERM has provided independent reasonable assurance over selected
sustainability information in this report, which is prepared in accordance with
the GRI Standards: core option. As a member of the ICMM, we are
committed to obtaining assurance in line with the ICMM Sustainable
Development Framework: Assurance Procedure. ERM has provided
assurance over our statement on compliance with the ICMM Sustainable
Development Framework, Principles and Reporting Requirements. The key
sustainability performance data for assurance by ERM in 2018 can be found
on p131 – 132.
Board approval
The Gold Fields Board of Directors acknowledges its responsibility to ensure
the integrity of this IAR and has applied its collective mind throughout the
preparation of this report. The Board believes that the integrated report is
presented in compliance with the International Integrated Reporting
Framework. Furthermore, the Board considers that this IAR 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 the
International Financial Reporting Standards.
As such, the Board unanimously approves the content of the IAR 2018,
including the Annual Financial Report 2018, and authorised its release on
29 March 2019.
Cheryl Carolus
Chairperson of the Board
25 March 2019
The Gold Fields Integrated Annual Report 2018
1
Contents
29
CEO
Report
1\
2\
3\
4\
5\
6\
7\
OUR BUSINESS
Our global footprint
Our business model
Value creation and distribution
Our operating context
Risks and materiality
Performance against strategic targets
LEADERSHIP
Vision of the Chairperson
Summarised corporate governance
CEO Report
PORTFOLIO MANAGEMENT
Managing our portfolio
Life extension through near-mine exploration
Mineral Resources and Reserves summary
SAFE OPERATIONAL DELIVERY
Operational performance
Safety
Health
Energy management
Innovation and technology
A fit-for-purpose workforce
Summarised Remuneration Report
CAPITAL DISCIPLINE
Financial performance
LICENCE AND REPUTATION
Overview
Environmental stewardship
Climate change
Water management
Waste and tailings
Mine closure
Stakeholder relations
Community relations
Human rights
ASSURANCE
First party: Internal Audit Statement
Independent Assurance Statement of Gold Fields Limited
Key sustainability performance data
Administration and corporate information
2
4
6
8
10
14
20
23
29
40
50
52
56
63
67
70
74
76
79
84
92
95
97
100
103
105
106
111
122
128
129
131
IBC
54
Safe operational
delivery
92
Licence and
Reputation
United Nations’ Sustainable Development Goals
Given our commitment to sustainable development, there is great
potential for Gold Fields to make an important and lasting contribution
towards the United Nations’ Sustainable Development Goals (SDGs).
Gold Fields seeks to work with partners to catalyse lasting social and
economic progress that supports an end to poverty, protects the
planet and ensures prosperity for all. The following development goals
are viewed as critical in the work of the mining and metals sector in
particular.
Where we believe our work is relevant to achievement of these goals
the icons below will appear in this IAR.
Good Health
and Wellbeing
Quality
Education
Clean Water
and Sanitation
Affordable
and Clean Energy
Decent Work
and Economic
Growth
Industry,
Innovation and
Infrastructure
Please refer to our online report at www.goldfields.com
Sustainable Cities
and Communities
Responsible
Consumption
and Production
Climate
Action
Life on
Land
Partnerships
for the Goals
Send us your feedback:
To ensure that we report on issues that matter to our stakeholders please
provide any feedback and questions to: investors@goldfields.com,
sustainability@goldfields.com or visit www.goldfields.com to download
the feedback form.
linkedin.com/company/gold-fields
business.facebook.com/GoldFieldsLTD
@GoldFields_LTD
2
The Gold Fields Integrated Annual Report 2018
Our global footprint
Group performance
Managed production
All-in cost
koz (au-eq)
3,000
US$/oz
1,500
2,500
2,000
1,500
1,000
500
0
4
9
2
,
2
6
3
2
,
2
9
1
2
,
2
3
3
2
,
2
7
0
1
,
2
14
15
16
17
18
1,000
1,000
0
7
8
0
,
1
6
2
0
,
1
6
0
0
,
1
3
7
1
,
1
8
8
0
,
1
14
15
16
17
18
Managed production1
All-in cost
koz
1,000
800
600
400
200
0
Safety
TRIFR2
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
6
3
7
4
5
7
6
1
7
0
1
7
1
0
5
7
14
15
16
17
18
2
0
.
1
5
7
.
0
8
6
.
0
0
5
.
0
9
4
.
0
14
15
16
17
18
US$/oz
1,500
1,250
1,000
750
500
250
0
4
9
0
,
1
9
4
0
,
1
0
2
0
,
1
9
1
1
,
1
8
9
0
,
1
14
15
16
17
18
Net cash-flow3
US$m
150
3
2
1
100
50
0
0
0
1
4
6
4
4
4
2
14
15
16
17
18
West
Africa
region
Contribution to
Group production
36%
Gold Fields’ West Africa region
consists of two mines, Tarkwa
and Damang, and a JV, Asanko,
in Ghana
1 Includes 45% of Asanko Gold for
August – December 2018
2 TRIFR – Total Recordable Injury Frequency Rate
Injuries per 1 million hours worked, including
employees and contractors
3 Net cash-flow = cash-flow from operating activities
less net capital expenditure, environmental
payments and finance lease payments.
If growth capital is excluded the numbers in US$m
would have been: West Africa 2017: 179
2018: 149
South Africa 2014: (79)
2015: (66)
2016: 20
2017: (26)
2018: (123)
4 The statistics for Australia include Darlot up to the
date of its sale on 2 October 2017
Managed production
All-in cost
koz
350
300
250
200
150
100
50
0
0
9
2
1
8
2
1
0
2
8
9
1
7
5
1
14
15
16
17
18
US$/oz
2,500
2,000
1,500
1,000
500
0
2
1
0
,
2
2
3
7
,
1
9
5
5
,
1
0
0
4
,
1
4
3
2
,
1
14
15
16
17
18
South
Africa
region
Safety
TRIFR2
5.0
5
6
.
4
4.0
3.0
2.0
1.0
0
1
9
.
2
1
9
.
2 2
4
.
2
7
0
.
2
14
15
16
17
18
Net cash-flow3
Contribution to
Group production
US$m
20
0
(20)
(40)
(60)
(80)
(100)
(120)
(140)
)
6
1
1
(
2
) 1
0
8
(
)
3
4
(
)
1
4
1
(
14
15
16
17
18
7%
The South Deep mine,
which is still in ramp-up
phase, is the only
operating asset in the
South Africa region
The Gold Fields Integrated Annual Report 2018
3
Safety
TRIFR2
6
5
4
3
2
1
0
4
0
.
4
0
4
.
3
2
4
.
2
7
2
.
2
3
8
.
1
14
15
16
17
18
Americas
region
Contribution to
Group production
15%
Managed production
All-in cost
Au-eq koz
400
300
200
100
0
Safety
TRIFR2
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
7
2
3
6
9
2
0
7
2
7
0
3
4
1
3
14
15
16
17
18
9
0
.
1
4
5
.
0
8
3
.
0
4
3
.
0
9
1
.
0
14
15
16
17
18
US$/oz
1,000
800
600
400
200
0
7
7
2 7
0
7
2
6
7
9
9
6
3
7
6
14
15
16
17
18
Net cash-flow3
US$m
200
150
100
50
0
0
5
1
7
1
1
4
1
1
7
7
5
3
14
15
16
17
18
Gold Fields’ presence in
the Americas region consists of the
Cerro Corona mine in Peru and
the Salares Norte project in Chile
Australia
region
Contribution to
Group production
42%
Managed production4
All-in cost4
koz
1,500
1,200
900
600
300
0
1
3
0
,
1
8
8
9
2
4
9
5
3
9
6
8
8
14
15
16
17
18
Safety4
TRIFR2
25
20
15
10
5
0
4
0
.
7
1
7
2
.
6
1
4
4
.
0
1
3
4
.
9
5
1
.
7
14
15
16
17
18
US$/oz
1,500
1,200
5
1
0
,
1
2
1
9
1
4
9
8
4
9
3
4
9
900
600
300
0
14
15
16
17
18
Net cash-flow3,4
US$m
300
250
200
150
100
50
0
5
5
2
6
5
2
8
1
2
8
8
1
4
9
1
14
15
16
17
18
The Australia region
consists of three mines,
Agnew, Granny Smith
and St Ives and one
project, Gruyere
OUR BUSINESS
4
The Gold Fields Integrated Annual Report 2018
Our business model
INPUTS
OUR BUSINESS PROCESS
HUMAN CAPITAL
Our 5,601 employees and
12,010 contractors provide
the manpower and skills
to drive our business.
NATURAL CAPITAL
Water and energy are critical
to support our mining
process and business
activities, while access to
land allows us to extract a
country’s gold resources.
SOCIAL AND
RELATIONSHIP
CAPITAL
The support of host
communities and
relationships with
governments secure
and maintain our social
and regulatory licence
to operate.
FINANCIAL
CAPITAL
Banks, shareholders and
bond holders provide the
financial capital that funds
the sustainability and
growth of our operations.
MANUFACTURED
CAPITAL
Contractors and suppliers
supply the manufactured
capital (goods and services)
for the development and
sustainability of our mines.
INTELLECTUAL
CAPITAL
The intellectual input of our
people and partners (OEMs
and technology companies)
inform the development
of strategy, the efficient
use of machinery and
the management of key
business risks.
EXPLORATION
Near-mine and selected
greenfields exploration focuses on
resource extension to enhance the
long-term sustainability of our portfolio.
DEVELOPMENT
2
We invest in the development
of projects that will improve
the cost and production profile
of our portfolio.
1
3
MINING
We extract gold and copper-bearing ore
from mechanised mines in Australia,
Ghana, Peru and South Africa – either
by our own teams or by contractors.
OUTCOMES FOR THE BUSINESS AND STAKEHOLDERS DURING 2018
HUMAN
CAPITAL
NATURAL
CAPITAL
■■ US$442m paid in salaries, dividends and
■■ 21.2GL water withdrawn, with 66% of water
benefits
■■ US$14m spent on training
■■ 1 fatal incident
■■ Improvement in total recordable injury
frequency rate (TRIFR) to 1.83
■■ Retrenchment of 1,092 employees and
420 contractors at South Deep
■■ About 1,200 former employees now
employed by new mining contractors
at Tarkwa
recycled
■■ 2 Level 3 environmental incidents
■■ 1,28TWh of electricity purchased
■■ 1.85m tonnes of CO
emissions
2
■■ 184.7Mt of total material moved
■■ 41Mt of tailings
GOOD GOVERNANCE FOUNDATION
A strong ethos of good governance underpins everything we do.
Our approach (detailed on p23 – 28) goes beyond compliance
– we believe it is an important differentiator, gaining us the
5
We seek to responsibly manage mine
closure and optimise our mine closure
liabilities through integrated mine
closure planning and progressive
rehabilitation.
MINE
CLOSURE
4
Physical and chemical
processing of ore results in semi-
pure gold doré and copper/gold
concentrate. The doré is externally
refined into gold bullion.
PROCESSING
The Gold Fields Integrated Annual Report 2018
5
OUTPUTS
2.04Moz
attributable gold-eq produced
(Further details on p56)
185mt
mining waste
(Further details on p103)
1.85mt
CO2-e emissions
(Further details on p97)
41Mt
of tailings
(Further details on p103)
US$2.58bn
revenue generated
(Further details on p84)
US$2.71bn
total value created
(Further details on p6)
SOCIAL AND
RELATIONSHIP CAPITAL
FINANCIAL
CAPITAL
MANUFACTURED
CAPITAL
INTELLECTUAL
CAPITAL
■■ US$147m paid in interest and
■■ Eight operating mines (including
dividends
our Asanko JV)
■■ Increase in net debt to
■■ Two projects in Australia and
US$1,612m (2017: US$1,303m)
Chile
■■ NYSE share price down 8%
■■ Dividend of R0.40/share
declared
■■ US$400m in gross mining
closure liabilities
■■ Total attributable annual
gold-equivalent production of
2.04Moz
■■ Copper production of
32,000 tonnes
■■ Fibre networks installed
underground in certain
operations
■■ Drones deployed at Tarkwa and
Damang to conduct remote
surveying
■■ Granny Smith, South Deep and
St Ives improved their people
and equipment tracking systems
■■ Continued investment in South
Deep, South Africa’s largest
bulk, mechanised,
underground gold mine
■■ US$26m invested in projects
that directly benefit our host
communities
■■ Employment for 9,259 members
of host communities (56% of
total workforce, including
contractors)
■■ US$441m spent on host
community enterprises
procurement (22% of total
procurement costs)
■■ US$1,813m to suppliers and
contractors, representing 67%
of total value creation
■■ 94% of total 2018 procurement
expenditure by mines was spent
on businesses based in
operating countries
■■ US$283m paid to
governments in taxes and
royalties
support of communities, ongoing access to mines from governments, the buy-in from existing and
potential employees and the trust of capital providers. We subscribe to numerous international best
practice standards.
OUR BUSINESS 6
The Gold Fields Integrated Annual Report 2018
Value creation and distribution
The ultimate aim of our strategy and business model is to create value for our stakeholders
Total and national value distribution
National value distribution by
region and type 2018 (US$m)
Government Business
Employees
Socio-
economic
spend
Capital
providers
National value
distribution
Americas
Australia
South Africa
West Africa
Corporate
Total Gold Fields
55
121
3¹
90
14
283
156
812
176
654
15
1,813
37
128
144
83
49
442
6
1
32
15
0
26
4
0
9
13
121
147
258
1,062
336
855
200
2,711
1 South Deep does not yet pay income tax as it is in a loss-making position
2 This includes spending from the South Deep trusts and SLP commitments
Governments
Payments include
Mining royalties and land-use payments, taxes, duties and levies.
Why these stakeholders matter
Governments provide 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.
2018 Contributions:
■■ We paid governments US$283m (2017: US$310m) in taxes and royalties,
10% of total value distribution (2017: 11%)
■■ In addition, the Ghanaian government benefited from US$15m in declared
dividends relating to its 10% shareholding in Gold Fields Ghana
Business
Payments include
Operational and capital procurements.
Why these stakeholders matter
Supply chain businesses provide the equipment and services needed
to develop and maintain our operations. They comprise business
partners, contractors and suppliers.
2018 Contributions:
■■ We paid US$1,813m to suppliers and contractors, representing
67% of total value creation (2017: US$1,857m/65%)
■■ Of the total 2018 procurement expenditure of US$1,813m,
US$1,542m, or 85%, was spent on businesses based in operating
countries by our mines (2017: US$1,620m/88%)
■■ US$441m, or 29%¹, of total procurement by our mines was
spent on suppliers and contractors from host communities
(2017: US$774m/45%)
¹ The % decline is due to a change in the definition of host communities
by our Australian operations to only include communities in their area
of influence (previously Perth was included in the definition due to the
FIFO nature of our mines)
Workforce
Payments include
Salaries and wages, benefits and bonus
payments (including shares and payroll taxes).
Why these stakeholders matter
The technical skills, experience and activity
of our people drive the day-to-day operations
of our business.
2018 Contributions:
■■ We paid US$442m (2017: US$506m) to
employees in terms of salaries, dividends
and benefits, representing 16% of total value
distribution (2017: 18%)
■■ We also provide employees (where legislated)
with additional benefits such as retirement
savings, healthcare assistance, life and
disability insurance, housing assistance
and personal accident cover
■■ We prioritise the employment of members
from our host communities. At end 2018
host community employment comprised 56%
of our workforce
Capital providers
Payments include
Interest and dividend payments to capital providers.
Why these stakeholders matter
Financial institutions, shareholders and bond holders invest
with us, thus enabling us to fund the development,
maintenance and growth of our operations and our overall
business.
2018 Contributions:
■■ We paid US$147m (2017: US$160m) to the providers
of debt and equity capital, mainly in the form of interest
and dividends
■■ Net debt increased by US$309m to US$1,612m
■■ We paid a total dividend of R0.40/share for the
2018 financial year
The Gold Fields Integrated Annual Report 2018
7
Communities
How we create value for communities
Payments include
Socio-economic development (SED) spending, including
infrastructure, health and wellbeing, education and
training, local environmental initiatives and donations.
Why these stakeholders matter
Host communities are the source of a significant portion
of our workforce and a key component of our social
licence to operate.
2018 Contributions:
■■ We spent US$26m (2017: US$17m) in terms of SED
investment, including contributions from the South
Deep trusts
■■ 56% of our workforce is drawn from host
communities
■■ The graph below provides an analysis
of our host community employment and
procurement as well as other benefits and
investment in communities
Gold Fields’ total value creation (2018)
Host community
procurement
creates
community jobs
and supply
opportunities
■ Support areas where community suppliers
can participate
■ Identify community suppliers with ability to
supply the mine
■ Provide skills development to close capability gaps
■ Delivery long-term, enduring value
Host
community
employment
maximises local
opportunities
■ Build skills base in community workforce
through education, bursaries, etc
■ Make community the first option for hiring staff
■ Encourage contractors/suppliers to employ
from the community
Community
investment
drives
integrated
investment
■ Balanced across services (health, education),
enterprise development and infrastructure
■ Matched to capacity and development needs
of communities
■ Shared Value projects benefit both communities
and our mines. Partnering for dual prosperity
US$m
3 000
2 500
2 000
1 500
1 000
500
0
3
8
2
7
4
1
3
1
8
1
2
1
4
4
1
1
7
2
7
8
6
Our host
community
spend is
US$686
million
=
25% of
total value
creation
6
2
2
4
4
1
0
2
2
Social investment
Employee payments
Total supplier spend
Government payments
Capital providers
Total value creation
■ Host community spend
1) 56% of workforce corporate office 2) 27% of total supplier spend excluding corporate, regional offices and project spend
■ Total spend
Why the focus on communities
We believe that our host communities are one of our most critical stakeholders as they grant us our licence to operate. Over the past few years, we
devoted considerable resources to sharing the value created through our mines with the communities surrounding them. This goes beyond the direct
financial investment to creating sustainable surrounding economies through community employment and procurement.
During 2018, we enhanced our understanding of the value created through these programmes by quantifying the impact.
Trade-offs
We continue to balance the legitimate, and at times conflicting, needs of our stakeholders in order to create value over
the short, medium and long-term. These were some of the significant trade-offs we had to make during 2018.
1. Balancing financial viability with employment
■■ To improve financial viability, we unfortunately had to retrench 1,082 employees and 420 contractors at South Deep to right-size the business (p46)
■■ At Tarkwa mine, we retrenched 2,211 employees, of which 1,714 were re-engaged by contractors or on a contractor basis (p33)
2. Improving long-term sustainability
■■ By channelling funds into growth capital we aim to secure future growth by temporarily cutting back on other stakeholder spending
3. Managing our environmental impacts
■■ Mining is resource intensive, but we seek to minimise our environmental impacts. During 2018, we had two Level 3 water-related
environmental incidents. We responded speedily to address the causes and communicated the incidents (p95)
4. Balancing the immediate needs of communities with long-term value creation
■■ Our focus shifted from short-term projects to long-term value creation by creating sustainable value for host communities through employment
and procurement programmes (p113)
5. Providing long-term contributions to host governments
■■ At the Cerro Corona mine, we reduced our taxable income in the short term to fund future growth. The investment is set to provide longer-term
tax and royalty revenues to the host government
OUR BUSINESS
8
The Gold Fields Integrated Annual Report 2018
Our operating context
Gold Fields is subject to external strategic dynamics that inform decision-making and
influence our business performance. An analysis of the three key strategic themes – and how
Gold Fields is responding to them – is set out below.
Gold price
Issue
The price of gold continued its
relatively static course during 2018,
ending the year at US$1,280/oz,
down just over US$30/oz from the
2018 opening price of US$1,313/oz.
The average gold price received by
Gold Fields, however, has barely
changed from US$1,255/oz in 2017
to US$1,252/oz in 2018.
The traditional investment case for
gold as a safe haven asset was called
into question as many investors sold
their physical gold holdings after
the gold price collapsed in 2013.
However, in late 2018 and early 2019
we have seen some shift to gold
amid political and economic
uncertainty in the US and the
subsequent weakness in the US
Dollar. While much of the gold price’s
short-term movement is driven by
market sentiment and geopolitical
developments, an analysis of gold’s
supply and demand fundamentals
underpins our belief that the gold
price could continue to improve over
the next few years, though there will
undoubtedly be periods of short-term
volatility.
According to the CPM Group,
total gold demand was steady at
127.4Moz in 2018 (2017:127Moz),
with jewellery and industrial demand
unchanged at 97Moz, and higher
central bank purchases offsetting a
decline in private investment in coins
and bullion. Net purchases by central
banks and other official institutions
continued to grow steadily in 2018,
improving by over 50% to 16.5Moz
in 2018, after a similar rise in 2017
to 11Moz. Total stock demand by
Exchange Traded Funds remained
stable at 30.3Moz in 2018 (2017:
30Moz).
In the long term, gold supply issues
will also support a recovery in the
gold price, in our view. According to
CPM data, mine production has
plateaued between 90Moz – 92Moz
since 2014. Mine supply in 2018
totalled 92.1Moz and secondary
supply 30.1Moz, both unchanged
from 2017, leaving total supply
marginally higher at 127.4Moz in
2018 (2017: 127Moz). Many gold
market analysts are of the view that
the industry has reached peak
production levels given the limited
number of new gold discoveries since
the mid-1990s, together with the
decreased levels of exploration spend
in recent years.
Response
Gold Fields does not predict the gold
price. We expect volatility and
structure the business accordingly.
We seek to maximise value by:
■■ Prioritising cash-flow over
production volumes
■■ Setting targets for each region at a
15% free cash-flow (FCF) margin
around a planning price of
US$1,200/oz
■■ Eliminating marginal mining
■■ Selling non-strategic assets
■■ Hedging a portion of our gold
production in times of high capital
expenditure
The Group is therefore in a relatively
strong state to weather a sustained
lower gold price (at just over
US$1,000/oz) and well positioned to
capture future upside when the gold
price recovers.
During 2017 and 2018, we invested
in the future of our portfolio with a
number of new projects, while at the
same time continuing to invest in the
ongoing development of ore bodies
– through proactive near-mine
exploration and development. Our
mines avoid ‘high-grading’ – due to
the obvious negative impact this
would have on the sustainability of
their ore bodies – by mining at or
below their reserve grade. We are
implementing these strategies
despite the current price
environment.
Global gold demand and supply versus the US$ gold price (average annual)
Moz
400
350
300
250
200
150
100
50
0
1
5
1
7
4
1
4
4
1
8
3
1
8
3
1
3
4
1
7
3
1
0
4
1
0
4
1
8
4
1
1
3
1
1
4
1
9
3
1
4
4
1
2012
2013
2014
2015
2016
2017
2018
US$/oz
2 000
1 750
1 500
1 250
1 000
750
500
250
0
■ Demand
■ Supply
■ Average gold price (US$/oz – rhs)
Source: WGC
Total mine supply
Moz
100
80
60
40
20
0
1
8
6
8
0
9
0
9
3
9
2
9
2
9
2012
2013
2014
2015
2016
2017
2018
Source: CPM
The Gold Fields Integrated Annual Report 2018
9
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, mines are dependent on
their mineral deposits and cannot
relocate to new locations when facing
deteriorating local or national
operating environments. Furthermore,
despite many mines’ lives being finite,
they can still span decades. Mines
must be able to navigate complex
social, economic and political
dynamics over time to avoid conflicts
with their host communities. As it is,
conflicts between communities and
mines in the industry globally have
risen sharply over the last decade.
To manage the potential risks, mining
companies need to maximise their
positive impacts, minimise their
negative impacts and make sure that
this is communicated to – and
recognised by – host community
stakeholders. For many decades this
was not the case and, apart from a
limited number of community jobs
and procurement offered by mining
companies, these communities saw
few benefits. Similarly, taxes and
royalties went into the coffers of
central governments for national
benefit and rarely found their way
back through investment in host
communities. It is therefore not
surprising that demands from host
communities have become more
vocal and strident in recent years.
Amid widespread use of social media
and activism in these communities
their demands have also found a
global audience.
Response
At Gold Fields, a strong social licence
to operate is embedded in our
societal value proposition and is a
prerequisite for long-term generation
of value for stakeholders. This
approach had to be underpinned by:
■■ Responsibility: ongoing
investment in responsible
operational standards to avoid
and mitigate negative social and
environmental impacts. This
includes effective water and
environmental management,
which has become an increasingly
material issue for most mining
companies (p95)
■■ Trust: frank, two-way
communication, realistic
expectation management and
visibly honouring commitments
builds trust. This includes ongoing
engagement on issues such as
indigenous rights, employment
opportunities and social
transformation (p111)
■■ Understanding: investment in
communities relies on a thorough
understanding of the risks,
community needs and community
perceptions. Since 2015, Gold
Fields has undertaken relational
proximity studies at a number of its
mines and in 2017 also undertook
socio-economic baseline and
social return on investment (SROI)
studies at its South Deep mine in
South Africa
■■ Value creation in host
communities: we seek to create
value in our communities through
investment in socio-economic
development (SED) projects, and,
more critically, by recruiting
employees and contractors from
host communities and sourcing
goods and services from
companies in these communities
(p113)
These initiatives are particularly
important in the low gold price
context, which has an impact on the
Group’s ability to invest in community
development projects as well as
raising the prospect of job cuts
among employees, many of whom
hail from host communities.
Conflicts between mines and communities
on the rise
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
0
20
Source: ICMM
Source: ICMM
40
60
80
100
120
Regulatory issues
Issue
A sound and certain regulatory and
fiscal environment should enable
the global gold sector to ride out
short-term fluctuations in gold prices
and achieve sustained returns over
the 15- to 20-year average life of a
mining project. In many jurisdictions,
however, the legal and tax
environment has become less
conducive to the long-term viability of
the mining sector. Many governments
view the industry as an easy target
for higher taxes and other fiscal
imposts, particularly during tough
economic times. As a result, the
governments’ share of mining
revenue has grown at the expense of
other stakeholders, but at the same
time miners and investors are shying
away from more risky jurisdictions.
Response
The question is how the trust gap
between mining companies and
governments can best be bridged.
Gold Fields on its own and in
conjunction with its peers in the wider
global mining industry, has sought to
address this trust gap in a number of
ways:
■■ The industry is continuing to
spread value to a number of
stakeholders. Over the past three
years, Gold Fields has consistently
created between US$2bn and
US$3bn in total value annually for
our wide range of stakeholders –
accounting for around 90% of
revenue on average (p6)
■■ Gold Fields is actively promoting
host community employment and
procurement from host community
enterprises in an effort to
strengthen its social licence to
operate and mitigate any regulatory
actions that limit its ability to share
the benefits of mining. In 2018,
about 25% of our total value
creation benefited host
communities through these
initiatives (p7)
■■ We are working with international
mining bodies, such as the
International Council on Mining and
Metals (ICMM),to promote industry-
wide best practice and showcase
the benefits that a responsible and
fairly regulated industry can bring
■■ We actively engage with our host
governments in Ghana, Australia,
Peru and South Africa, either
directly or through industry
organisations, in addressing the
resource nationalism that, we
believe, prevents the sector from
achieving sustainable growth.
OUR BUSINESS
10
The Gold Fields Integrated Annual Report 2018
Risks and materiality
Top 20 Group risks and opportunities in 2018
How Gold Fields manages risk
The approach to assessing risk in Gold Fields is a collective effort by Group, regional and mine management of the
risks facing the business. The assessments of the risks and their mitigating actions are a critical internal management
tool, which reduce the identified risks significantly. Risk mitigations are included in the annual Group Performance
Scorecard and cascaded down to the performance scorecard of management employees at regional and operational
levels. The formal risk review process starts during management’s annual strategic planning sessions where strategic
risks and macro-trends are analysed in developing the Company’s risk register and mitigating actions. These are
updated quarterly, and presented to the Board’s Risk Committee twice a year for verification.
Risk tables and heat maps have been published in the IAR on this basis for the last nine years.
Y
T
I
R
E
V
E
S
4
21
13 14
6
7
11
3
5
15
109
12
8
minimum
maximum
PROBABILITY
OUR MATERIAL ISSUES
Gold Fields Group materiality score for GRI
standards
(where 1 = critical to Gold Fields and
10 = not material at all)
Direct and indirect economic impacts
Health and safety
Public policy / corporate governance
Environmental compliance
Employment
Water management
Energy / emissions
Indigenous people
1.85
2.62
2.75
3.09
3.23
3.36
3.66
3.85
For how we determine our risks and materiality,
see www.goldfields.com/risk-management-and-
materiality.php.
1
2
3
4
5
RISK AND MITIGATING ACTIONS
South Deep – loss of investor confidence due to non-
achievement of the restructuring plan
■■ Implementation of the organisational restructuring programme
■■ Productivity initiatives to unlock the full potential of all our employees
■■ Skills development programmes – artisan upskilling and supervisor
training programme – progressed
■■ Ensure compliance to mine design
■■ Improve fleet performance by focusing on effective maintenance and
operation of equipment
■■ Continue to ensure safe working environments
■■ Short-, medium- and long-term strategies to supplement grid power
A sustained and significantly lower gold price and currency
exchange rate volatility
■■ Business plans implemented and monitored through regular cost,
capital and production reviews
■■ Ongoing portfolio optimisation to ensure cash generation
■■ Gold and copper production hedging for various regions
■■ Business restructuring and technology strategies to improve safety,
efficiencies and costs
Resource nationalism
■■ Enhanced engagement and lobbying through industry bodies
■■ Further refinement of stakeholder engagement policies and strategies
■■ South Deep’s new 2018 — 2022 Social and Labour Plan (SLP)
submitted. Waiting for approval by the regulator
■■ Shared Value projects, particularly host community employment and
procurement programmes
Non-delivery of Damang Reinvestment and Gruyere projects
■■ Damang Reinvestment project ahead of schedule
■■ Mitigating strategies in place to catch up on the slight backlog at Gruyere
caused by severe weather
■■ Monthly reporting and monitoring of construction and engineering
schedules
■■ Management of construction and commissioning contractor strengthened
■■ Night shift introduced at Gruyere to ensure project schedule is achieved
Replacing Resources and Reserves at international operations
■■ Comprehensive near-mine exploration programmes in place
■■ Mergers and acquisitions strategy to identify opportunities, such as
the Asanko joint venture (JV) in 2018
■■ Damang Reinvestment progressing ahead of plan, and Gruyere
commissioning planned for mid-2019
■■ Salares Norte project feasibility study completed
The Gold Fields Integrated Annual Report 2018
11
6
7
8
9
10
11
12
Safety and health of our employees
■■ Establishment of the Group Safety Leadership forum in 2018
■■ Courageous Safety Leadership programme to be rolled out throughout
the Group during 2019
■■ Behaviour-based safety and visible-felt leadership programmes
ongoing in all regions
■■ All operations certified to OHSAS 18001 standard, converting to ISO 45001
■■ Independent verification of critical controls identified in the ICMM
critical control management programme during 2019
Water pollution, supply and cost
■■ Strict and focused compliance with environmental management regulations
■■ All operations ISO 14001 certified
■■ Water management plans expanded to include post-closure water
management
■■ Water recycle, reuse and conservation practices in place in all regions,
and targets set for 2019
Attraction and retention of skills
■■ Fit-for-purpose regional and mine human resource (HR) structures to meet
operational requirements
■■ HR strategy focused on developing a high-performance culture
■■ Succession planning and talent review systems in place at mine, regional
and Group level
■■ Building line leader capabilities to enable strategic and operational focus
and key deliverables
Cost of energy and security of power supply
■■ Implementation of the integrated energy and carbon management strategy
■■ Solar microgrid system advanced at Granny Smith, and signed agreement
for a hybrid solution at Agnew
■■ Review of South Deep solar photovoltaic project
■■ Oil price hedges in place in Australia and Ghana, ending in 2022
Cybercrime / Loss of ICT data
■■ South Deep, corporate and regional offices ISO 27001 certified, with
certification of all outstanding operations planned for 2019
■■ Cyber security maturity assessment conducted and areas for continual
improvement identified
■■ Ongoing attack and penetration testing
Impact on social licence to operate
■■ Growth opportunities in stable mining destinations – Damang, Gruyere
and Salares Norte
■■ Enhanced stakeholder engagement planned for 2019
■■ Strengthen stakeholder engagement strategy to deal with Native Title
issues in Australia
■■ Ongoing community investment and Shared Value projects in Ghana,
Peru and South Africa
Failure to implement climate adaptation measures
■■ Comprehensive climate change risk assessment conducted at all mines
with remedial action plans being implemented
■■ Alignment of financial and operational disclosures to the Task Force on
Climate-related Financial Disclosures (TCFD)
■■ Evaluating 20% renewable energy options for new project in Chile
13
14
15
16
17
18
19
20
Increased geotechnical underground risks
■■ Implementation of the recommendations by the external Geotechnical
Review Board (GRB) at South Deep is ongoing
■■ Enhanced ground and secondary support to mitigate against rock bursts
■■ GRB work extended in 2018 to all Australian operations to mitigate the
effects of seismicity
Increased surface open pit geotechnical risks
■■ GRB work to be undertaken for all major project and pit cutbacks
■■ Real time continuous pit wall monitoring at Damang
■■ Upgrading hydro-geological monitoring at the Cerro Corona pit to enhance
pit wall stability
Tailings dam failure
■■ Gold Fields’ tailings storage facilities (TSFs) aligned with and assured
against the ICMM position statement
■■ Increased governance of TSFs at Company and Board level
■■ Accelerated dam break assessments, design code compliances and
updated emergency response procedures implemented
High debt levels
■■ Ongoing sale of non-core investments
■■ Extensions for maturity dates on revolving credit facilities
■■ Regular engagements with credit rating agencies and financial institutions
■■ Cash generation from operations to be used to pay down debt
■■ New bond offering under review
Political uncertainty in jurisdictions where we operate
■■ Continued geographic de-risking towards mining jurisdictions in which
we operate
■■ Enhanced stakeholder engagement planned in 2019 with key stakeholders,
particularly governments and communities
■■ Engaging governments directly and indirectly through industry associations
Fraud and breach of the Code of Conduct
■■ Rigorous oversight through Board and the Social, Ethics and
Transformation Committee
■■ Compliance with corporate governance codes and regular reviews
■■ Global training programme conducted on relevant legislation
■■ Screening of suppliers and contractors for pre-defined risks
Failure to modernise operations
■■ Real-time monitoring solutions that track movement of equipment, people
and production
■■ CEO Young Persons Team established to align with latest digital and social
media trends
■■ Programme in place for cooperation between original equipment
manufacturers, suppliers and ourselves
■■ Innovation and technology (I&T) strategy implementation to work towards
Gold Fields Mine of the Future
Ezulwini (neighbouring mine) re-watering impact on South Deep
■■ Planned maintenance and monitoring programme of reinforced concrete
water plugs between the two mines
■■ Participation in Ezulwini closure regulatory processes backed by
legal strategy
■■ Development of alternative solutions to utilise mine water
OUR BUSINESS 12
The Gold Fields Integrated Annual Report 2018
Risks and materiality continued
Top five risks and opportunities per region in 2018
Americas
region
Australia
region
Y
T
I
R
E
V
E
S
2
1
4
3
5
Y
T
I
R
E
V
E
S
1
32
4 5
minimum
maximum
minimum
maximum
PROBABILITY
PROBABILITY
RISK/OPPORTUNITY AND MITIGATING ACTIONS
RISKS/OPPORTUNITY AND MITIGATING ACTIONS
1
2
3
4
5
Life-of-mine extension at Cerro Corona
■■ Accelerate mining and stockpiling to facilitate early in-pit tailings
■■ Pre-feasibility study for 2030 life-of-mine extension finalised, and feasibility study
to be completed in 2019
Salares Norte project, Chile – Potential delay in Environmental Impact
Assessment (EIA) approval
■■ Close interaction with the authorities and building sound relations in terms of baseline
studies
■■ Assurance of project information, engineering design, scope and timetable
■■ Proactive and timely community engagement programme
Lower copper and gold grades
■■ Continuous monitoring of grade reconciliation
■■ Drilling programme to target deeper ore resources
■■ Additional stockpile build-up to reduce risk of ore shortages due to higher
cut-off grade
Increasing hardness of ore impacting processing throughput
■■ Ongoing blasting engineering project to optimise ore fragmentation
■■ Implementation of optimisation projects in the process facility to deal with increased
hardness
Local social pressures, conflicts and community expectations
■■ Proactive community and stakeholder relationships and engagement
■■ Crisis management plans to deal with potential conflict
■■ Stringent follow-up and feedback on all community commitments
■■ Involvement of government authorities in our social projects
1
2
3
4
5
Reserve life
■■ Commissioning of the Gruyere project planned for mid-2019
■■ Significant near-mine exploration to delineate further reserves
■■ Accelerating exploration intervention at Agnew
■■ Acquisition of JV ground near St Ives and assessing toll-treatment options
Gruyere project delivery
■■ Stronger management team appointed at the construction contractor
■■ Increased room capacity at onsite camp facility to facilitate larger labour component
■■ Night shift implementation
■■ Stricter expenditure approval process
Turnover of key personnel
■■ Review and enhancement of employee development programmes
■■ Flexible working arrangement to facilitate greater work-life balance
■■ Market-related salary increases
■■ Quarterly talent discussions held at leadership level
Volatility of Australian gold price
■■ Ongoing portfolio of business improvement projects
■■ Continued focus on cost controls
■■ Hedges in place for gold, currency and oil
Native title legislation
■■ Stakeholder engagement strategies and programmes in place
■■ Extend business opportunities and job placement to Indigenous groupings,
where feasible
■■ Finalisation of a holistic strategy for Indigenous Engagement
■■ Development of a Reconciliation Action Plan
■■ Ongoing legal and specialist support
The Gold Fields Integrated Annual Report 2018
13
West Africa
region
South Africa
region
Y
T
I
R
E
V
E
S
3
2
1
4
5
Y
T
I
R
E
V
E
S
4
1
3
2
5
minimum
maximum
minimum
maximum
PROBABILITY
PROBABILITY
RISKS/OPPORTUNITY AND MITIGATING ACTIONS
RISKS/OPPORTUNITY AND MITIGATING ACTIONS
1
2
3
4
5
Fiscal and government policy changes
■■ Frequent engagement with relevant government departments
■■ Intensive engagement via the Chamber of Mines
■■ Ensure adherence to principles and conditions in the Development Agreement (DA)
■■ Back-up legal strategies
Under-performance of contractor mining at Tarkwa
■■ Updating and monitoring key contract milestones
■■ Implementation of continuous improvement initiatives
■■ Dedicated team to address and mitigate shortfalls in contractor performance
Execution of Damang mine Reinvestment project
■■ Implementation and delivery of milestones under the reinvestment plan
■■ Fit-for-purpose organisational structure and continuous improvement initiatives
■■ Ongoing monitoring of contract mining milestones
■■ Pit-wall control implementation
Reserve depletion at Tarkwa – inadequate organic growth and
life-of-mine extension
■■ Bringing the Asanko JV ounces to account and aligning processes and systems
■■ Continued brownfields exploration to test for further potential at Tarkwa
■■ I&T programme to improve operational and processing efficiencies
■■ Ensure utilisation of DA benefits for long-term exploration potential
Optimisation of Independent Power Producer (IPP) arrangements
■■ Continuous monitoring of IPP performance
■■ Full commissioning and expansion of power plants at both Damang and Tarkwa
■■ Completion of the gas pipeline to supply plants with natural gas replacing the road
trucked liquid gas
1
2
3
4
5
Loss of investor confidence due to non-achievement of
the business plan
■■ South Deep workforce has been restructured through the Section 189 process –
ensure the right people in the right roles
■■ Frontline leadership, productivity and ways of working intervention
■■ Effective and sustainable management operating system
■■ Identify business improvement initiatives and drive implementation
■■ Improvement of fleet reliability and utilisation
■■ Adaptation to Eskom supply constraints and developing longer-term strategies for
power self-sufficiency
Poorly defined execution strategy
■■ Develop and roll out key visual control standards
■■ Organisational restructuring frontline coaching
■■ Implementation of a business improvement process
■■ Improved fleet utilisation
■■ Ore pass/tip/discharge chute rehabilitation
■■ Roadway and footwall (water) management
Inappropriate organisational structure
■■ Embed new HR structure
■■ Fit-for-purpose organisational structures with the right people in the right roles
■■ Robust talent management system
■■ Identity, develop and recruit successor for critical roles
Ageing infrastructure
■■ Replacing ageing infrastructure based on an inventory of our assets
■■ Utilise South Shaft for mining services only to enable extended maintenance
■■ Implementing infrastructure and maintenance improvement projects
■■ Independent risk engineering audit conducted on infrastructure and fire risks with
a five-year remedial action plan developed
Health and safety of our employees
■■ Roll out and effective monitoring of the safety management systems
■■ Implementing behaviour-based safety programmes and the Courageous Leadership
programme
■■ Effective baseline risk management process identifying major unwanted events and
verification of effective critical controls
■■ Strengthen systems for effective reduction of dust and noise exposure levels
■■ Implementation of South African mining industry’s occupational safety and health
initiatives
OUR BUSINESS
14
The Gold Fields Integrated Annual Report 2018
Performance against strategic targets
Group 2018 performance against BSC objectives
Our strategy is embodied through our Board-approved balanced scorecard (BSC), which is cascaded throughout our
organisation. Below we reflect on our performance against these targets in 2018. On the pages that follow, we show our
CEO’s performance against his 2018 targets, as well as the Group’s 2019 BSC.
VISION:
2018 BSC
PILLARS
STRATEGIC GOALS
To be the global leader in sustainable gold mining
MEDIUM-TERM ASPIRATION:
By 2020 we are targeting All-in Cost (AIC) of approximately
L
A
E
N
Y
TIO
F
R
A
E
S
A
LIV
R
E
E
P
D
O
1
2
3
Deliver FCF margin of
15% at US$1,200/oz
Safely meet guidance
for operations
Safely deliver
strategic projects
US$900/oz1
ANNUAL TARGET:
Free cash-flow (FCF2) margin of 15% at
US$1,200/oz
gold price
THE GOLD FIELDS VALUES:
E
L
LIN
A
PIT
CIP
A
DIS
C
4
Manage balance sheet and
maximise capital returns
Safety:
If we cannot mine safely,
we will not mine
Integrity:
We act with
honesty, fairness and
transparency
Respect:
We treat all stakeholders
with trust, dignity
and respect
Delivery:
We strive for
excellence and do what
we say we will do
Innovation:
We encourage
innovation and an
entrepreneurial spirit
Responsibility:
We responsibly manage our
impact on the environment
and host communities
1 At 2019 levels
2 FCF does not take project capital into account
LIO
T
N
E
M
E
G
A
N
A
M
O
F
T
R
O
P
5
Improve the quality of our
portfolio
D
N
N
E A
TIO
C
A
N
T
U
E
LIC
P
E
R
6
Protect licence to operate and
enhance reputation
The Gold Fields Integrated Annual Report 2018
15
STRATEGIC GOALS
PERFORMANCE AGAINST 2018 BALANCED SCORECARD TARGETS
■ Production and AIC/oz better than yearly guidance with spatial compliance to plan
■ No fatalities and a reduction in TRIFR by 10% in the long term (due to a regression in 2017, the stretch target was 12% for 2018)
■ Reduce energy usage by 5% to 10% against a future baseline through energy saving initiatives and implement renewable
energy initiative at South Deep
■
Implement ICMM critical control guidelines on safety, health and environmental stewardship and stakeholder management
■ Project delivery: deliver in accordance with key metrics for 2018
– Damang
– South Deep
– Gruyere
■ Manage talent pipeline and succession cover for critical roles
■ Reinvigorate vision and values to a winning culture that rewards teamwork and delivery of Group strategy
■ Pay dividends in line with policy
■ Debt:
– Maintain net debt:adjusted EBITDA ratio of under 1.25x-
– Extend debt maturity
■ All new capital spend to have appropriate returns taking into account risks and cost of capital ranked and prioritised in
accordance with an agreed matrix and in line with internal capital control standards and study guidelines. Accordingly all growth
capital expenditure on existing mines, new projects or acquisitions to have hurdle rates of 15% at a US$1,300/oz gold price
■ Deliver life extension, cost reduction, revenue enhancement and improved health and safety through innovation and technology
(I&T) and business improvement initiatives
■ Reduce Group life-of-mine AIC/oz and increase reserve life per region through brownfields exploration, M&A and optimisation
of existing mines
■ Deliver positive Salares Norte feasibility project that exceeds metrics set for the project
■ Mine closure costs, along with concurrent rehabilitation plans, incorporated into strategic plans
■
Improve total shareholder return by positioning share price between median and upper quartile of peer group
■ Increase the proportion of sustainable host community procurement and employment to drive Shared Value
■ No Level 3 or above environmental incidents and a 10% reduction in Level 2 incidents
■ Align management practices with ICMM tailings and water position statements
■ Deliver and manage a robust and transparent group governance and compliance programme
■ Maintain position in top five of the Dow Jones Sustainability Index (DJSI)
p56
p63
p70
p64
p48
p46
p44
p76
p87
p87
p87
p74
p50
p47
p105
p106
p111
p95
p100
p23
Performance key: ¢ Achieved ¢ Ongoing ¢ Not achieved
OUR BUSINESS
16
The Gold Fields Integrated Annual Report 2018
Performance against strategic targets continued
CEO’s 2018 performance against BSC objectives
Gold Fields recognises that remuneration is a critical part of value creation. We are committed to aligning our employees’
remuneration to our strategic objectives, as embodied in our Group BSC. The Group BSC is then cascaded into individual
scorecards, to ensure individual effort drives Group performance. Below is a summary of our CEO, Nick Holland’s, BSC for
2018 and his performance against it. His average score for 2018 was 2.9 out of 5, as evaluated by the Remuneration
Committee. The Board believes that by reflecting on the CEO’s scorecard and how it drives value creation, we demonstrate
to our stakeholders our commitment to fair and transparent reporting. For the detailed breakdown of the CEO’s BSC, refer to
our comprehensive Remuneration Report in the AFR p44 – 46.
Deliver
D amang
4.5
10%
South Deep critic al
infrastructure proje c t s
2
10%
DeliverGruyere
2
5%
10%
p
e
e
D
h
t
u
o
S
y
t
i
v
i
t
c
u
d
o
r
p
1
15%
70%
20%
5%
5%
o
r
g
a
nis
S
atio
n
o
3
uth Deep
al re-structuring
20%
5%
5%
4
Improve d g o v e r n a
i a n c
and c o m p l
e
c
n
e
I
n
t
e
H
R
g
s
t
r
r
a
t
a
t
e
e
d
g
y
3
A
a
u
n
s
d
t
r
l
i
a
l
f
i
e
a
-
o
f
r
e
s
m
e
r
i
n
e
v
e
l
i
f
e
-
o
f
-
m
i
n
e
W
e
s
t
A
f
r
i
c
a
4
5%
5%
3
e
e
g Min
utur
Enablin
of the F
4
I&T strategy
progression
5%
3
5%
4
p it al allo cation
p r oto c ol
a
C
PERFORMANCE RATING SCALE:
1
/ Target not achieved
(less than 60% of goals achieved)
/ Underperformance
(60% - 90% of goals achieved)
2
2.5 / Development required
(91% - 99% of goals achieved)
3 / Good performance
(100% - 105% of goals achieved)
3.5 / Great performance
(106% - 110% of goals achieved)
/ High performance
(111% - 120% of goals achieved)
4.5 / Top performance
(121% -125% of goals achieved)
/ Exceptional performance
(126% or more of goals achieved)
4
5
CATEGORY KEY:
¢ Safe Operational Delivery
¢ Portfolio Management
¢ Licence and Reputation
¢ Capital Discipline
The Gold Fields Integrated Annual Report 2018
17
Group 2019 performance targets
Each year, management and the Board assess the Group’s key objectives for the year ahead to ensure the Group achieves
its medium-term target. The 2019 goals are captured in the BSC below.
ORGANISATIONAL CAPACITY
Make sure the company has the capacity to deliver
1. IMPROVE IMPACT OF I&T
¢ Put in place dedicated senior Innovation & Technology leadership team per region that drive the initiatives
to improve cost, safety and productivity
¢ Upgrade infrastructure to improve connectivity and real time information
¢ Increase the use of technology to Improve safety performance including people tracking and traffic
INTERNAL BUSINESS
PROCESS
Build the processes required
for delivery
1. Increase total shareholder return
¢ Achieve market guidance
2. Improve liquidity and profile of debt
¢ No fatalities
¢ Establish and maintain an Environment
Health and Safety scorecard with leading
and lagging indicators
¢ Roll out courageous Safety Leadership
programme to Exco and regional leadership
teams
¢ Roll out Vital Behaviour (VB) safety programme
to Exco and regional leadership teams
management
¢ Automate or semi-automate equipment to improve efficiencies
¢ Implementation of integrated technical systems to enhance planning and delivery
2. IMPROVE QUALITY OF PORTFOLIO
¢ South Deep: 477 tonnes mined / employee as per business plan
Develop Individual development plans for mission critical positions and execute 2019
activities
¢ Damang: Deliver Damang at a cumulative cost of US$365m.
Spend project capital of US$69m for Damang and deliver ore from saddle pit area
¢ Gruyere: Deliver Gruyere first gold by Q2 at a cost of $621m
¢ Australia: Replace 100%-120% of depleted reserves
¢ Americas: >50% completion of pre-feasibility study for Cerro Corona on life extension
beyond 2030
3. IMPROVE GOVERNANCE, COMPLIANCE & RISK
¢ No material deviations from guidelines / corporate standards as per the 2019
Compliance framework
¢ Independent verification of safety, health, environmental and community critical
controls
¢ Carry out 1 self-assessment of the ICMM Performance Expectations Guidance
¢ Maintain certification to OHSAS 18001 / ISO 45001 (Safety) ISO 14001 and
Cyanide code
¢ Australia, Ghana and South Africa: conduct gap analysis, develop and implement
60% of remedial actions to align to ISO 50001 (Energy); Cerro Corona to
maintain ISO 150001 certification
STAKEHOLDERS
Maintain stakeholder support by delivering value
1. Increase stakeholder engagement
¢ Increase the number of informal and formal engagements
with key community, government and investor stakeholders
¢ Extend sell side coverage and undertake timely detailed
analysis of all sell side reports
¢ Maintain top 5 position in DJSI
¢ Consolidate sustainability of host community procurement
spend at between 23%-25% of total procurement spend
¢ Maintain host community employment at 54%-56% of direct
and indirect employment
FINANCIALS
Make money
1. Increase total shareholder return
¢ TSR between median and upper quartile of peer group
2. Improve liquidity and profile of debt
¢ Reduce net debt by a range of US$100m - US$150m
¢ Extend maturity of debt profile
3. Improve free cash flow margin
¢ 15% FCF margin @US$1,200/oz
4. Improve capital returns
¢ 15% return on project capital spend @ US$1,300/oz
¢ 100% compliance to approved capital budget
4. IMPROVE SECURITY OF UTILITIES
¢ Reduce freshwater withdrawal by 3% (or 415ML)
¢ Increase recycling of total water use from 57% to 65%
¢ Energy saving initiatives between 5% to 7% against the baseline set in
January 2019 (GJ savings)
5. IMPROVE PEOPLE CAPACITY & CULTURE
¢ 5% increase in productivity against the business plan (ounce / TEC)
¢ Decrease turnover of critical roles to 5%
¢ Reduce time to fill critical roles to between 90 and 100 days
¢ Enhance and further improve leadership capability and
subsequent assessment and development to drive ethical and
socially responsible leadership, with a strong focus on living
the Gold Fields values, and embracing cultural diversity
¢ HDSA % in South Deep management > 54%
¢ Localisation in Ghana <4% expats
¢ Improve Bloomberg Gender Equality Index ranking to >
75% and 20% women in management
¢ Develop a baseline for measurement of the
employment of vulnerable people across regions
OUR BUSINESS
18
The Gold Fields Integrated Annual Report 2018
Page heading continued
COPY TO BE SUPPLIEDSecondary page heading continuedfor the year ended 31 December 2018 Page heading continued
The Gold Fields Integrated Annual Report 2018
19
Our vision of being the global leader in
sustainable gold mining requires the
highest levels of corporate governance
to ensure we create value for our
stakeholders over the short, medium
and long term. In order to ensure our
ultimate operational and strategic
success, as well as our sustainability,
we remain committed to sound
and robust corporate governance and
responsible corporate citizenship.
Vision of the Chairperson
Summarised governance and compliance report
Our Board of Directors
CEO Report
■■ Introduction and overview
■■ Group performance scorecard
■■ Strategy overview
■■ Note of thanks
p20
p23
p24
p29
p30
p31
p38
p39
COPY TO BE SUPPLIEDSecondary page heading continuedfor the year ended 31 December 2018Leadership 20
The Gold Fields Integrated Annual Report 2018
Vision of the Chairperson
Many of our stakeholders, particularly
investors, still see Gold Fields as a
South African mining company, with
much of its fortunes inextricably
linked to the country’s current and
future mining landscape, as well as
the short-term performance and
outlook for South Deep, our sole
remaining mine in the country. We are
a proudly South African company
with a history going back to 1887
and remain deeply committed to the
country despite the political and
economic uncertainties currently
besetting it. While South Deep is a
key component of our portfolio, I
continue to stress that Gold Fields is
a global gold mining company with a
portfolio of assets spread across
three continents.
Not only are our production and
cash-flow already heavily weighted
towards our mines in Australia, Peru
and Ghana, we have increased our
investment in these countries to
enhance sustainability of our
business:
■■ Our combined US$502m
investment over the past two years
in the Damang mine in Ghana and
the Gruyere project in Australia is
set to bear fruit in 2019, with the
potential to further boost our
production and profitability in
these regions
■■ During 2018, we acquired a 45%
stake in the highly prospective
Asanko gold mine (AGM) in Ghana,
further raising our profile in a
jurisdiction in which we have
operated for 25 years
■■ We expect the production of our
portfolio in Australia, Ghana and
Peru to approach 2Moz during
2019. Based upon our attributable
gold-equivalent Mineral Reserves of
over 20Moz in these regions, our
track record of resource conversion
and exploration activity, we believe
that our global portfolio outside of
South Africa will be able to maintain
a similar production level over the
medium to longer term (at the
current gold price)
■■ We have successfully completed
a feasibility study for the Salares
Norte project in Chile and declared
a maiden Mineral Reserve. While
we await the outcome of the
Environmental Impact Assessment
(EIA), expected in early 2020, we
have also asked management to
develop a funding plan for the
project
■■ We have extended the life of our
Cerro Corona mine in Peru to 2030
and are working on a scoping
study with the aim of extending it
further to 2040
■■ Our substantial investments in
near-mine exploration at our
Australian mines continued to yield
good results, with the mines not
only making up annual depletion
but adding net Mineral Reserves
over the past four years
■■ Until two years ago, just over 70%
of our Reserves were held by
South Deep. That profile has
changed: at end 2018, 59% of
the Group’s attributable Mineral
Reserves were at the mine
I believe that these developments
clearly underscore Gold Fields’ strong
and sustainable global profile.
Turning to South Deep, I fully
appreciate the frustration experienced
by our shareholders over the past few
years. We failed to deliver the rebase
plan in 2018, as it became evident
that South Deep would not achieve
the targets set out in the plan and
continued to experience cash losses
that averaged R100m (US$8m) a
month.
With the full backing of the Board, the
mine embarked on a fundamental
restructuring in Q3 2018, which saw
management close loss-making
areas, reduce the cost base and
embark on a section 189
retrenchment process. Unfortunately,
this meant that we had to retrench
just over 1,500 employees and
contractors, despite the strong
opposition by the unions, which led
to a 45-day strike. We could not yield
to the demands of the unions to
reverse the retrenchments, as this
would have put the sustainability of
South Deep, and the remaining
3,500 jobs, at risk.
I believe that the restructuring, the
most comprehensive in South Deep’s
history, will achieve a significant
reduction in the cash losses this year
and set the mine up for long-term
and sustainable growth. However,
the Board has also mandated
management to investigate
alternative options should it fail to
deliver its key targets over the next
year.
Gold Fields’ mines performed well
against a background of a volatile
gold price and heavy investment in
growth projects during 2018. All
mines, except South Deep, met, or
improved on, their production and
cost guidance and generated
sufficient cash to fund the bulk of the
investment spend and pay a modest
dividend to shareholders. We had to
increase our debt to pay for the
acquisition of Asanko Gold but,
notwithstanding this, our balance
sheet remained in good health.
Not only has the cash generated by
our mines enabled us to invest in
future growth, but also to create
significant value for our key
stakeholders. During 2018, Gold
Fields’ total value distribution to our
stakeholders was US$2.7bn in the
form of payments to governments,
capital providers, business suppliers
and our workforce.
A particular focus in 2018 was
strengthening our relations with host
communities, whose partnership is
critical in sustaining our mines. We
have asked management to focus on
host community employment and
procurement, to improve the
economic wellbeing of these
communities. During 2018, almost a
quarter of our total value creation,
The Gold Fields Integrated Annual Report 2018
21
Stakeholder engagement remains
a critical issue for the Board.
As a foundation, we want to
develop honest, mutually
beneficial win-win
partnerships with these
stakeholders and, by and large,
have found ways to achieve this.
In return though, we would
expect governments and trade
unions, in particular, to work with
us to ensure that our mines can
continue to operate sustainably.
Cheryl Carolus
Chairperson
LEADERSHIP 22
The Gold Fields Integrated Annual Report 2018
Vision of the Chairperson continued
almost US$700m, remained in our
host communities through focused
job creation and procurement.
Stakeholder engagement and
relations remain a critical issue for the
Board. As a foundation, we want to
develop honest, mutually beneficial
partnerships with these stakeholders
and, by and large, have found ways
to achieve this. In return though, we
would expect governments and trade
unions, in particular, to work with us
to ensure that our mines can
continue to operate sustainably.
During 2018, the major trade unions
at our Ghanaian and South African
operations resisted the restructurings
we believed were essential to ensure
the longevity and profitability of our
Tarkwa and South Deep mines.
While we eventually implemented
contractor mining at Tarkwa and
retrenchments at South Deep, we
need to re-establish common ground
with our union partners.
Resource nationalism is growing in
many major mining jurisdictions. This
presents a significant challenge for
Gold Fields as we seek to expand
our operations in some of these
jurisdictions. In South Africa, a new
Mining Charter was finally agreed
in mid-2018. It is a significant
improvement on previous iterations.
There are, however, critical areas with
which Gold Fields and the industry
has deep concerns, namely that the
Charter does not fully recognise the
black economic empowerment (BEE)
ownership credentials of previous
BEE transactions. This is the case in
respect of mining right renewals and
transfers of these rights. To be frank,
this is a non-negotiable for the mining
sector and will require more
engagement between the Minerals
Council of South Africa and the
Department of Mineral Resources
(DMR). The 2018 Charter will also
require significant investment in
employment equity, procurement and
enterprise development, and human
resource development.
The mining regimes in Peru, Ghana
and Australia remain largely stable.
Overall though, we would welcome
a more proactive approach by
governments, such as the one
adopted by the Ghanaian
government – which has entered into
development agreements (DAs) with
large mining companies that actively
encourage investments.
Most importantly, the Board shares
management’s commitment to
eliminate all fatalities and serious
injuries. It is therefore a major
disappointment that we experienced
a fatality during 2018. I want to
express my sincerest condolences to
the family, friends and colleagues of
Ananias Mosololi, a load haul dump
truck operator at South Deep.
Gold Fields continues to show
significant progress in improving our
safety performance and management
practices. During 2018, the fatality
rate, the benchmark total recordable
injury frequency rate (TRIFR) and the
total number of recordable injuries
continued their overall improvements
of the past few years. At 1.83
incidents per million hours worked,
the Gold Fields 2018 TRIFR has
improved by 55% since 2014.
On the health front, the Occupational
Lung Disease Working Group,
representing the majority of gold
mining companies in South Africa,
including Gold Fields, reached a
historic settlement with attorneys
representing ex-mineworkers
suffering from silicosis and
tuberculosis (TB). The settlement,
once approved by the courts, is set
to see R5bn (US$380m) dedicated
to compensating ex-mine workers.
Appreciation
As directors of this Company, one of
our key responsibilities is to ensure
that the global corporate governance
programmes at Gold Fields are in line
with the ever-changing and more
stringent standards expected from
multinational companies. I take
enormous comfort in the fact that our
Board of Directors comprises a team
of dedicated and able men and
women whose experience,
knowledge and commitment makes
my task as Chairperson so much
easier.
The composition of this team was
strengthened during 2018 with the
addition of Phuti Mahanyele-
Dabengwa to the Board. Phuti took
over from Don Ncube, who was on
Gold Fields’ Board for over 11 years.
Don left a considerable mark at Gold
Fields in terms of the transformation
of the Company, improved
relationships with our host
communities and, most recently, as
Chairperson of the Social, Ethics and
Transformation (SET) Committee. His
experience, counsel, humour and
friendship will be missed.
Gold Fields had to contend with
difficult economic and operational
circumstances during 2018. The
continued operational, financial and
sustainability progress made by the
Company in these conditions is a
credit to the hard work and
dedication of its employees, led by
CEO Nick Holland and his executive
management team. On behalf of the
Board, I would like to express my
gratitude to Nick and his team around
the globe and wish them strength for
their endeavours in the year ahead.
Cheryl Carolus
Chairperson
Summarised corporate governance
The Gold Fields Integrated Annual Report 2018
23
Corporate governance overview
Strong leadership and good governance support the achievement of our vision to be the global leader in sustainable gold
mining. By protecting and enhancing our reputation and licence to operate, and ensuring compliance with legislation and
industry standards, good governance ensures we continue to enjoy the support of stakeholders and allows us to deliver
sustained value. The long-term, capital-intensive nature of our mining operations, as well as the often challenging social
and political contexts in which we operate, make it even more important that we leverage good governance to ensure the
long-term sustainability of our business.
In addition to the international standards and guidelines to which we voluntarily subscribe (outlined on p3 of the Annual
Financial Report (AFR)), we are committed to entrenching the principles of the King IV Report on Corporate Governance
(King IV) in our operations. The application of King IV within the Company can be found in the full corporate governance
report on p15 – 16 of the AFR.
KEY DELIBERATIONS AND DECISIONS TAKEN BY THE BOARD
Strategic area
Board deliberations
Strategic goals supported by Board deliberations
SAFE OPERATIONAL
DELIVERY
MANAGE BALANCE
SHEET AND MAXIMISE
CAPITAL RETURNS
PORTFOLIO
MANAGEMENT
PROTECT LICENCE
TO OPERATE AND
ENHANCE REPUTATION
■■ Review of Gold Fields’ operational
plans and strategies
■■ Deliberation on South Deep’s
performance and approval of
restructuring
■ Meet guidance by following mine plan which
aligns with strategic plan
■ Safely deliver strategic projects
■■ Approval of additional oil price and
gold production hedges
■■ Approval of debt refinancing
and extension of debt
maturity
■ Manage balance sheet and maximise returns
■ Maintain healthy net debt:adjusted EBITDA ratio
■■ Completion of acquisition of 45% of
Asanko gold mine (AGM)
■■ Deliberation and approval of
Gruyere project scope and budget
changes
■■ Overseeing the implementation
of Tarkwa contractor mining
■ Improve the quality of our portfolio
■ Reduce Group life-of-mine All-in Costs (AIC)/oz
and increase Reserve life per region through
organic growth, brownfields exploration and
optimisation of existing mines
■ Deliver life extension, cost reduction, revenue
enhancement and improved health and safety
through innovation and technology and business
improvement initiatives
■■ Recomposition of a number of Board
committees
■■ Deliberation on increases in host
community employment and
procurement targets
■■ Approved the following policy
statements: Stakeholder
Relationship and Engagement,
Environmental, Occupational
Health and Safety
■■ Approved implementation and
alignment to International
Council on Mining & Metals
(ICMM) tailings and water
position statements
■ Deliver and manage a robust and transparent
Group governance and compliance programme
■ Drive Shared Value creation with impacted
communities
■ Align management practices with ICMM tailings
and water position statements
LEADERSHIP 24
The Gold Fields Integrated Annual Report 2018
Our Board of Directors
During 2018, we had Board and Board committee
attendance of 93%, which is reflective of our high
levels of commitment and engagement. For our full
Board and Board committee attendance during
the year, as well as detailed curricula
vitae (CVs) of our directors, see the
full Corporate governance section
in the Annual Financial Report.
3
5
1
6
8
2
4
7
9
The Gold Fields Integrated Annual Report 2018
25
1. Cheryl Carolus (60)
Chairperson
BA Law; Bachelor of Education, University
of the Western Cape; Honorary Doctorate
in Law, University of Cape Town
Appointed to the Board:
Director 2009, Chairperson 2013
2. Richard Menell (63)
Deputy Chairperson
MA (Natural Sciences Geology),
Cambridge; MSc (Mineral Exploration
and Management), Stanford University,
California
Appointed to the Board:
2008, Deputy Chairperson 2015, Lead
Independent Director 2017
3. Terence Goodlace (59)
Independent non-executive
director
MBA (Business Administration), University
of Wales; BCom, University of South
Africa; NHDip (Metalliferous Mining),
Witwatersrand Technikon; MDP, University
of Cape Town
Appointed to the Board:
2016
4. Phuti Mahanyele-
Dabengwa (48)
Independent non-executive
director
Executive Development Programme,
Kennedy School of Government,
Harvard University, US; MA Business
Administration, De Montford University,
Leicester, UK; BA Economics, The State
University of New Jersey, US
Appointed to the Board:
2018
5. Paul Schmidt (51)
Chief Finance Officer
BCom; University of the Witwatersrand;
BCompt (Hons), University of South Africa;
CA(SA)
Appointed to the Board:
2009
6. Carmen Letton (53)
Independent non-executive
director
PhD (Mineral Economics, University of
Queensland; Bachelor Mining Engineering,
WASM
Appointed to the Board:
2017
7. Steven Reid (63)
Independent non-executive
director
BSc (Mineral Engineering), South Australian
Institute of Technology; MBA, Trium Global
Executive, ICD.D, Institute of Corporate
Directors
Appointed to the Board:
2016
8. Alhassan Andani (57)
Independent non-executive
director
BSc (Agriculture), University of Ghana;
MA (Banking and Finance), Finafrica
Institute in Italy
Appointed to the Board:
2016
9. Peter Bacchus (50)
Independent non-executive
director
MA (Economics), Cambridge University
Appointed to the Board:
2016
10. Nick Holland (60)
Chief Executive Officer
BCom; BAcc, University of the
Witwatersrand; CA(SA)
Appointed to the Board:
Executive director, 1998
CEO, 2008
11. Yunus Suleman (61)
Independent non-executive
director
BCom, University of KwaZulu-Natal;
BCompt (Hons), University of South Africa;
CA(SA)
Appointed to the Board:
2016
10
11
Board diversity
Board independence
Board tenure
19%
19%
36%
9%
19%
54%
81%
19%
55%
■ White male
■ Black male
■ White female
■ Black female
Experience
■ Independent non-executive directors
■ Executive directors
■ 0 to 2 years
■ 3 to 8 years
■ >9 years
Development (social, infrastructure and training)
2
Management (including risk management)
Auditing, financial accounting
1
Finance, investment banking, mergers and acquisitions, commercial, capital projects
Governance and compliance, corporate strategy
3
Mining and geology
7
6
6
0
1
2
3
4
5
6
7
8
Nationalities:
x 6
x 2
x 1
x 2
LEADERSHIP
26
The Gold Fields Integrated Annual Report 2018
Governance
THE BOARD AND ITS SUB-COMMITTEES (as at March 2019)
The Board of Directors
Meets four times per year
Chairperson:
Cheryl Carolus
Audit Committee
Meets six times per year
Chairperson:
Yunus Suleman
Remuneration Committee
Meets four times per year
Chairperson:
Steven Reid
As the highest governing authority of the Group,
the Board offers guidance and oversight that
allows the Company to achieve its strategic
objectives and deliver maximum value for
stakeholders. It comprises a diverse group
of competent and appropriately skilled and
experienced individuals who seek to govern with
integrity, responsibility, accountability, fairness and
transparency. This informs the manner in which
it leads to set the ethical tone of the Company.
It delegates to management the responsibility
of the implementation of and adherence to the
Gold Fields Code of Conduct and the Company’s
values, and monitors how a culture of ethics is
being managed.
Members: Rick Menell, Alhassan Andani,
Peter Bacchus
The Audit Committee oversees the integrity
and transparency of Gold Fields’ corporate
reporting, and considers risks that may affect
the integrity of external reports.
Members: Cheryl Carolus, Alhassan Andani,
Rick Menell, Peter Bacchus
The Remuneration Committee assists the
Board in confirming that remuneration
throughout the Group is fair and equitable
and that the remuneration of executive
management, in particular, is directly linked
to Gold Fields’ performance against strategic
objectives. This protects the interests of
stakeholders by incentivising management
to deliver value.
Social, Ethics and Transformation
Committee
Meets four times per year
Capital Projects, Control and
Review Committee
Meets four times per year
Safety, Health and Sustainable
Development Committee
Meets four times per year
Chairperson:
Carmen Letton
Chairperson:
Rick Menell
Chairperson:
Terence
Goodlace
Members: Cheryl Carolus, Rick Menell,
Alhassan Andani, Nick Holland, Phuti
Mahanyele-Dabengwa
This committee guides corporate behaviour
and holds the Company accountable for
conducting business ethically in line with the
principles of good corporate citizenship. With
a central focus on how the business interacts
with communities and employees, it helps the
business to retain its social licence to operate –
a critical component of long-term sustainability.
Members: Peter Bacchus, Terence Goodlace,
Yunus Suleman, Steven Reid, Cheryl Carolus,
Phuti Mahanyele-Dabengwa, Carmen Letton
This committee considers new capital projects
and satisfies the Board that the Group has
used correct, efficient methodologies in
evaluating and implementing such projects.
Members: Cheryl Carolus, Rick Menell, Steven
Reid, Carmen Letton, Phuti Mahanyele-
Dabengwa
The SHSD Committee seeks to ensure that
Gold Fields complies with relevant laws,
regulations and external standards to ensure
optimal safety, health and environmental
practices, contributing to the Group’s
reputation as a responsible corporate citizen.
Risk Committee
Meets twice per year
Chairperson:
Peter Bacchus
Nominating and Governance Committee
Meets four times per year
Ad-hoc Investment Committee
Chairperson:
Cheryl Carolus
Chairperson:
Peter Bacchus
Members: Terence Goodlace, Carmen Letton,
Yunus Suleman
The Risk Committee assists the Board in
developing improved risk management
approaches, ensuring consistent value creation
for our stakeholders in an ever-changing risk
environment.
Members: Steven Reid, Rick Menell,
Yunus Suleman
This committee plays a leadership role in
the structure and operation of Gold Fields’
Board, and guides the Company’s corporate
governance – ensuring an ethical and value-
driven culture.
Members: Alhassan Andani, Yunus Suleman,
Steven Reid, Cheryl Carolus, Rick Menell
This committee makes recommendations to
the Board on strategic restructuring options
for the Group, as and when required.
Our Group Executive Committee (Exco)
The Group Exco is primarily responsible for the implementation of Gold Fields’ strategy, as well as carrying out the Board’s mandate and directives.
Exco meets on a regular basis to review Company performance against set objectives and develops strategy and policy proposals for consideration by the Board. It also
assists the Board in the execution of the Company’s disclosure obligations.
Exco consists of the principal officers and executive directors of Gold Fields – 12 members in total. The Exco members are profiled at
www.goldfields.com/our-leadership.php.
The Gold Fields Integrated Annual Report 2018
27
BOARD OVERSIGHT OF KEY ISSUES PERTAINING TO OUR BUSINESS
Building an ethical culture
As the highest governing authority of the Group, the Board
is responsible for upholding an ethos of good governance
and sustainability. It sets the tone for a culture of ethics that
permeates throughout the Company. This underpins Gold
Fields’ commitment to going beyond compliance
requirements, and voluntarily embracing best practice
standards and principles.
1
The Board also seeks to ensure that business decisions are
made with reasonable care, skill and diligence. This protects
and enhances the Company’s reputation and helps to
maintain its licence to operate – a fundamental foundation
of sustainability.
4
Creating a safe working environment
Our Board’s commitment to safety and health as our key
priority reflects the imperative of minimising any potential
negative impact on our employees and contractors,
maintaining operational continuity and protecting our
reputation. The Board, together with management, drives a
stringent safety culture. In upholding our primary value, ”If we
cannot mine safely, we will not mine”, the Board also backs
management in stopping mining in areas or situations that
are deemed unsafe.
In discharging its oversight responsibilities with regard to
safety, the Board is assisted by the SHSD Committee, which
receives detailed quarterly reporting on all safety issues and
incidents. The Board also oversees Gold Fields’ adherence
to safety, health and environmental standards and
compliance requirements, and has approved the Company’s
adoption of various voluntary best practice safety principles.
Setting fair remuneration
In determining remuneration principles, the Board is guided by
the principles of King IV. The remuneration policy (outlined on p79)
includes detailed and specific disclosures on implementation. Gold
Fields provides stakeholders with transparent reporting of the
remuneration of the CEO and CFO. The Board seeks to ensure that
remuneration of executives is fair, equitable and responsible, and
informed by the value added by the Exco through the achievement
of strategic objectives.
2
Through the Remuneration Committee, the Board ensures that
remuneration practices align with shareholder interests and support
the achievement of a sustainable business by:
■■ Helping to attract, motivate, retain and reward employees
■■ Driving the achievement of strategic objectives through
appropriate incentives and rewards
■■ Promoting a culture of ethics and responsible corporate
citizenship
3
Stakeholder relationships and engagement
Gold Fields understands that stakeholders are an integral part
of our business, representing a wide range of interests that both
influence and are impacted by our operations. The Board, through
the adoption of the Stakeholder Relationship and Engagement
Policy, seeks to ensure that the Company follows a stakeholder
engagement approach that allows for participative and informed
decision making. By overseeing transparent reporting, it allows
stakeholder groups to make an informed assessment of Gold
Fields’ ability to deliver sustainable value.
As stakeholder concerns have become increasingly important
to Gold Fields’ sustainability, the Board has driven an evolution
from simple stakeholder management to inclusive stakeholder
engagement and relationship building. This approach balances the
interests, needs and expectations of our stakeholder with the best
interests of Gold Fields.
6
Environmental stewardship
and impact on communities
The Board seeks to ensure that Gold
Fields conducts business in a way that
aligns with good corporate citizenship,
and that we continually assess and
respond to any negative impacts our
operations may have on communities
and the environment. The importance
of these issues informed the Board’s
establishment of a dedicated SET
Committee in 2015. The committee
focuses on, among others, our impact
on communities, while the SHSD
Committee deals with, inter alia, issues
of environmental stewardship. For
more information on our environmental
stewardship and how we interact with
communities, refer to p95 – 124.
7
Regulatory environment
We seek to comply with all relevant
laws and regulations, as well as
the highest levels of corporate
governance, and often our
governance practices exceed the
legal minimum. As such, corporate
governance systems and frameworks
at Gold Fields are reviewed constantly
to align with the ever-changing and
increasingly stringent standards that
are being rolled out by regulators.
Strategy to deliver long-term value and sustainability
The Board is independent and delegates responsibility for the development and
implementation of the strategy to the Group Exco. However, the Board nevertheless has
a deep understanding of and approves the strategic goals and direction of the Company.
When reviewing the strategy, it considers the business’ risks and opportunities and how
these might impact the achievement of objectives. In so doing it aims to ensure that the
strategy drives a sustainable business agenda and considers the interests of
stakeholders.
5
Exco presents the Company strategy, business plans and risk register to the Board on
an annual basis for input and approval. The Board also agrees performance targets with
management. The CEO provides the Board with monthly reports on, among others,
performance against strategic and operational targets. This input allows the Board to
effectively monitor the implementation of strategy.
Board members perform onsite visits to our operations and projects, and on occasion
interact with individual executives on strategic and operational performance.
Innovation and Technology (I&T)
Gold Fields recognises the importance of implementing I&T to secure the
sustainability of our operations. Doing so is expected to deliver higher production,
greater efficiencies, improved safety and a decrease in the potential negative impact
on the environment and communities. In line with the requirements of King IV, the Board
has approved an I&T strategy that is set to further the achievement of Gold Fields’
Group strategy.
8
LEADERSHIP 28
The Gold Fields Integrated Annual Report 2018
Summarised corporate governance
Ensuring we do business ethically
THE STRUCTURES AND MECHANISMS USED TO DRIVE ETHICAL BUSINESS PRACTICE
Our business is built on the foundation of ethics, which informs a culture of integrity and transparent reporting to our stakeholders.
This foundation assists us in ensuring that we build trust, strengthen our reputation and create value for all our stakeholders. The
Board and its committees set the ethical tone for the business. We use various mechanisms to confirm ethical behaviour,
compliance and good governance in the business:
1
Legal and
compliance
2
Audit and
risk
3
Commitment to
best practice
Assesses the legal risks facing
the Company and mitigates these
by enacting effective policies,
procedures and controls.
During 2018, we:
■ Enhanced the regulatory risk profile
process to incorporate the review
and assessment of all applicable
and adopted, non-binding rules,
codes and standards (RCS) per
country
■ Developed an online regulatory and
RCS risk dashboard for the Group
■ Recorded an Annual Compliance
Index per region and for the Group
■ Confirmed alignment with the
Internal Audit Plan
■ Screened 100% of all new and
existing suppliers and contractors
for a range of pre-defined risk
categories, including human rights
and related violations
The Risk Committee reports our
key business risks to the Board on
a biannual basis. The Board aims
for effective controls and corrective
measures are in place to manage and
mitigate these risks. Furthermore, the
Audit Committee seeks to ensure the
integrity, accuracy, and adequacy of
accounting records.
Internal Audit assesses that the
internal controls in place are working to
mitigate potential risks. This takes place
in all regions on a quarterly basis and
operations are given an audit ranking.
Corrective measures are put in place
where necessary.
External Audit provides the
integrity, accuracy and adequacy of
accounting records and corporate
reporting. During 2018 we contracted
PricewaterhouseCoopers as our new
auditors from 2019 onwards, following
our standard tender process. KPMG
had been our auditors since 2010.
For more information on our Risk
and Audit committees, refer to the
full Governance Report in the Annual
Financial Report.
We support the development of an ethical
and impactful industry, one that goes
beyond a compliance-based approach.
Gold Fields is aligned to both international
and local best practices, which underpin
our commitment to responsible corporate
citizenship. We are committed to and
guided by:
■ The legislation and regulations of the
countries in which we operate
■ The requirements of the stock exchanges
on which we are listed
■ The United Nations (UN) Guiding
Principles on Business and Human Rights
■ The ICMM 10 Principles on Sustainable
Development
■ The 10 Principles of the UN Global
Compact
■ King IV
■ UN Convention Against Corruption
■ OECD Convention on Combating Bribery
■ Extractive Industry Transparency Initiative
■ World Gold Council – Conflict Free Gold
Standard
■ Voluntary Principles on Security and
Human Rights
During 2018, we also committed to the
Task Force on Climate-related Financial
Disclosures (TCFD).
Code of Conduct
Our Code of Conduct is informed by the Gold Fields values and underpins the way we conduct ourselves, from our
operations to our Board. It also extends to our supply chain business partners. The Code of Conduct was updated in 2017
and distributed to all existing employees, while all new employees receive it during their onboarding. As at end 2018, 66% of
our people had undergone training on the Code of Conduct. An anonymous Tip-Offs hotline is permanently in operation, and
the Company takes a zero tolerance approach to intimidation and victimisation of those who report incidents.
4
Key principles of our Code of Conduct:
■ Emphasis on ethical leadership within the organisation in addition to ethical management
■ Protection of employee and third-party whistle-blowers, promoting an environment for reporting of Code of Conduct
transgressions
■ Safeguarding the business against potential reputational harm and litigation
■ Transparent and ethical dealings with government and suppliers
■ Protection of company information
■ Accurate and transparent reporting
■ Safeguarding against insider trading
CEO Report
The Gold Fields Integrated Annual Report 2018
29
2018 marked the second year
of the reinvestment programme
embarked on by Gold Fields
at the end of 2016. The key
motivation behind the
investment focus is to ensure
that our portfolio of mines
continues to generate
cash sustainably into
the foreseeable future, while
at the same time lowering our
costs and extending mine life.
Nick Holland
CEO
LEADERSHIP 30
The Gold Fields Integrated Annual Report 2018
CEO Report continued
Introduction and overview
Dear stakeholders
2018 marked the second year of the
reinvestment programme embarked
on by Gold Fields at the end of 2016.
The key motivation behind the
investment focus is to ensure that
our portfolio of mines continues to
generate cash sustainably into the
foreseeable future, while at the same
time lowering our costs and
extending mine life.
Having spent total project capital of
US$502m over the past two years,
primarily on Damang and Gruyere,
Gold Fields is now well placed to
maintain a production profile of near
to 2Moz a year at our international
operations in Australia, Ghana and
the Americas over the medium to
long term. This is based on current
gold price levels, our attributable gold
Mineral Reserves of 20Moz in these
regions as well as our track record of
Resource conversion and exploration
activities.
The 2Moz milestone is expected to
be reached for the first time in 2019
as Damang and Gruyere are set to
come into production and our
Asanko joint venture (JV) in Ghana
contributes for the full year. The
longer-term future of this portfolio
also looks positive as we continue to
invest in near-mine exploration at our
Australian mines, while the Board has
approved a maiden Mineral Reserve
and the technical components of the
feasibility study for the Salares Norte
project in Chile.
The globalisation of our portfolio has
also been evident in a gradual shift in
our Mineral Reserve exposure. Until
two years ago, just over 70% of our
Reserves were held by South Deep.
That profile has changed: of our total
gold-equivalent Mineral Reserves
of 50.9Moz in December 2018
(December 2017: 53.1Moz), 41%
are now outside South Africa.
One of the key benefits of the
reinvestment programme over the
past two years is the expected
reduction in Group All-in Costs (AIC)
to approximately US$900/oz, a level
which we feel is required to be
competitive on a global scale. As the
quality of the portfolio improves and
our cost profile starts to decline, we
expect an improved free cash-flow
(FCF) margin. For 2019, therefore, we
have adjusted our target to a FCF
margin of 15% at a gold price of
US$1,200/oz (previously
US$$1,300/oz).
Not only did our international portfolio
of mines exceed its production
targets in 2018, but it also
outperformed cost guidance.
However, as South Deep, our only
remaining South African operation,
was well below target, Group
attributable production of 2.04Moz
for the year was below our original
guidance of 2.08 – 2.10Moz, as well
as 2017 production of 2.16Moz.
Group AIC of US$1,173/oz were
below the guided US$1,190/oz –
US$1,210/oz, but slightly higher than
the US$1,088/oz reported in 2017,
due to the continued investment in
our growth projects.
The strong operational performances
of our operations in Ghana, Peru and
Australia resulted in net cash flows of
US$332m, and enabled us to fund
our US$290m total project capital
expenditure in 2018 (excluding
Asanko), without putting undue
pressure on our balance sheet.
Despite the increased spending,
as anticipated, we declared a total
dividend for 2018 of R0.40/share.
Planned project and sustaining
capital for 2019 is scheduled to
decline to US$633m, of which
US$143m is growth capital.
At South Deep, annual production in
2018 at 157,100oz was half the
originally guided 321,000oz.
Production in the second half of the
year was impacted by the tragic fatal
accident as well as a wide ranging
restructuring, including the
retrenchment of over 1,500
employees and contractors, and
a subsequent six-week strike by
the majority National Union of
Mineworkers (NUM). However,
I believe that in the wake of the
restructuring, which has seen our
employee workforce at the mine fall
by about 30% to just under 2,500
and the number of contractors
decrease from 2,294 to 1,725, we
are in a position to significantly
reduce South Deep’s pre-
restructuring (H1 2018) cash-burn
of about R100m (US$8m) a month.
During 2018, we recorded one fatality
(three in 2017), which served as a
tragic reminder that we have lots
more work to do to eliminate all
fatalities and serious injuries to realise
our goal of zero harm. We did
however see a continued
improvement in our health and safety
performance amid renewed efforts to
entrench a committed safety culture
and standards. Gold Fields’ total
recordable injury frequency rate
(TRIFR) fell below two recordable
injuries per million hours worked for
the first time, a continuation of our
long-term downward trend and
our best safety performance ever.
Mining is an industry that has
significant impacts on the countries
and communities in which it
operates. This requires continued
proactive stakeholder engagement
strategies and sustainable
development policies.
Host communities, in particular, are
critical stakeholders for our mines.
During 2018, we continued investing
significant resources in community
programmes, including increasing the
share of jobs and procurement spend
allocated to host communities. We
are showing good results with around
25% of our total value creation of
US$2.7bn during 2018 channelled
into host communities.
The judicious use of water and
energy resources by our mines and
proactive mine closure programmes
are other critical elements of our
sustainable development
programmes, not only as part of
our commitment to operational
efficiencies and environmental
stewardship, but also as part of
strengthening our social licence to
operate.
We are also committed, in
collaboration with our peers in the
ICMM, to a renewed focus on the
governance and technical
management of our tailings storage
facilities (TSFs) following the collapse
of a TSF at Vale’s Feijão iron ore mine
in Brumadinho, Brazil, in January
2019, during which there were over
300 deaths.
The Gold Fields share price took
a hit when we announced the
restructuring of South Deep in August
2018. While it has gradually
recovered since then, overall in 2018
our share price decreased by 18% on
the New York Stock Exchange and
9% on the JSE.
The Gold Fields Integrated Annual Report 2018
31
Group performance scorecard
Performance highlights (Group)
Fatalities
TRIFR
Attributable production
All-in Sustaining Costs (AISC)3
AIC3
Net cash-flow1,3
Free cash-flow (FCF) margin3
Net debt3
Dividend declared
Total value distribution
Energy usage2
Water withdrawal5
CO2 emissions
Host community procurement (% of total)6
Host community employment (% of total)7
Gross mine closure liabilities
Number
/million hours worked
Moz
US$/oz
US$/oz
US$m
%
US$bn
R/share
US$bn
TJ
Mℓ
million tonnes
%
%
US$m
2018
1
1.83
2.04
981
1,173
(132)
16
1,612
0.40
2.711
11,628
21,179
1.85
27
56
400
20174
3
2.42
2.16
955
1,088
(2)
16
1,303
0.90
2.849
12,178
32,985
1.96
45
40
381
1 Net cash-flow = cash-flow from operating activities less net capital expenditure, environmental payments and finance lease payments
2 The sum of direct and indirect energy consumption reflects a conversion factor used by Granny Smith, Tarkwa and Damang power stations to
account for generation losses
3 These non-IFRS measures have been defined in management’s discussion and analysis in the Annual Financial Report and have been reconciled to
IFRS
4 2017 numbers include continued and discontinued operations
5 Large difference in numbers due to change of definition of water withdrawal to exclude diverted water
6 The % decline is due to a change in the definition of host communities by our Australian operations to only include communities in their area of
influence (previously Perth was included in the definition due to the FIFO nature of our mines)
7 South Deep’s host community definition was changed in 2018 to align with the 2016 municipal boundary change which amalgamated the
Westonaria and Randfontein municipalities. It now includes all individuals who reside in the Rand West City Local Municipality. This number also
excludes the Perth office and Gruyere project
Each year, Gold Fields adopts a
Group performance scorecard that
incorporates the Company’s strategic
priorities and seeks to instil the right
culture and behaviours among our
workforce, driven by the imperatives
of safety, cash generation and
sustainably growing the business.
By integrating all of the key value
drivers into the business, the
scorecard also aims to enhance the
Group’s sustainability and reflects the
integrated nature of our business.
The scorecard consists of four key
performance areas and elements
against which we measure our
performance, which are discussed
in detail in the IAR:
1. Safe operational delivery – how
we make money (p56)
2. Portfolio management – what
we choose to invest in (p40)
3. Capital discipline – how we
spend money (p84)
4. Licence and reputation – how
we conduct ourselves (p92)
My performance as CEO against my
scorecard objectives is shown on
p16. This Integrated Annual Report
(IAR) is structured along the lines of
our 2018 scorecard and an overview
of each performance area follows.
Safe operational delivery
Safety and health
Safety is management’s first priority
and it is critical that we continuously
emphasise our commitment to zero
harm. Therefore, the fact that we still
had one fatality at our mines during
2018, compared with three in 2017,
is a setback. Our heartfelt
condolences go out to the family,
friends and colleagues of Ananias
Mosololi, a load haul dump operator
at South Deep, who died after an
underground accident on 12 October
2018. In a non-mining-related
accident, a member of the
Community Security Task Force,
Francis Yeboah, drowned in a
settling pond at our Tarkwa mine
in Ghana. We are deeply saddened
by his loss and extend our
condolences to his family.
Our overall safety performance
improved during 2018, with the
TRIFR declining to 1.83 incidents
per million hours worked from
2.42 in 2017, as the total number
of recordable injuries reduced to
99 from 138 in 2017. This is a
continuation of a longer-term trend.
As recently as 2014, our TRIFR was
4.04 and we reported 200 recordable
injuries.
Working towards eliminating all
fatalities and serious injuries remains
a priority for our management teams
at the operations, which have
ultimate responsibility for health and
safety issues. The Group Safety
Leadership Forum, formed in 2017,
is overseeing the development of a
Group-wide safety strategy that will
further improve our safety
performance. It has identified three
pillars to underpin our safety efforts
- systems and processes, safety
leadership, and safe behaviour - to
complement the many good safety
initiatives already in place. To further
LEADERSHIP 32
The Gold Fields Integrated Annual Report 2018
CEO Report continued
Group performance scorecard continued
entrench safe behaviour, we have
also implemented greater recognition
for safety in performance scorecards
of all employees by adding a number
of leading indicators to the current
lagging indicators.
On the health front, the Occupational
Lung Disease Working Group,
representing most gold mining
companies in South Africa, including
Gold Fields, reached an historic
settlement with attorneys
representing ex-mine workers
suffering from silicosis and TB. The
settlement still needs to be approved
by South Africa’s courts. Once it is
approved a trust will be set up,
funded by R5bn (US$390m) from
the gold mining companies, and the
process of compensating ex-mine
workers can finally begin. Gold Fields
has provided R368m (US$25m) for its
share of the settlement.
Business and financial
performance
2018 was the second year of our
reinvestment programme that seeks
to improve the quality of our portfolio
and sustain the current production
base for the next decade. The
significant capital expenditure
requirements that accompany this
programme inevitably resulted in
higher Group AIC and reduced net
cash-flow during both 2017 and
2018. As such, we guided the market
at the beginning of 2018 on higher
costs and marginally lower
production.
Group attributable production of
2.04Moz for the year was 2% below
our originally guided 2.08 – 2.10Moz.
All the international mines exceeded
their production guidance. South
Deep’s production at 157,100oz was
well below guidance.
Despite the significant capital
expenditure programme during 2018,
stringent cost management across
the Group resulted in a good
cost performance with AIC of
US$1,173/oz and AISC of
US$981/oz in 2018, below guidance
As part of the restructuring, South
Deep closed mining activities in
loss-making areas of the mine and
reduced operational and support staff
commensurately. Development
activities in the new mine areas were
also suspended. Both registered
trade unions were served with
section 189 notices in terms of South
Africa’s Labour Relations Act and,
after the legislated consultation
period ended, the retrenchment of
1,092 employees and 420
contractors were implemented. This
leaves the staff complement
approximately 30% lower than it was
before the retrenchments.
The NUM commenced strike action
on 2 November 2018 to protest the
retrenchments, which continued until
18 December 2018. Amid violence
and intimidation, non-striking
employees were prevented from
accessing the mine and,
subsequently, no production was
possible for November and
December 2018.
for the year of US$1,190/oz –
US$1,210/oz and US$990/oz –
US$1,010/oz respectively.
Total capital expenditure during 2018
was US$814m, just lower than the
US$834m spent in 2017. The Group
reported net cash-outflow of
US$132m (2017: US$2m cash-
outflow) and a FCF margin (which
excludes capital spend on growth
projects) of 16% (2017: 16%). The
gold price received by Gold Fields
during 2018 averaged US$1,252/oz
(2017: US$1,255/oz).
The Group and mine operating and
financial performances are detailed
on p56 – 62.
South Deep restructuring
2018 proved to be an extremely
difficult year for South Deep. After
falling behind plan in H1 2018,
management announced a material
restructuring on 14 August 2018.
The aim of the restructuring was to
consolidate mining activity to increase
focus, and to match the cost
structure with the level of production.
Attributable gold production
koz
2,500
2,000
1,500
1,000
500
0
9
1
2
,
2
0
0
2
,
2
9
5
1
,
2
0
0
2
,
2
6
4
1
,
2
5
2
1
,
2
0
6
1
,
2
8
5
1
,
2
6
3
0
,
2
0
9
0
,
2
2014
2015
2016
2017
2018
■ Actual
■ Guidance
All-in Costs (AIC)
US$/oz
1,400
1,200
1,000
800
600
400
200
0
0
5
1
1
,
7
8
0
,
1
5
7
0
1
,
6
2
0
1
,
6
0
0
1
,
0
4
0
1
,
0
8
1
1
,
8
8
0
1
,
3
7
1
,
1
0
0
2
,
1
2014
2015
2016
2017
2018
■ Actual
■ Guidance
The Gold Fields Integrated Annual Report 2018
33
Production at South Deep during
2018 decreased by 44% to 4,885kg
(157,100oz) from 8,748kg
(281,300oz) in 2017 driven by
decreased volumes and grade. AIC
for 2018 increased 42% to
R854,049/kg (US$2,012/oz) from
R600,109/kg (US$1,400/oz) in 2017,
mainly due to lower gold sold. Net
cash-outflow for the year was
R1,891m (US$141m). South Deep
also reported an asset and goodwill
impairment of R6.47bn (US$482m) in
2018 following a goodwill impairment
of R3.5bn (US$278m) in 2017.
Subsequent to the 2018 year-end,
South Deep commenced the process
of building up production with a
reduced, but more focused,
workforce and having removed over
R800m from the mine’s cost base.
The immediate target is to get the
mine to break even at the current
level of production. Once this has
been achieved, the focus will be on
improving productivity off the
restructured cost base and overhead
structure, to bring the mine to
profitability. Gold Fields is unable to
continue sustaining the cash losses
of the last few years and, should our
efforts subsequent to the
restructuring at South Deep not show
positive results, other options for the
asset cannot be ruled out.
Guidance of 6,000kg (193,000oz)
has been provided for 2019 at an AIC
of R610,000/kg (US$1,394/oz). The
mine’s Mineral Reserves were
reduced by 12% to 32.8Moz in
December 2018 compared with a
year earlier, while Mineral Resources
have declined by 15% to 56.2Moz
over the same period.
Energy
During 2018, Gold Fields shifted
further away from the use of carbon-
intensive energy sources. Our mines
in Ghana, Australia and Peru are now
largely powered by low-carbon gas,
though diesel is still being used for
the majority of our mining fleet.
During 2018, 54% of our total
electricity capacity was generated by
gas, with coal accounting for 35%,
hydro-electric for 9% and diesel
for 2%.
Currently Gold Fields has 134MW in
installed gas capacity and an
additional 16MW of gas capacity is
being evaluated by the Australian and
Ghanaian mines. Renewable energy
is also becoming a viable option, not
only due to its positive impact on
carbon emissions but also because
the cost of renewables is rapidly
coming down. At present, Gold Fields
has 55MW of solar capacity and
18MW of wind capacity under study
at our South African, Australian and
Ghanaian mines.
The Granny Smith mine in Australia
looks set to be the first mine in our
portfolio to be partly solar powered,
having contracted an independent
power producer to design, build and
operate a 8MW solar plant backed by
2MW of battery systems, to be
commissioned in Q4 2019. The
Agnew mine is also expected to
develop a hybrid gas and renewable
power plant during 2019.
By 2020 we are confident that
around 2% of installed Group energy
capacity will be from solar and wind.
Gold Fields also remains committed
to its goal of 20% renewable energy
generation over the life-of-mine at all
new projects.
Energy accounted for 22% of
Group operating costs in 2018, the
second largest cost component at
our mines. While energy consumption
decreased by 4% in 2018, the Group
increased energy spending by 17%
to US$302m in 2018, amid higher
diesel unit costs and regulated tariff
increases. Operational energy
efficiencies yielded savings of
US$29m.
Greater use of renewables has the
added benefit of reducing the carbon
footprint, which is one of Gold Fields’
key environmental priorities. During
2018, total CO
2 emissions declined to
1.85m tonnes (2017: 1.96m tonnes),
and we expect longer-term benefits
arising from the energy efficiency and
fuel-switching projects we have put in
place at our mines.
Fit-for-purpose workforce
A key area of focus in 2018 was
to ensure that our mines have
appropriately sized and qualified
workforces to drive safe operational
delivery. As part of the restructuring
of South Deep, which commenced
in August 2018, 1,092 employees
and 420 contractors were retrenched
as part of our efforts to align the
cost base with the reduced
operational footprint of South Deep.
Earlier in the year a further 260
employees and about 25% of the
mine’s management team had
accepted voluntary severance
packages.
The Tarkwa mine switched to
contractor mining during 2018, with
about 90% of the affected workforce
of the mine moving over to the two
contractors. At our Damang mine,
too, we converted just over 300
full-time employees into fixed-term
contractors. As a result, the number
of full-time employees in the West
Africa region reduced from 2,910 at
end 2017 to 1,079 at end 2018,
while the number of contractors rose
from 4,761 to 6,291 over the same
period. Damang has been using
contractor mining since the start of
the reinvestment project early in
2017.
As a result of these initiatives,
the Group now employs 5,601 full-
time employees (2017: 8,856) and
12,010 contractors (2017: 9,738).
Another important human resource
initiatives implemented in 2018 is the
continued drive to have appropriately
skilled people in the right roles. With
the increasing shift towards
mechanisation and automation at our
mines, we have found that,
in addition to the continued
development and training of our
workforce, it is important to recruit
appropriately skilled and experienced
people. During 2018, we spent over
US$14m globally on training and
development – on top of recruiting
the best mining skills to supplement
our existing talent pool.
LEADERSHIP 34
The Gold Fields Integrated Annual Report 2018
CEO Report continued
Group performance scorecard continued
Capital discipline
The core focus of Gold Fields’
financial strategy is to grow our FCF
margin and to sustain this margin in
the long-term. The Group has set a
FCF margin target per region (after
capital expenditure, royalties and
taxes) of at least 15% at a notional
long-term planning gold price of
US$1,200/oz, thus providing a
cushion in case of lower prices.
Despite the significant capital
investment programme of US$814m,
Gold Fields produced a sound cost
and cash-flow performance during
2018. AIC of US$1,173/oz and AISC
of US$981/oz for 2018 were slightly
ahead of 2017 numbers but below
guidance for the year of US$1,190 –
US$1,210/oz and US$990 –
US$1,010/oz, respectively.
Cash-flow generated by the
operations remained strong.
Excluding project capital and off-mine
exploration expenditure, operational
cash-flow was US$334m (US$194m
in Australia, US$114m in Peru,
US$149m in Ghana and a negative
US$141m in South Africa) versus
US$441m in 2017. On a net basis,
which includes growth capital, the
Group reported net cash-outflow
of US$132m (2017: US$2m cash-
outflow) and an FCF margin (which
excludes capital spend on growth
projects) of 16% (2017: 16%) at an
average gold price received of
US$1,252/oz (2017: US$1,255/oz).
Revenue was down by 7% to
US$2.58bn (2017: US$2.76bn) due
to the production decline at South
Deep. Cost of sales were down
proportionally at US$2.04bn (2017:
US$2.11bn). The overall financial
performance was impacted largely by
non-recurring items, including
impairment of South Deep and
retrenchment costs in Ghana related
to the conversion to contract mining
at Tarkwa.
Given the volatility in commodity
prices and exchange rates and, more
pertinently, the high levels of project
capital expenditure incurred during
2018, management undertook
short-term, tactical hedging of the oil
price, the copper price and the
US Dollar, Australian Dollar and South
African Rand gold prices to protect
cash-flow. We are continuing with
our gold hedging programme in
Australia during 2019 as we finalise
the construction of Gruyere. We have
also extended hedging to the Rand
gold price to protect South Deep’s
cash-flow during the build-up to
more sustainable production levels.
Altogether, around 1Moz of gold
production for 2019 has been
hedged.
Dividends and debt reduction
Two of Gold Fields’ key strategic
objectives are to pay its shareholders
a dividend and reduce the amount of
debt on our balance sheet. Despite
recording a net cash-outflow, the
Group declared a total dividend for
the year of R0.40/share (2017:
R0.90/share).
Having moved into a capital-intensive
phase during 2017 and 2018,
management guided the market for
a pick-up in debt. Net debt increased
by US$309m during 2018 to
US$1,612m, mainly due to project
capital spend and the funding of the
Asanko Gold deal.
Gold Fields ended 2018 on a net
debt:adjusted EBITDA ratio of 1.45x
compared with 1.03x at the end of
2017, but still well below the debt
covenant level of 2.50x.
During 2018, we continued to
successfully manage our balance
sheet by extending the maturity of the
US$380m term loan by 12 months to
June 2020. We are considering
additional refinancing of our debt in
2019 to further improve liquidity.
Portfolio management
Gold Fields manages its assets
to improve the overall quality of
its portfolio and enhance the
sustainability of the cash-flow
generated by this portfolio. In this
regard, the focus is on reducing
Group AIC, increasing the FCF/oz
and extending the life of the assets.
All assets in our portfolio are subject
to the Group’s annual strategic
planning process. A scenario analysis
is conducted for each operation,
assessing how to maximise cash-
flow, life-of-mine and margin. The
results of this analysis are then used
in conjunction with the Group’s
capital profile and the current
economic environment as inputs
into our annual business planning.
Mine developments
The strength of our international
portfolio is evident in the continued
net cash-flow generation of our mines
in Australia, Ghana and Peru, which
collectively generated US$457m in
2018 (2017: US$501m), before
taking into account project capital.
During 2018, we announced an
extension of Cerro Corona’s life-of-
mine to 2030 through work on the
tailings facility and the future use of
in-pit tailings.
Our Australian mines continue to
benefit from our consistent and
sizeable near-mine (brownfields)
exploration programmes. During
2018, we spent A$83m (US$62m)
at Agnew, Granny Smith and St Ives
and, as a result, added 1.18Moz in
Mineral Reserves (before depletion)
and 1.95Moz in Mineral Resources
at our Australian mines. Notable
projects arising from this investment
drive are:
■■ Greater Invincible Complex
continued to grow in 2018 and
now represents one of the largest
mineralised systems at St Ives
■■ Significant incremental ounces
added to the Wallaby mine at
Granny Smith
■■ Near-mining resources and
reserves replaced at Agnew’s New
Holland and Waroonga mines and
new discoveries at Waroonga
North and Redeemer
A further A$76m (US$57m) has been
budgeted for brownfield exploration
at our Australian mines in 2019.
Near-mine exploration is also being
stepped up at our Ghanaian mines,
notably at Tarkwa, where the focus
is on paleoplacer extension
opportunities at the mine’s existing
pits. US$9m was spent in 2018 with
some early promising results evident.
The Gold Fields Integrated Annual Report 2018
35
The only operating asset in the Group
that still needs to be brought to full
account is the South Deep mine.
Management believes that following
the significant restructuring in the
second half of 2018 the cost base
has been adjusted to the reduced
operating footprint. We expect to
significantly reduce the monthly cash
losses at the mine and are confident
that South Deep is set up for a
sustainable recovery over the next
few years.
Gold Fields holds investment
positions in Gold Road Resources
and Asanko Gold, which are the joint
venture partners in the Gruyere
project and the Asanko gold mine
(AGM) respectively. We also have
minority holdings in a number of
junior mining companies, including
Cardinal Resources, Red 5 and
Hummingbird, and evaluate these
interests on a regular basis. The
company also diluted its shareholding
in Toronto-listed Maverix Metals to
20%.
Project advancements
2018 was the second year in our
drive to secure the longevity and
sustainability of our portfolio of
assets, and all our key projects in this
respect are tracking their delivery
deadlines and financial budgets:
■■ At Gruyere, the JV partners, Gold
Fields and Gold Road Resources,
have to date invested A$492m
(US$374m) of the total expected
project cost of A$621m
(US$480m). During 2017 and
2018, Gold Fields’ portion of the
spend was A$246m (US$185m),
including capital investment and
management costs. First gold is
expected to be poured during Q2
2019, with production for 2019
guided at 118koz (100% basis)
■■ At the end of 2016 we commenced
the US$341m investment at our
Damang mine in Ghana to extend
the life-of-mine to 2025. Capital
spending during 2018
was US$125m (2017: US$115m).
The project is ahead of plan and
the mine is set to reach full
production in early 2020
■■ At the Salares Norte project in
Chile, the feasibility study was
completed in 2018, and a maiden
Mineral Reserve of 4.0Moz (gold
equivalent) was declared.
Any decision to build a mine at
Salares Norte will be made based
on the outcome of the
Environmental Impact Assessment
(EIA), which was accepted for
evaluation by the regulator in July
2018 and is expected to take 18 -
24 months. Spending on further
drilling and other work totalled
US$64m during 2018.
Potential operational parameters
established by the feasibility study
for a possible future mine include:
– Initial 11.5-year life-of-mine
– Annual throughput of 2Mt
– Life-of-mine production of
3.2Moz of gold and 26.7Moz
of silver
– Average annual production of
450koz gold equivalent for the
first seven years of the project at
an AISC of US$465/Au-eq oz
– Project construction capital of
US$834m
■■ A JV with Asanko Gold in Ghana
was completed in July 2018, with
Gold Fields acquiring 45% in the
Asanko Gold Mine (AGM) for
approximately US$185m, of which
US$20m was deferred. The mine
achieved total production of
223koz (100% basis) at an AIC of
US$1,183/oz and is guiding for
production of 225koz - 245koz at
AIC of US$1,130/oz - US$1,150/
oz for 2019. Gold Fields has also
acquired a 9.9% stake in the
holding company, Toronto listed
Asanko Gold
■■ The sale of the Arctic Platinum
Project to CD Capital Management
was concluded in early 2018 for a
cash consideration of US$40m and
future royalties of 2%
Mineral Resources and
Reserves
During 2018, Gold Fields’ managed
gold-equivalent Mineral Reserves (net
of depletion) decreased by 1% to
54.1Moz and Mineral Resources by
8.1Moz to 140.5Moz at 31 December
2018. The declines were largely due
to reductions in Mineral Resource
and Reserves at South Deep, due to
a higher cut-off grade.
Other notable developments during
2018 were:
■■ Salares Norte declared a maiden
gold-equivalent Mineral Reserve of
4.0Moz at 31 December 2018,
following the completion of its
feasibility study
■■ In Australia, managed Mineral
Reserves (net of depletion)
increased by 0.2Moz to 6.4Moz
and Mineral Resources increased
by 1.1Moz to 17.1Moz at 31
December 2018, testament to the
continued success of brownfields
exploration at the mines
■■ At South Deep, Mineral Reserves
totalled 32.8Moz (2017: 37.4Moz)
and Mineral Resources 56.2Moz
(2017: 66.3Moz) at 31 December
2018.
As recently as 2017 South Deep held
just over 70% of our Group Mineral
Reserves. The profile has changed:
of our total managed gold-equivalent
Mineral Reserves as at 31 December
2018, 59% are held by South Deep,
and our Mineral Resource profile
indicates that this percentage could
continue to fall.
A straight comparison between
South Africa’s and our international
operations’ Mineral Reserves is in any
case misleading, given the different
style of mineralisation. The
paleoplacer type orebody at South
Deep is large and consistent, while
most of the rest of the Group’s
reserves are dominated by orogenic/
greenstone type orebodies, which are
more variable and usually do not
have particularly long Reserve lives.
But these orebodies are
characterised by consistent
replacement of Reserve depletion.
Importantly, our commitment to
brownfields exploration has allowed
us to continually replace Reserves,
particularly at our Australian mines,
over a number of years. A detailed
breakdown of the Company’s Mineral
Reserves and Mineral Resources is
contained on p52 – 55 of this report.
LEADERSHIP 36
The Gold Fields Integrated Annual Report 2018
CEO Report continued
Group performance scorecard continued
Licence and reputation
The success of our business is
dependent on our relationships
with key external stakeholders which
determine both our regulatory and
social licences to operate.
Environmental stewardship
Responsible environmental
management remains a vital
component of Gold Fields’ approach
to operate at all our operations and
projects. In 2018, we reported two
Level 3 environmental incidents
(2017: two), one in Peru and one in
Ghana (p95). Gold Fields has had no
Level 4 or 5 environmental incident
for well over ten years, but the two
Level 3 incidents had the potential to
impact water supply to the nearby
communities. Our teams acted
quickly to remediate the events and
communicated transparently with
regulators and communities on this
issue. The number of Level 2
incidents fell by 18% to 68 in 2018
from 83 in 2017.
Water is a particular focus of our
environmental strategy, as it is
becoming an increasingly scarce
and expensive resource globally.
Managing the risks around current
and anticipated water security, which
includes the quantity and quality of
supply as well as associated costs,
is essential to ensure sustainable
production for existing operations
and the future viability of projects.
During 2018, our operations invested
in improving water practices,
including pollution prevention,
recycling and conservation initiatives.
A key target is to reuse or recycle
much of the water we use in our
processes and we set ourselves a
target of 65%, in line with ICMM
guidance. We achieved the target in
2018, when 66% of our total water
use was recycled or reused water.
Work carried out by the ICMM on
water and tailings management has
provided best-practice guidelines for
the Company, and during 2017 and
2018 we worked closely to align our
practices to these ICMM position
statements. During 2018, external
reviews of our compliance with these
position statements concluded that
we are aligned with the ICMM
position statements both in terms of
water and tailings management.
After the catastrophic tailings failure
at the Feijão iron ore mine in
Brumadinho, Brazil, in January 2019,
during which there were over 300
deaths, all Gold Fields’ operations
carried out additional safety
inspections at our 33 tailings facilities,
particularly on the 18
decommissioned TSFs, and
concluded that Gold Fields-managed
TSFs were not at risk. During 2019
we will further strengthen technical
and governance oversight over all of
our TSFs. Longer term, our teams are
working with our peers at the ICMM
to evaluate independent assessment
and accreditation of all ICMM
member TSFs as will as on solutions
such as filtered and dry-stack tailings.
The total gross mine closure liability
for Gold Fields was raised by 5% to
US$400m in 2018 from US$381m in
2017. During 2018, we further
enhanced our integrated approach to
mine closure management with a
focus on progressive environmental
rehabilitation and full life-of-mine
closure obligations.
Stakeholder relations
Employees, business partners,
shareholders, investors, governments
and communities have been identified
as Gold Fields’ key stakeholders.
Their support is critical in ensuring
that we receive and retain our
regulatory approvals and social
licence to operate. This can only be
achieved if we develop stakeholder
relationships that are based on
transparent and open engagement
and if we create shared value with
them. The ability to generate cash is
critical in distributing the benefits from
mining to our stakeholders. In 2018,
Gold Fields’ value distribution totalled
US$2.7bn, compared with the
US$2.9bn we distributed in 2017.
For details on how this amount was
dispensed to stakeholders during
2018 see p6.
Government relations
As the issuers of mining licences,
developers of policy and
implementers of regulations, host
governments at all levels (national,
regional and local) are one of Gold
Fields’ most critical stakeholders.
While we seek to engage with these
stakeholders regularly to build trusts,
these relationships are not always
easy. Over the past few years we
have seen a resurgence of resource
nationalism, particularly in Africa. As
part of this many governments
accuse the mining industry of not
paying fair taxes by using profit-
shifting and under-invoicing their
physical gold exports. Gold Fields
has appropriate controls and
procedures in place to ensure that we
comply with relevant tax legislation,
including compliance with transfer
pricing regulations, and account fully
for our gold exports.
In South Africa the industry and
government have been at an impasse
for a number of years over the
implementation of a new Mining
Charter to govern the sector. A new
Charter was published by the
Department of Mineral Resources
(DMR) in mid-2018. The 2018 Mining
Charter is an improvement on
previous draft versions, but there are
still critical matters, including
renewals of licences, that are not
dealt with. As it stands now the
licence renewal clause is
unacceptable to the industry, as it
would invalidate all previous
empowerment deals if the
empowerment partner has since sold
its interests. Should this impasse
continue, the Minerals Council of
South Africa (MCSA), reserves its
rights to proceed with a legal review
of the Charter relating to, among
others, the renewal of licences.
The Minerals Council of South Africa
won a court case recognising the
”once empowered, always
empowered” principle, which would
guarantee the legislated black
economic empowerment ownership
levels for South Deep until its licence
renewal in 2040 and a further term of
30 years after that. However, the
ruling has been appealed by the
DMR and the MCSA will follow due
process in this regard.
The Gold Fields Integrated Annual Report 2018
37
A more proactive approach is
required, such as the one adopted
by the Ghanaian government, which
has entered into development
agreements with large mining
companies, including Gold Fields,
and incentivises new mining projects.
Our agreement with the Ghana
government was fundamental in our
US$341m reinvestment programme
in Damang, which created or secured
around 1,850 jobs. The favourable
investment environment also
encouraged us to take a 45% holding
in AGM.
The mining regimes in Peru and
Australia remained relatively stable,
though we opposed a proposed rise
in the gold royalty rate in Western
Australia.
Labour relations
Gold Fields fundamentally respects
and protects the rights of its
employees to organise themselves
through trade unions. Over the years
we have developed good working
relations with organised labour at
our operations and constructive
engagement usually precedes any
restructuring and corporate actions
needed to keep our operations
sustainable. However, during 2018,
our relationship with unions at our
Ghanaian mines and at South Deep
turned adversarial.
At Tarkwa, the Ghanaian
Mineworkers Union brought a court
injunction against the decision to
convert from owner to contractor
mining, which is essential to ensure
life extension at the mine. This was
overturned by the courts and the
mine implemented the transition to
contractor mining successfully, with
a large part of affected employees
joining the two mining contractors.
As a result the employee workforce
at our Ghanaian mines is now
non-unionised.
At South Deep, the NUM embarked
on a 45-day strike in November and
December 2018 following the
mine’s decision to retrench around
1,500 employees and contractors as
part of its wide-ranging restructuring.
The strike was marred by violence
and intimidation carried out by a
small group of NUM branch members
against the majority of employees
who wanted to return to work, but
were prevented from doing so. The
strike was resolved after many NUM
employees sought the assistance of
the national and regional offices of
the NUM to end the industrial action.
The strike highlighted the need to
rebase our labour relations at South
Deep, and a new collective
agreement was signed between the
NUM and the mine in March 2019 to
take cognisance of South Deep’s
new operating model.
Community relations and
Shared Value
One of the biggest challenges facing
mining companies is building
relationships and trust with their host
communities, without which there is
potential for operational disruption,
project delays and cancellations – the
loss of our social licence to operate.
Gold Fields has traditionally invested
in communities through a range of
educational, skills development,
health and infrastructure projects
and, more recently, through Shared
Value-based projects. This approach
to structuring our investments in
communities ensures that the value
created is shared by communities
and the business. Socio-Economic
Development (SED) is still an
important part of our community
investment strategy, but host
community procurement and
employment have proven to be more
impactful as they create economic
value directly in the communities
most impacted by our mines and
projects.
During 2018, host community
members accounted for 56% of
our total workforce (employees and
contractors) throughout the Group
– 9,259 employees – with the
numbers varying from around 5% at
our Fly-in, Fly-out mines in Australia
to over 70% at our two Ghanaian
operations.
Host community procurement can be
even more impactful as our spending
with suppliers and contractors is
generally our biggest cost
component. In 2018 we spent about
US$1.81bn with these businesses, of
which 94% was spent in-country and
27%, or US$441m, with businesses
from our host communities. The
economic benefits in terms of skills
development, job creation and
reducing dependency from the mine
are self-evident.
Altogether, we have calculated that
during 2018 almost a quarter of our
total value creation of US$2.71bn
– US$686m – remained with our host
communities. It is a number we are
seeking to grow and our regions
have developed ambitious targets
in this respect.
Governance and compliance
Supporting our integrated
management approach is a robust
corporate governance programme
throughout the Company. During
2018, building on the implementation
of the recommendations of the
King IV Report on Corporate
Governance during 2017, the Board
approved a diversity policy and
revised human rights, stakeholder
engagement, environmental as well
as occupational health and safety
policy statements. These policies are
expected to improve sound
governance, transparency and
regulatory compliance at Gold Fields.
Adherence to legislation, controls and
standards is a non-negotiable aspect
of doing business, while ethical
leadership and sound business
governance serve to strengthen
our reputation and relationships with
shareholders, governments,
communities and employees.
LEADERSHIP 38
The Gold Fields Integrated Annual Report 2018
CEO Report continued
Strategy overview
Industry developments
The past few months has seen a
pick-up in mergers and acquisitions
in the global gold mining sector. Most
notably, there have been announced
tie-ups between Newmont Gold and
Goldcorp and between Barrick Gold
and Randgold Resources, as well as
Newmont and Barrick merging their
Nevada assets. These deals, if and
when finalised, will reshape the
industry. Amid speculation about
further sector consolidation, Gold
Fields has been linked with a number
of similar-sized industry peers.
We believe, though, that we are in
the final stages of successfully
implementing our own growth
strategy, one we embarked upon two
years ago. By kick-starting the
investments in our growth projects
then, we are confident that we are
ahead of the curve in terms of project
development.
Historically, mergers between gold
mining companies have faced
significant challenges to achieving
success. We believe that too often a
proposed merger was based on an
increased production profile without
necessarily achieving greater cost
synergies, while cultural differences
between companies are another
impediment to delivering value to
shareholders and other stakeholders.
It is early days for the recently
announced mega-mergers but
extracting value-creating synergies
could prove challenging. Instead,
they suggest that the companies are
seeking to build growth and boost
their Reserve lives. At Gold Fields, we
don’t believe we need a merger to
achieve profitable growth. We are
executing what we believe to be
strong, sustainable and deliverable
growth strategy, which will create
shareholder value in the short,
medium and long-term.
Our growth strategy
Gold Fields seeks to be a low-cost
gold producer that secures
sustainable cash-flow through the
inevitable price cycles in the gold
mining industry. Through this, we are
confident we can deliver superior
returns when the gold price is high,
and offer a degree of protection when
the price falls. At the same time,
sound cash-flow has enabled us to
manage our debt, invest in the right
assets and distribute the benefits
of mining to our stakeholders.
To continue expanding margins and
distributing cash, the long-term
sustainability of the business must be
kept intact. This requires investing to
extend the life of our assets, ensuring
we maintain our social licence to
operate and retaining our people who
are key to the Company’s success.
2018 was the second year of our
reinvestment programme in which
we have invested a total of almost
US$550m. The key projects under
this programme are set to come to
fruition in 2019 and have the potential
to produce strong cash-flows for
Gold Fields in the future.
At present gold prices, I am confident
that our Ghanaian, Australian and
South American regions are well
placed to maintain a production
profile of nearly 2Moz per year over
the medium to longer-term, based
upon our Mineral Reserve profile in
these regions, our track record of
resource conversion, finalisation of
our growth projects, and expected
exploration activity.
In Ghana, the reinvestment at
Damang is essentially the equivalent
of developing a new mine, while our
investment in Asanko Gold also has
the potential for longer-term growth
through life-of-mine extension. The
Gruyere JV is close to completing a
new mine in Western Australia, with
first production scheduled in Q2
2019. Finally, in the Americas region,
we have successfully completed a
feasibility study for the Salares Norte
project in northern Chile.
These projects are important in terms
of their contribution to the strategic
objectives of Gold Fields, namely to
maintain and grow cash-flow on a
sustainable basis. Based on current
projections, they are expected to
operate at an AIC that is lower than
the current AIC of the Group, once
steady-state levels of production are
realised. As such, management
believes that the Group’s overall cost
of production has the potential to
reduce over time.
We continue to invest in brownfields
exploration in Australia with the
objective of not only replacing what
we mine, but also increasing our
Mineral Resources and Mineral
Reserves at a higher quality than what
has been mined previously. Finally, we
need to optimally manage the ore
bodies of our operating mines in terms
of grade management and ongoing
sustainable capital expenditure by
planning for outcomes that optimise
the lives of these ore bodies.
We should not forget the potential
growth and profitability that we
believe South Deep and its 33Moz in
gold Reserves can offer Gold Fields
in the longer-term. We have thus far
failed to bring that potential to the
fore, but I believe that the wide-
ranging restructuring measures we
implemented during 2018 – reducing
the mine’s footprint and cutting the
accompanying cost structures – have
laid the foundation for future growth.
For 2019, the focus will be on
improving productivity and reducing
the mine’s significant cash-outflows.
But beyond that I believe we could
see sustainable growth from South
Deep that has the potential to add
further to Group production.
A key element of the Group’s
underlying strategy, which has
contributed towards improving the
quality of the portfolio over the years,
are value-accretive acquisitions.
During 2018, this resulted in our
acquisition of a 45% stake in AGM.
Given the amount of capital that
has been committed to Gruyere,
Damang, Asanko and South Deep,
and the potential call on funding
resources to build Salares Norte,
should we decide to do so,
management has adopted a cautious
approach on future acquisitions.
I am confident that Gold Fields has
put in place the strategies that will
lead to sustained value creation in the
medium to long-term, and will see
the Company build on its current
production profile.
Executive management has sought
to align itself with investors through
its long-term incentive scheme, a
large portion of which relates to the
performance of the share price over
time. If we stay the course on which
we have embarked, I am confident
that the Company will achieve strong
operational performances, cash-flow
generation and profitable growth.
The Gold Fields Integrated Annual Report 2018
39
Gold price outlook
During 2018 the average US Dollar
gold price declined marginally to
US$1,252/oz from US$1,255/oz in
2017. It recovered strongly from lows
in late November and Q1 2019 was
trading in between US$1,290/oz –
US$1,330/oz. In their assessments
the World Gold Council (WGC) and
the CPM Group credit gold’s recent
stronger performance to three main
factors:
■■ Increased market uncertainty,
political turmoil in the US and
the expansion of protectionist
economic policies, which have
historically made gold attractive
as a hedge
■■ While gold has faced headwinds
from higher interest rates and US
Dollar strength, these effects have
been limited as the US Federal
Reserve has signalled a more
neutral stance following a series
of rate hikes in 2018
■■ Continued purchases of gold by
central banks, a trend set
to continue into 2019
While management anticipates that
these trends may have a positive
impact on the gold price, Gold Fields
has adopted a cautious approach
and is planning its business for 2019
on the assumption of a US$1,200/oz
gold price, the same as in 2018.
The fundamentals may support a
firmer gold price in future. On the
supply side the steady increase in
primary gold supplies until 2015 has
since stabilised to around 105Moz
per annum. This is predominantly due
to the cut in exploration spending as
well as the dearth of new mines being
built, but also exacerbated by the
decline in grades and the increasing
depth and complexity of the ore
bodies being mined and processed.
Consumer demand in India and
China, while significantly down on its
highs over the last five years, should
remain strong according to CPM and
WGC, given economic growth, rising
urbanisation and traditional affinity
towards gold in these countries.
Central banks continue to buy gold
and it appears that most of the
central banks that were looking to
sell gold have already done so.
Management believes these factors
bode well for the long-term future
of gold, although the price will
undoubtedly move through cycles
with the attendant volatility.
Guidance for 2019
Gold Fields’ business plan for 2019
has been built around an average
gold price of US$1,200/oz
(A$1,600/oz, R525,000/kg) and
assuming exchange rates of
R13.8 per US$ and A$0.75 per US$.
As stated, 2019 is set to be an
important growth year for Gold Fields,
with the Damang project approaching
completion and Gruyere commencing
production. In addition, Asanko will
contribute for a full year for the first
time since acquisition. As a result the
Company is guiding for an increase of
4% – 7% in attributable equivalent
gold production in 2019 to 2.13Moz
– 2.18Moz. AISC is expected to be
between US$980/oz and US$995/oz
and AIC between US$1,075/oz –
US$1,095/oz. The year will however,
be one of two halves, with both
production and cash-flow being
weighted to H2 2019.
The main drivers behind production
and cost guidance for 2019 are:
■■ Our 50% share of production at
Gruyere, which is guiding 118koz
(100% basis) for the year with
production set to start in Q2 2019
■■ An expected increase in Damang’s
production from 181koz to 218koz,
with AIC of US$1,100/oz (2018:
US$1,506/oz)
■■ Asanko is set to contribute for the
full year. Its guidance for 2019 is
225koz – 245koz (100% basis) at
AIC of US$1,130/oz -US$1,150/oz
■■ Production for South Deep is
expected to be 6,000kg (193koz),
with AIC of R610,000/kg
(US$1,394/oz)
■■ An expected 5% decline in the
production of our three Australian
mines to 843koz (2018: 886koz)
■■ A drop in gold-equivalent
production at Cerro Corona from
314koz in 2018 to 291koz at a
higher AIC of US$802/Au-eq oz
(2018: US$699/oz)
With our two key projects set to
reach fruition it means that our capital
expenditure is expected to decline
through 2019. Capex for 2019 is split
into planned sustaining capital
expenditure of US$490m (including
near-mine exploration) and growth
capital expenditure of US$143m.
Growth capex comprises US$69m
for Damang and A$99m (US$74m)
for Gruyere. Expenditure on Salares
Norte (which is not capitalised) is
expected to be US$57m in 2019,
comprising US$37m on fixed costs
and engineering work and US$20m
on district exploration. The capital
expenditure above excludes Gold
Fields’ 50% share of Asanko’s capital
expenditure of US$25m for 2019, as
this interest is equity accounted.
For 2019, Gold Fields has continued
to undertake certain gold price
hedging to secure short-term cash
flow and protect the balance sheet
from the volatility of the gold price as
we complete our investment phase
and ramp up the projects.
Note of thanks
I would like to express my gratitude
to my fellow directors, led by our
Chairperson, Cheryl Carolus, for their
support and guidance during 2018.
I want to pay a special tribute to Don
Ncube, who retired as Chairperson of
the Social, Ethics and Transformation
Committee and the Board in May
2018. He was a director of Gold
Fields for 11 years and the input he
provided in transforming the
Company and building closer
relations with our host communities,
particularly at South Deep, will stand
us in good stead for years to come.
The composition of our Executive
Committee remained stable during
2018, with Rosh Bardien joining as
Executive Vice President: People and
Organisational Effectiveness in early
2018. I rely heavily on the members
of this team in guiding and advising
me in managing a complex,
multinational company like Gold
Fields. Each member of the team did
a fantastic job in 2018.
Most importantly, I would like to
express my sincere appreciation and
gratitude to all the employees of Gold
Fields. They have gone through some
difficult times over the past year, with
wide-ranging restructuring initiatives
impacting their work lives, particularly
for our colleagues at Tarkwa and
South Deep. Their resilience, hard
work and dedication never fails to
astonish me and it gives me great
comfort to know that I have this team
behind me.
Nick Holland
CEO
LEADERSHIP 40
The Gold Fields Integrated Annual Report 2018
Gold Fields’
attributable Mineral Reserves
48Moz
KEY MEASUREMENTS – PORTFOLIO MANAGEMENT
2018
Status
2017
2016
2015
2014
Attributable Gold Mineral Resources
(Moz)
Attributable Gold Mineral Reserves
(Moz)
Attributable Copper Mineral
Resources (Mlb)
Attributable Copper Mineral
Reserves (Mlb)
Attributable Gold-equivalent Mineral
Resources (Moz)
Attributable Gold-equivalent Mineral
Reserves (Moz)
Near-mine exploration (US$m)
Near-mine exploration – metres
drilled
96.60 ¢
103.76
101.49
102.21
108.84
48.07 ¢
49.01
48.11
46.06
48.12
4,816 ¢
4,881
5,813
5,912
6,873
691 ¢
764
454
532
620
108.22 ¢
115.60
113.10
113.94
120.04
50.26 ¢
90 ¢
50.80
49.20
47.29
49.55
87
79
58
58
556,272 ¢ 754,669 694,527 349,189 349,511
¢ 2018 performance improvement on 2017 or achievement in line with strategy
¢ 2018 performance drop against 2017
¢ 2018 performance on par with 2017
STRATEGIC GOALS
1 Improving the quality of our portfolio and ensuring that current
levels of production are sustainable for the next ten years
RESULTS AND IMPACTS
Strategic
responses
– Effective
portfolio
management
Key
initiatives
■■ Use portfolio management and strategic planning to inform acquisitions and disposals
■■ Life extension through brownfields exploration and business optimisation
■■ Implement business improvement and efficiency projects to reduce costs
■■ Reduce costs through innovation and technology projects
■■ Implementation of restructuring programme at South Deep
■■ Acquisition of 45% of Asanko gold mine
■■ Feasibility study completed for Salares Norte
■■ Skills development programme
■■ Mitigating strategies in place to catch up on the backlog at Gruyere
■■ Comprehensive near-mine exploration programme in place
■■ South Deep – organisational restructuring, revised business plan and the loss of investor
confidence
Related risks
■■ A sustained and significantly lower gold price and currency exchange rate volatility
■■ Non-delivery of Damang Reinvestment and Gruyere projects
■■ Replacing Resources and Reserves at international operations
SUSTAINABLE DEVELOPMENT GOALS
Decent Work and
Economic Growth
Industry, Innovation
and Infrastructure
KEY STAKEHOLDERS –
SHAREHOLDERS
AND INVESTORS
EMPLOYEES
GOVERNMENTS
The Gold Fields Integrated Annual Report 2018
41
Page heading continued
Secondary page heading continued
for the year ended 31 December 2018
Mining is a long-term investment.
As a business, we need to balance
investing for future growth of our
portfolio whilst generating cash
today. Through our investment
projects and strategic decisions, we
aim to sustainably extend the life of
Gold Fields’ overall portfolio at lower
costs than today.
■■ Managing our portfolio
■■ Life extension through near-mine exploration
■■ Mineral Resources and Reserves Summary
p42
p50
p52
COPY TO BE SUPPLIEDPortfolio management 42
The Gold Fields Integrated Annual Report 2018
Managing our portfolio
Quality portfolio of growth
projects
By employing an active portfolio
management approach, Gold Fields
has built an attractive global portfolio
of assets in Australia, Ghana and
Peru, which have met or exceeded
production and cost guidance over
the past few years. At a mine level,
this international portfolio of assets,
excluding South Deep, generated net
cash flow of US$457m (excluding
project capital) during 2018 (2017:
US$$485m), enabling the Group to
report a FCF margin, which takes
into account the outflow from South
Deep, of 16% (2017: 16%). This is in
line with our targeted 15% margin at
a US$1,200/oz planning gold price.
South Deep is the only asset within
the Company that has failed to meet
expectations, with 2018 proving to
be an extremely difficult year for the
mine. After falling behind plan in the
first half of 2018, management
announced a material restructuring
on 14 August 2018, with the aim of
consolidating mining activity to
increase focus and to match the
cost structure with the level of
production. The immediate target
is to get the mine to break even at
the current level of production
(around 190koz per annum) and
minimise the cash burn. Once this
has been achieved, the focus will
be on improving productivity off the
restructured cost base and overhead
structure, to bring the mine to
profitability. For more details on the
South Deep restructuring and
outlook, refer to p46.
All assets in our portfolio are subject
to the Group’s annual strategic
planning process, which assesses
how to best maximise cash-flow,
life-of-mine, and margin. The results
of this analysis are combined with the
Group’s capital profile and the current
economic environment as inputs into
our annual business planning. This
process supported the continued
investment in the Group’s three key
growth and exploration projects
(Damang, Gruyere and Salares Norte)
during 2018:
■■ US$125m in project capital was
incurred on the Damang
Reinvestment project in 2018, after
having spent US$115m in 2017
(p48)
■■ Gold Fields spent A$218m
(US$163m) on the Gruyere project
in 2018, compared with A$182m
(US$140m) in 2017. Included in
this number is A$153m (US$115m)
in project capital, A$39m (US$29m)
in capitalised interest, A$18m
(US$14m) in operational support
costs and A$8m (US$6m) in
exploration expenditure. During
2018, the joint venture (JV) partners
announced that there had been a
delay to the project timeline (first
gold now expected in Q2 2019),
together with a 17% increase in the
final forecast capital cost estimate
to A$621m (US$480m) (p44)
■■ US$64m on further feasibility study
work was spent on the Salares
Norte exploration venture in Chile
during 2018. The feasibility study
was completed and approved by
the Board in February 2019 (p47).
Introduction
Gold Fields manages its business
with the aim of continually improving
the quality of its portfolio and,
ultimately, its cash-flow generation.
From a strategic standpoint, the
overriding goal is to generate a free
cash-flow (FCF) margin of at least
15% at a US$1,200/oz gold price,
which is an adjustment from the
previous 15% FCF margin at
US$1,300/oz. To achieve this, there
is strict focus on reducing AIC and,
as a result, increasing the FCF/oz.
However, it is also imperative that the
generation of cash-flow is
sustainable. Therefore, in addition to
lowering Group AIC, strategic
decisions aim to extend the life of the
Group’s asset base and the overall
portfolio.
To improve the quality of our portfolio,
management employs the following
elements in the portfolio management
process:
■■ Acquiring or developing lower-cost
(than Group average), longer-life
assets
■■ Disposing of higher-cost, shorter-
life assets that management
believes can be better served by a
company that has more time and
resources to commit to them
■■ Extending the life of current assets
through near-mine brownfields
exploration
■■ Focusing on in-country
opportunities to leverage off our
existing footprint, infrastructure
and skill set and capitalise on the
experience we have gained from
operating in these jurisdictions
Recent developments that improved
the quality of our portfolio include the
sale of Darlot in 2017, the acquisition
of a 45% stake in the Asanko gold
mine (AGM), and the continued
investment into the Damang and
Gruyere projects. Once Damang and
Gruyere are operating at steady state,
expected in 2020, Group AIC is
expected to approach US$900/oz.
The Gold Fields Integrated Annual Report 2018
43
There were no further material
developments regarding the Far
Southeast (FSE) project in the
Philippines during 2018. The project
is held by Far Southeast Gold
Resources (FSGRI) in which Gold
Fields has a 40% interest, with an
option to increase its stake to 60%,
and is adjacent to an existing mining
operation with established
infrastructure. Lepanto Consolidated
Mining of the Philippines holds the
remaining 60% interest and manages
the existing mining operation. Gold
Fields impaired its investment in Far
Southeast to US$92m in 2018, as
determined by an evaluation of
Lepanto's market value on the
Philippine Stock Exchange.
Gold Fields’ holding costs in FSE
have been reduced to approximately
US$120,000/month, related mainly
to staff and administrative costs,
managing existing drill core,
environmental monitoring, community
engagement work, as well as
activities to support the permitting
process.
While the Group spent more than it
generated in 2017 and 2018, the
cash-outflow over the period (US$2m
in 2017 and US$132m in 2018) was
lower than anticipated, underpinned
by favourable hedge positions and a
gold price received that was higher
than planning prices. Despite the
cash-outflows over the past two
years, Gold Fields remains committed
to its strategy of generating cash to
reduce our debt, pay dividends to
shareholders and share the value we
create with employees, governments
and host communities.
Gold Fields also has a portfolio of
minority investments through a range
of transactions conducted over the
previous few years. During 2018, the
Arctic Platinum Project in Finland
was sold for US$40m, while we also
bought a 9.9% stake in Toronto-listed
Asanko Gold for US$17.6m. Asanko
is our JV partner in AGM in Ghana. In
2016 Gold Fields injected its royalty
portfolio into Toronto-listed Maverix
Metals in exchange for a 32%
interest. As other gold mining
companies, including Newmont Gold,
have followed our move this interest
has been diluted to approximately
20%. A summary of our investments
is in the table below.
Shareholding
Market Value
(Dec 2018 –
US$m)
Expanding our global
footprint
2018 was the second year of Gold
Fields’ reinvestment phase, in which
we incurred US$290m (excluding
Asanko) in project capital (2017:
US$217m). All project capital spent
was in countries that Gold Fields
currently operates in, allowing us to
leverage our knowledge of the
business environment. Importantly,
management only invested in projects
that it believes have relatively short
pay-back periods and attractive
returns.
Gold Fields also increased its
footprint in Ghana during 2018 by
acquiring a 50% stake of Asanko
Gold’s 90% interest in AGM for an
upfront payment of US$165m (the
government of Ghana holds the
remaining 10%). A deferred payment
of US$20m will be paid to Asanko
Gold, should it achieve key
milestones in the development of
the Esaase project at AGM before
31 December 2019. In addition, Gold
Fields purchased a 9.9% equity stake
in Toronto Stock Exchange-listed
Asanko Gold for US$17.6m.
Gold Fields’ material investments
Investment
Gold Road Resources
Asanko Gold
Cardinal Resources
Red 5
Maverix Metals
Hummingbird Resources
Rusoro Mining
Lefroy Exploration
Magmatic Resources
Orsu Metals
Other
10%
9.9%
11.3%¹
19.9%
19.9%²
6%
25.7%
18.2%
15%
7.2%
37
14
11
16
75
6
13
2
1
1
15
191
Total value (including warrants)
¹ Gold Fields owns an additional 38.2m options valued at US$6.0m
² Gold Fields owns an additional 10m warrant options valued at US$9.3m. Adding these
warrants results in a holding of 20.5% in Maverix on a diluted basis
PORTFOLIO MANAGEMENT 44
The Gold Fields Integrated Annual Report 2018
Managing our portfolio continued
Gruyere
In November 2016, Gold Fields
entered into a 50/50 JV with
Australian exploration company,
Gold Road Resources, for the
development and operation of the
Gruyere gold project in the Yamarna
belt of Western Australia, one of the
country’s largest undeveloped gold
regions. The JV comprises the
Gruyere gold deposit and 144km2 of
exploration tenements.
Gruyere is a large shear hosted
porphyry gold deposit, with
combined total Mineral Resources
of 6.6Moz and Mineral Reserves of
3.8Moz, 50% of which is attributable
to Gold Fields. It is located 200km
east of Laverton in Western Australia,
where our Granny Smith mine is
located.
Early work at Gruyere began in
December 2016, with Gold Fields
taking over management of the
project on 1 February 2017. After
remaining largely on track and within
budget in 2017, the JV partners
announced a slight delay to project
completion and an increase in the
final forecast capital (FFC) cost
estimate during 2018. First gold is
now expected to be poured during
the June 2019 quarter (previously the
March 2019 quarter) whilst the FFC
estimate is A$621m (US$480m), a
17% increase from the previous FCC
estimate of A$532m (US$411m).
Included in the new FFC estimate are
scope changes and force majeure
costs (due to extreme rainfall events
during 2018) of A$30m (US$22m)
and a contingency of A$30m
(US$22m).
During 2018, Gold Fields spent
project capital of A$153m (US$115m)
on Gruyere, bringing our cumulative
capital expenditure as at end-
December 2018 to A$246m
(US$187m). In addition, capitalised
interest of A$39m (US$29m),
operational support costs of
A$18m (US$14m) and exploration
expenditure of A$8m (US$6m) was
incurred during the year, bringing
Gold Fields’ total spending on
Gruyere for 2018 to A$218m
(US$163m). The remaining project
capital of A$129m (US$97m) (100%
basis) has been budgeted for 2019,
the majority of which is expected to
be spent during the first half of the
year.
In a project update released on
6 December 2018, the JV partners
announced an increase in average
annual production to 300koz from
270koz, driven by the purchase of
larger semi-autogenous grinding
(SAG) and ball mills which increased
processing throughput to 8.2Mtpa
from 7.5Mtpa. In addition, there
was an increase in average All-in
Sustaining Costs (AISC) over
life-of-mine to A$1,025/oz
(US$738/oz) from A$945/oz
(US$709/oz) to reflect industry cost
inflation since the 2016 feasibility
study.
As at end December 2018,
engineering was largely complete,
while construction progress was
86.7% with all major equipment and
materials for effective construction
already delivered to site. During 2018,
civil works on the TSF and installation
of the tailings decant recovery
pipelines were completed and the
power station was fully
commissioned. All civil and concrete
works for the process plant were
completed by year-end, with
structural steel, plate steel and tanks
nearing completion. Post year-end,
the remaining work focused on
piping, electrical and instrumentation
and delivery of plant systems for
commissioning of the plant during
Q1 2019.
Downer EDI, which was awarded a
five-year mining services contract in
Q4 2017, began mobilising its
workforce during Q1 2018 to begin
construction of the mining
infrastructure. Mining activities
commenced in November 2018,
focusing on completing the pre-strip
and second stage run-of-mine (ROM)
pad development. First ore was in Q1
2019, with mining rates expected to
peak at 60Mtpa (100% basis) in 2023
and average 32Mtpa over life-of-
mine.
The tenements comprising the
Gruyere project fall within the area of
the Yilka and Sullivan Edwards native
title determination. The Yilka People
and the Sullivan Edwards families are
the traditional owners of the land,
with many of their members residing
in the nearby Cosmo Newberry
community. The JV partners have a
Native Title Agreement in place with
the Yilka People and the Cosmo
Newberry Aboriginal Corporation,
which provides consent to mine.
The partners also offer financial,
contracting and employment benefits
to the community, and have facilitated
comprehensive processes for the
management of Aboriginal heritage
within the project area. A number
of projects have been implemented
with the Yilka People, including the
provision of cultural awareness
training for Gruyere employees and
contractors. Key contractors at
Gruyere have also been required to
identify and pursue employment and
contracting opportunities with the
Yilka People to expand the scope
of local participation.
First gold is forecast for Q2 2019
with production guidance of 118koz
(100% basis) for the year at an AIC
of A$3,178/oz (US$2,384/oz) (Gold
Fields’ share only). A relatively quick
ramp up is anticipated, with steady
state run-rate expected by year-end.
The Gold Fields Integrated Annual Report 2018
45
Construction
activity at the
Gruyere
project
PORTFOLIO MANAGEMENT 46
The Gold Fields Integrated Annual Report 2018
Managing our portfolio continued
South Deep
The key challenge for Gold Fields
since taking ownership of South
Deep in 2006 has been transitioning
the mine from a conventional mining
mindset to mining with a safe,
modern, bulk, mechanised approach.
Despite numerous interventions over
the years to address the mine’s
underperformance – including
optimising the mining method,
extensive training and skills
development, changing shift and
work configurations, and outsourcing
functions – the mine has continued to
underperform and make losses.
South Deep got off to a difficult start
in 2018, with production in Q1 2018
impacted by a slow build-up after
the seasonal holidays, two labour
restructuring processes that took
place at the end of 2017 and Q1
2018 respectively, and a change
in the underground working shift
arrangements implemented to
increase face time and productivity.
In addition, low mobile equipment
reliability, the intersection of active
geological features (faults and dykes)
in the high-grade corridor 3 and poor
ground conditions in the western
sections of the mine (composites)
slowed production rates. South Deep
only produced 1,485kg (48koz) in Q1
2018.
Production was further impacted by
a Department of Mineral Resources
(DMR) related safety stoppage during
April. As a result of these factors,
guidance for the mine was
downgraded to 7,600kg (244koz)
with the release of our Q1 2018
production update on 25 April,
down from the original guidance of
10,000kg (321koz).
Despite the two restructuring
processes, South Deep continued to
face a number of organisational and
structural challenges that directly
impacted performance during Q2
2018, with production during the
quarter only marginally higher than
Q1 2018 at 1,518kg (49koz). As a
result, on 14 August 2018, Gold
Fields announced a further material
restructuring of the mine. The aim of
the restructuring was to consolidate
mining activity to increase focus, and
to match the cost structure with the
level of production. This included:
■■ Temporarily suspending mining
activities at one of the mining areas
(87 Level) and redeploying these
mining crews into a different
corridor (4W)
■■ Servicing the eastern part of the
mine from the Twin Shafts and
restaffing the South Shaft
operations to a single shift per day.
South Shaft now only facilitates the
provision of water and backfill
reticulation, water pumping and
ventilation services to the full
mining operation
■■ Reducing growth capital
expenditure for an 18-month
period up until end 2019 to reduce
the cash burn. New mine
development has outperformed
the plan with 918m achieved
during 2018 against 749m
planned, which allowed us some
flexibility to reduce this spending
in the near term
As part of the restructuring, Gold
Fields served a section 189 notice on
its trade unions, the National Union
of Mineworkers (NUM) and UASA
(formerly named the United
Association of South Africa), on
14 August 2018, which is when
the legislated minimum 60-day
consultation period commenced.
It was envisaged that an estimated
1,100 permanent employees and
460 contractors could be impacted
through the retrenchment process.
The consultation period ended on
31 October and Gold Fields formally
served the NUM and UASA with a list
of employees that were to be given
notice of termination as per the
section 189 process. Severance
letters were issued to 1,082 affected
employees, which prompted the
majority union (NUM) to serve Gold
Fields a 48-hour notice of its intention
to commence a strike.
The strike started on 2 November
and Gold Fields was granted an
urgent court interdict on 3 November
which prevented striking employees
from intimidating other employees
and blocking access to the mine.
Despite this, the strike, which was
orchestrated by a core group of
about 200 NUM members and
supporters of the South Deep branch
leadership, was immediately
characterised by intimidation and
violence, prompting management to
instruct all employees to remain clear
of the mine property for the duration
of the industrial action. The “no work,
no pay” policy applied to all NUM
members given that this union had
declared the strike.
On 20 November, Gold Fields tabled
an improved retrenchment offer in an
attempt to break the deadlock and
end the strike. The union rejected the
offer twice before the regional office
of the NUM suspended the strike
on 13 December and signed a
settlement agreement five days later.
Through the restructuring, a total of
1,092 permanent employees exited
the business, of which 904 were
retrenched, 183 opted for voluntary
separation packages and five
resigned.
In the wake of the restructuring,
which has seen us remove R800m
(US$56m) from the mine’s cost base
and our employee workforce fall by
38% to just under 2,500 and the
number of contractors from 2,294 to
around 1,500, we are in a position to
significantly reduce South Deep’s
pre-restructuring cash-burn during
2019. We expect to build-up
gradually to a sustainable production
profile from this restructured position.
Guidance of 6,000kg (193,000oz)
has been provided for 2019 at an AIC
of R610,000/kg (US$1,394/oz).
The key enablers for sustainable
improvements at South Deep are
expected to be:
■■ Improved organisational design
with the right people in the right
roles and a flat management
structure
■■ Rigorous performance
management linked to line of sight
performance
■■ Improved stakeholder
management, including
government, trade unions and
surrounding communities
■■ Reliable fixed infrastructure
■■ Accelerated backfill placement
■■ Improved fleet availability and
utilisation
Once this has been achieved,
the focus will be on improving
productivity off the restructured cost
base and overhead structure, to bring
the mine to profitability.
The Gold Fields Integrated Annual Report 2018
47
Salares Norte
The Salares Norte project is 100%
Gold Fields-owned and is focused
on a gold-silver deposit in the
Atacama region of northern Chile.
Mineralisation is contained within a
high-sulphidation epithermal system,
offering high-grade oxides. The
project is at an elevation of 4,200m
– 4,900m above sea level.
The Salares Norte feasibility study
was completed in late 2018 and peer
reviewed in January 2019. Gold
Fields spent US$51m on feasibility
study work and drilling in 2018 (2017:
US$53m) with a further US$13m
spent on district exploration. The
findings of the feasibility study were
presented to the Gold Fields Board
in February 2019.
Key findings of the feasibility study
include the following potential
operational parameters for Salares
Norte:
■■ Initial 11.5-year life-of-mine
■■ Annual throughput of 2Mt
■■ Life-of-mine production of 3.2Moz
of gold and 26.7Moz of silver
■■ Average Annual production of
450koz gold equivalent for the first
seven years of the project at AISC
of US$465/Au-eq oz
■■ Average annual production of
355koz gold equivalent for the first
10 years of the project at AISC of
US$545/Au-eq oz
■■ Project construction capital of
US$834m (in current terms)
■■ Internal rate of return of 25% at a
US$1,300/oz gold price with a
2.2-year payback period from
commencement of production
The project envisages open pit
operations with a processing plant
that includes both Carbon-in-Pulp
(CIP) and Merrill Crowe processes
due to the high silver content of the
ore. The processing plant could
deliver recovery rates of around 92%
for gold. In addition, filtered and dry
stack tailings will be used for safety,
water scarcity and environmental
reasons. Contractor mining is likely to
be used for Salares Norte.
In December 2018, Gold Fields
updated the project's Mineral
Resources and Reserves, reporting a
total gold Mineral Resource of 3.9Mt
of gold and 44Moz of silver. More
pertinently, a maiden Mineral Reserve
has been declared with 3.5Moz of
gold and 39Moz of silver. The
gold-equivalent Mineral Reserve
is 4.0Moz.
A final go-ahead decision on the
project hinges on the outcome of the
Environmental Impact Assessment
(EIA) for the project, which was
accepted by the regulator for review
on 11 July 2018. The EIA entails
baseline research comprising
hydrogeological, flora, fauna and
biodiversity studies, including
research and recommendations on
the protection of the endangered
short-tailed Chinchilla in the area.
Gold Fields anticipates the EIA review
to take 18 – 24 months to complete.
This time period will give Gold Fields
sufficient time to consider funding
options for the anticipated US$834m
in project capital. Depending on the
timing of the EIA decision,
construction could commence in
late 2020 with first gold production
in 2023.
A pre-development budget of
US$81m has been estimated to
advance detailed engineering,
permits and early works during 2019
and the first half of 2020, while we
await the outcomes of the EIA and
the permit to proceed. As at
December 2018, Salares Norte
controlled about 84,000ha of mineral
rights concession in the Salares
Norte district and has carried out
extensive district-wide exploration
within a 20km radius of Salares
Norte. It will continue investing in
exploration in the area, with the
objective to discover and deliver ore
from these targets to the production
pipeline from 2025 onwards.
Land easement for 30 years was
granted on 30 May 2016 and water
rights for the project were obtained
on 29 December 2016, with the
regulator granting Gold Fields access
to 114.27l/second (more than double
what the project is planning to use).
Energy demand for the project is
estimated at 12MW, with an
independent power producer (IPP)
operating an onsite 14MW diesel
power station to meet this
requirement. A staged approach
to incorporating renewable energy
sources is also being considered.
While there are no indigenous claims
or community presence on the
concession or the dedicated access
routes, Salares Norte has embarked
on an extensive engagement
programme with three indigenous
communities in the wider vicinity of
the project. The principal area of
social influence of the project – and,
potentially, for recruiting labour – is
the Diego de Almagro municipality,
approximately 125km away. A
long-term framework agreement
has been signed with the municipality
and its communities to govern the
relationship. Furthermore, work
protocols have been signed for the
gathering of information and citizen
participation process with two of the
three communities, with the process
ongoing for the third community.
Exploration
drilling at
Salares
Norte
PORTFOLIO MANAGEMENT
48
The Gold Fields Integrated Annual Report 2018
Managing our portfolio continued
Damang Reinvestment
The Damang Reinvestment project is
set to extend its life-of-mine to 2025.
It entails a major cutback to both the
eastern and western walls of the
Damang Pit Cutback (DPCB). When
complete, the cutback is expected
to have a total depth of 341m,
comprising a 265m pre-strip to
access the base of the existing pit.
This will be followed by a deepening
of the pit by a further 76m which will
ultimately provide access to the full
Damang ore body, including the
high-grade Tarkwa Phyllite lithology.
The project is on track to begin
sourcing higher-grade ore from the
Saddle area of the DPCB towards the
middle of 2019, and then reach the
bottom of the main pit in early 2020.
The Amoanda pit has been the main
ore source during the cutback of the
Damang pit, with positive grade
reconciliation from Amoanda being
the main reason for the out-
performance of the project during
2017 and 2018.
The reinvestment project, which
commenced on 23 December 2016,
got off to a strong start in 2017 and
continued to track well against plan
during 2018. Total tonnes mined
were 45.9Mt in 2018 (2017: 39.7Mt)
versus the project schedule of
41.5Mt, driven by a good
performance by both contractors
(BCM and E&P). Gold produced of
180.8koz (2017: 143.6koz) was 13%
higher than guidance of 160koz,
underpinned by the high-grade
material from the Amoanda pit,
while AIC of US$1,506/oz
(2017: US$1,827/oz) was below
guidance of US$1,520/oz. Project
capital of US$125m was spent during
2018, on top of the US$115m spent
during 2017.
To ensure sufficient tailings capacity
for Damang’s extended life-of-mine,
a new tailings storage facility, the Far
East Tailings Storage Facility (FETSF),
with a tailings capacity of 44Mt, was
commissioned in Q4 2017, on time
and within budget. Decommissioning
of the older East Tailings Storage
Facility (ETSF) commenced during Q1
2018, and was completed during
2018, with all tailings now being
deposited on the FETSF.
A sharp increase in Damang’s
production from 181koz to 218koz
has been guided for 2019, with AIC
sharply reduced to US$100/oz (2018:
US$1,506/oz). Project capital for
2019 is expected to be US$69m.
Damang pit
cutback
The Gold Fields Integrated Annual Report 2018
49
Asanko
In March 2018, Gold Fields
announced that it had entered into
an agreement to form a 50:50
incorporated JV with Asanko Gold.
In the deal, which went unconditional
on 31 July 2018, Gold Fields
acquired a 50% stake in Asanko Gold
Ghana’s 90% interest in AGM,
associated properties and exploration
rights in Ghana (the Ghana
government holds the remaining
10% through the legislated free carry
arrangements). Our 45% stake in
AGM is equity accounted as Asanko
Gold remains the operator of the
mine.
The acquisition was in line with the
Group’s growth strategy of focusing
on jurisdictions in which it already has
an established footprint and can
leverage off its infrastructure and
skills set. A JV committee has been
established which oversees the
running of the JV.
AGM is a multi-deposit complex,
with two main deposits, Nkran and
Esaase, and nine known satellite
deposits. The mine is situated 100km
north of Gold Fields’ Tarkwa and
Damang operations along the
prospective and under-explored
Asankrangwa greenstone belt in
Ghana.
Gold Fields’ purchase consideration
included an upfront payment of
US$165m and a deferred payment
of US$20m by 31 December 2019,
or earlier if agreed development
milestones at the Esaase project are
reached. In addition, Gold Fields
purchased 9.9% of Asanko Gold’s
issued equity on the Toronto Stock
Exchange through a private
placement, for a total consideration
of US$17.6m.
During 2018, AGM produced
223koz (100% basis) at an AISC
of US$1,072/oz and an AIC of
US$1,183/oz. Gold Fields’ share of
the production for the period August
– December 2018 was 44,500oz.
Guidance for 2019 is production of
225koz – 245koz (100% basis) at an
AISC of US$1,090/oz – US$1,110/oz
and AIC of US$1,130/oz –
US$1,150/oz. The guidance includes
oxide material from the Esaase
deposit, which will be trucked about
30km to the processing plant. A
feasibility study has been completed
and the JV partners are currently
deciding on the long-term
development and associated ore
transportation plans for the Esaase
project in H2 2019.
An updated Mineral Reserve will also
be released on completion of the
feasibility study. Development capital
of US$18m is planned for AGM
during 2019, mainly on the
development of Esaase.
AGM’s sizeable resource base, with
a life-of-mine of at least 15 years at
2018 production rates, is accretive
to the Gold Fields portfolio, with the
potential for further discoveries on the
large, relatively unexplored, tenement
package of about 540km2, held by
Asanko Gold.
View of
Asanko
plant area
PORTFOLIO MANAGEMENT 50
The Gold Fields Integrated Annual Report 2018
Life extension through near-mine exploration
Near-mine exploration plays a key
role in Gold Fields’ strategy as we
believe it offers one of the lowest-
cost opportunities for growing
cash-flow, particularly on a per share
basis. The value in near-mine
exploration lies in:
■■ Knowledge of the ore bodies,
which enables the exploration
teams to identify extensions or
additional ore sources housed
within the mining tenement
■■ Operational capabilities, including
Gold Fields’ proven ability to
develop and mine orogenic ore
bodies, which are prevalent at our
Australian mines
■■ Regional and operational
infrastructure, including existing
processing plants and regional
management teams
In addition to adding to Gold Fields’
Mineral Resource and Mineral
Reserve base, near-mine exploration:
■■ Extends the life of the Group’s
existing mines
■■ Ensures each region can continue
to leverage its infrastructure
■■ Provides a robust platform for
regional growth
In 2018, Gold Fields spent US$80m
on near-mine exploration (2017:
US$87m), which supported a total of
507,497 metres of near-mine drilling
(2017: 754,669 metres). The majority
of this spending – US$63m (A$85m)
(2017: US$75m (A$99m)) – was
incurred at our Australian mines.
US$14m was spent in Ghana, which
is slightly higher than the US$11m
spent in the region in 2017, amid a
renewed focus on extending the life
of the Tarkwa mine.
For 2019, Gold Fields has budgeted
US$63m for near-mine exploration of
which US$57m (A$76m) will be at our
Australian operations.
Following is a breakdown of brownfields exploration at our operations
during 2018:
Agnew
Mineral Reserve reconciliation
(Gold - Moz)
St Ives
Mineral Reserve reconciliation
Agnew
Mineral Reserve reconciliation
Gold – Moz
Gold – Moz
4
5
.
0
5
2
.
0
7
2
.
0
6
5
.
0
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
7
5
.
1
0
4
.
0
7
5
.
0
4
7
.
1
Dec
2017
Mined
depletion
Growth
Dec
2018
0.6
0.5
0.4
0.3
0.2
0.1
0.0
Dec
2017
Mined
depletion
Growth
Dec
2018
St Ives
At St Ives, total exploration
spend in 2018 was A$36m
(US$27m). A total of 124,355
metres were drilled during the
year, resulting in a 2% increase
in Mineral Resources to 3.9Moz.
Taking into account depletion
of 367koz during 2018, Mineral
Reserves at St Ives increased
11% from 1.57Moz to 1.74Moz.
Key outcomes:
■■ 11% increase in Mineral
Reserves
■■ 2% increase in Mineral
Resources
■■ Extensions of invincible
complex both laterally and
at depth
In June 2018, Gold Fields
entered into a farm-in joint
venture agreement with Lefroy
Exploration. The prospective
tenements being farmed into
comprise 372km2 of the Lefroy
Gold project adjacent to our
St Ives mine. Gold Fields can
earn up to a 70% interest in the
tenements by spending up to
A$25m (US$19m) on exploration
activities over a six-year period,
and will manage all exploration
activities during this time. During
2018, Gold Fields spent A$36m
(US$26m) on exploration
activities on the tenements
(including Lefroy Gold).
Agnew
A$23m (US$17m) was spent on
exploration at Agnew during
2018 and a total of 122,082
metres were drilled during the
year. Encouragingly, Agnew
replaced Reserves after depletion
again during 2018. Mineral
Reserves increased 4% to
0.56Moz while Mineral
Resources increased 5% to
2.05Moz.
The exploration effort of the past
few years is starting to show
success, with Waroonga North
growing laterally and at depth.
Redeemer North is building up
to a 0.5Moz – 1.0Moz deposit,
whilst we are seeing further
extensions of Genesis and
Sheba at New Holland.
Key outcomes:
■■ 4% increase in Mineral
Reserves
■■ 5% increase in Mineral
Resources
■■ Redeemer North growing into
a sizeable deposit
■■ Waroonga North growing
laterally and at depth
■■ Further extensions at New
Holland
The Gold Fields Integrated Annual Report 2018
51
Granny Smith
Mineral Reserve reconciliation
Tarkwa
Mineral Reserve reconciliation
Damang
Mineral Reserve reconciliation
Gold – Moz
Gold – Moz
Gold – Moz
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
3
7
.
1
9
1
.
0
1
2
.
0
2
6
.
1
Dec
2016
Mined
depletion
Growth
Dec
2018
Damang
While the focus at Damang
was on implementing the
reinvestment plan, Gold Fields
also spent US$5.4m on near-
mine exploration during 2018.
A total of 33,857 metres were
drilled. Despite the exploration
effort, Mineral Resources and
Mineral Reserves decreased
marginally to 6.0Moz (-1%) and
1.6Moz (-6%), respectively.
Key outcomes:
■■ Focus on further extension of
Amoanda to the North
■■ Unconstrained case with 2Moz
potential
■■ 6% decrease in Mineral
Reserves
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
1
9
.
5
4
5
.
0
1
4
.
0
8
7
.
5
Dec
2017
Mined
depletion
Growth
Dec
2018
Tarkwa
With the transition to contractor
mining in early 2018, the Tarkwa
mine has devoted more time
and resources on life-of-mine
extension exploration activities.
Gold Fields spent US$9m
in near-mine exploration at
Tarkwa during the year, drilling
48,429 metres. Tarkwa’s Mineral
Reserves decreased by 128koz
(2%), but Mineral Resources
increased by 1.3Moz (15%).
As at 31 December 2018,
Tarkwa’s Mineral Resources and
Mineral Reserves were 9.9Moz
and 5.8Moz, respectively.
Key outcomes:
■■ 2% decrease in Mineral
Reserves
■■ 15% increase in Mineral
Resources
■■ Early target identification for
life-of-mine extension
2.5
2.0
1.5
1.0
0.5
0.0
0
2
.
2
0
3
.
0
4
3
.
0
5
2
.
2
Dec
2017
Mined
depletion
Growth
Dec
2018
Granny Smith
Total exploration spend at
Granny Smith was A$23m
(US$17m) in 2018. A total of
165,456 metres were drilled
during the year, which resulted in
a 43koz (2%) increase in Mineral
Reserves and a 762koz (11%)
increase in Mineral Resources at
the Wallaby Underground mine.
Exploration has generated
additional advanced targets
in-mine and regionally, which will
be targeted as additional sources
of mill feed in the near future.
As at 31 December 2018,
Granny Smith’s Mineral
Resources and Mineral Reserves
were 7.84Moz and 2.25Moz,
respectively. Gold Fields has
grown the Granny Smith
Resource by 4.5Moz and the
Reserve by over 2.5Moz since
acquiring the asset in 2013. The
immediate focus is on converting
Mineral Resources to Reserves.
Key outcomes:
■■ 2% increase in Mineral
Reserves
■■ 11% increase in Mineral
Resources
■■ Advanced targets identified as
additional mill feed sources
PORTFOLIO MANAGEMENT
52
The Gold Fields Integrated Annual Report 2018
Mineral Resources and Reserves Summary
The summary of Gold Fields’ Mineral
Resources and Mineral Reserves in
this section should be read in
conjunction with the Gold Fields
Mineral Resource and Mineral
Reserve Supplement (the
Supplement), which sets out
important and detailed information on
the Company’s Mineral Resources
and Mineral Reserves as at
31 December 2018. The Supplement
can be found on our website on
www.goldfields.com.
Gold Fields’ December 2018
Resource and Reserve position
reflects the Company’s growth
strategy of consistent funding of
brownfield exploration, reinvestment
in the sustainability and growth of
the operations, embedded Business
Improvement programmes and
advancement of selected growth
projects.
Gold Fields continued with its
strategy of focusing on brownfields
(near-mine) exploration at our
Australian and Ghanaian mines to
extend the life of our mines. During
2018, our Australian mines again
replaced more Reserves than they
mined. The emphasis at all mine sites
is to strive for Mineral Reserve growth
that replaces annual depletion,
improves cash-flow and costs per
ounce, and maintains momentum
on discovery. The sites are also
encouraged to convert Resources to
Reserves to maintain business plan
production profiles and cash-flow
projections.
Our strategy also seeks to assess
emerging in-country opportunities to
leverage off our existing infrastructure
and resources and boost the medium
to longer-term life of our portfolio. The
successful feasibility study at Salares
Norte, leading to the conversion of
the Mineral Resource to a maiden
4Moz gold equivalent Mineral
Reserve, is positive evidence of this
strategy.
Key projects supporting the
Company’s Resource and Reserve
development strategy continued
during 2018. Apart from the progress
at Salares Norte, these projects
include the operating model
restructuring at South Deep,
delivering on key milestones of
the Damang Reinvestment plan,
significant life extension at Cerro
Corona and advancing the Gruyere
project construction schedule to a
point where full mining of the pit looks
set to commence in Q2 2019.
Metal prices and exchange
rates
This declaration is based on a Mineral
Resource gold price of US$1,400/oz
(A$1,850/oz; R600,000/kg) and a
Mineral Reserve price of US$1,200/oz
(A$1,600/oz; R525,000/kg). The gold
price of US$1,200/oz used for the
Mineral Reserve declaration is within
the guidelines of the United States
(US) Securities and Exchange
Commission (SEC). The copper price
used for the Mineral Resource
estimation is US$3.20/lb and for
the Mineral Reserve estimation
US$2.50/lb, increasing to US$2.80/lb
from 2020 onward, with the
respective prices used for silver being
$20/oz and $17.50/oz. The following
exchange rates were used for Mineral
Reserve planning purposes:
R/US$13.6, R/A$10.2, and
A$/US$0.75.
Corporate governance
For reporting Mineral Resources
and Mineral Reserves, Gold Fields’
over-arching principle is to ensure
transparency, materiality and
competency in reporting, compliance
with public regulatory codes and
internal standards, and to inform
all stakeholders of relevant material
issues regarding the status of the
Group’s fundamental asset base.
The Group’s December 2018 Mineral
Resource and Mineral Reserve
estimate is in accordance with the
requirements of the South African
Code for the Reporting of Exploration
Results, Mineral Resources and
Mineral Reserves (the SAMREC
Code, 2016), the South African Code
for the Reporting of Mineral Asset
Valuation (2016 SAMVAL Code) and
Industry Guide 7 for reporting on the
US SEC. The SAMREC Code covers
public reporting and information that
is prepared for investors or potential
investors and their advisers, as well
as other interested parties.
Reporting is also in accordance with
section 12 of the Johannesburg
Stock Exchange Limited (JSE)
Listings Requirements and takes
cognisance of other relevant
international codes, where
geographically applicable. The
definitions contained in the SAMREC
Code are either identical to, or not
materially different from, equivalent
international codes.
The December 2018 declaration aims
to report on information that is rated
as important for disclosure on Mineral
Resources and Mineral Reserves and
it reflects a level of detail required for
completeness, transparency and
materiality in reporting. Gold Fields’
Mineral Resources and Mineral
Reserves are reviewed on an ongoing
basis by an internal Competent
Person team administered by
Corporate Technical Services and
cyclically, at least every three years,
by external and independent experts,
details of which are published in the
Supplement. The Competent
Persons designated in terms of
SAMREC, who assume responsibility
for the reporting of Mineral Resources
and Mineral Reserves, are the
respective operation-based geology,
technical and relevant project
managers. The relevant Competent
Persons are listed in the Supplement
to this Integrated Annual Report.
The Gold Fields Integrated Annual Report 2018
53
Managed gold Mineral Resources1, 2
Managed gold Mineral Reserves1
6.2
6.2
0.0
1.1
1.3
16.0
17.1
14.8
16.0
Americas
region
Australia
region
West Africa
region
(10.2)
South Africa
region
0.0
(Moz)
Growth
projects2
19.8
19.8
3.3
1.9
5.2
0.3
6.2
6.4
7.6
7.4
Americas
region
Australia
region
(0.2)
West Africa
region
(4.6)
South Africa
region
66.3
56.2
37.4
32.8
Moz
(5)
0
5
10
15
20
25
30
35
40
■ Variance
■ Dec 2017
■ Dec 2018
Moz
(10)
0
10
20
30
40
50
60
70
■ Variance
■ Dec 2017
■ Dec 2018
1 Salares Norte and Gruyere are included in the Americas and Australia regions respectively
2 The Growth Project Resource now reflects the FSE project only
Headline numbers
At 31 December 2018, Gold Fields’
mines and projects had total
attributable gold and copper Mineral
Resources of 96.6Moz (December
2017: 103.8Moz) and 4,816Mlbs
(December 2017: 4,881Mlbs),
respectively. Attributable gold and
copper Mineral Reserves are
48.1Moz (December 2017: 49Moz)
and 691Mlbs (December 2017:
764Mlbs) respectively, net of mined
depletion. Total gold-equivalent
Mineral Resources are 108.22Moz
(December 2017: 115.60Moz) and
Mineral Reserves 50.26Moz (2017:
50.80Moz). South Deep currently
accounts for 47% of gold-equivalent
Mineral Resources and 59% of
Mineral Reserves.
The adjacent charts depict the
Group’s comparative 2018 and 2017
managed gold Mineral Resource and
Mineral Reserve ounces split by
region and growth projects. Detailed
year-on-year reconciliations are set
out in the Supplement.
Construction
at Gruyere
gold mine
PORTFOLIO MANAGEMENT
54
The Gold Fields Integrated Annual Report 2018
Mineral Resource and Reserve summary continued
Gold Fields Mineral Resource statement as at 31 December 20181
Headline numbers
Managed Mineral Resources
Attributable ounces
Gold only
Total regions2
Total projects3
Total Au only
Cu and Ag as Au equiv.
Cerro Corona Cu as Au Equiv.5
FSE Cu as Au Equiv.6
Salares Norte Ag as Au Equiv.7
Grand total as Au equivalents
Operational summary*
Gold
Australia region
Agnew
Granny Smith
St Ives
Gruyere
Total Australia region
South African region
South Deep2
Total South Africa region
Americas region
Cerro Corona
Salares Norte
Total Americas region
West Africa region
Damang
Tarkwa – open pits
Tarkwa – surface stocks
Tarkwa – total
Total West Africa region
Gold only
GFL Operations – Total Gold
31 Dec 2018
31 Dec 2017
Tonnes
(Mt)
Grade
(g/t)
1,002.1
891.7
1,893.8
2.96
0.69
1.89
Au
(Moz)
95.5
19.8
115.3
Tonnes
(Mt)
Grade
(g/t)
1,010.8
891.7
1,902.5
3.18
0.69
2.01
Individual metals detailed in table below
1.9
22.7
0.6
140.5
31 Dec
2018
31 Dec
2017
Gold (Moz)
88.7
7.9
96.6
1.9
9.1
0.6
108.2
95.8
7.9
103.8
2.1
9.1
0.7
115.6
Au
(Moz)
103.3
19.8
123.1
2.1
22.7
0.7
148.6
Managed Mineral Resources
Attributable ounces
31 Dec 2018
Grade
(g/t)
Tonnes
(Mt)
31 Dec 2017
31 Dec
2018
31 Dec
2017
Gold
(koz)
Tonnes
(Mt)
Grade
(g/t)
Gold
(koz)
Resource (koz)
12.3
46.2
33.2
77.7
169.5
328.0
328.0
107.7
25.6
133.2
85.1
213.2
73.1
286.3
371.4
5.16
5.27
3.68
1.32
3.14
5.32
5.32
0.65
4.76
1.44
2.21
1.30
0.46
1.08
1.34
2,049
7,837
3,928
3,305
17,120
56,152
56,152
2,263
3,910
6,173
6,058
8,891
1,091
9,983
16,040
11.5
38.6
34.4
75.4
160.0
381.6
381.6
115.0
23.3
138.3
86.2
172.5
72.2
244.8
331.0
5.25
5.70
3.47
1.29
3.11
5.41
5.41
0.69
4.89
1.40
2.21
1.37
0.46
1.10
1.39
1,946
7,075
3,847
3,134
16,002
66,318
66,318
2,542
3,663
6,205
6,119
7,583
1,074
8,658
14,776
2,049
7,837
3,928
3,305
17,120
50,955
50,955
2,252
3,910
6,162
5,452
8,002
982
8,984
14,436
1,946
7,075
3,847
3,134
16,002
60,350
60,350
2,530
3,663
6,193
5,507
6,825
967
7,792
13,299
1,002.1
2.96
95,485
1,010.8
3.18
103,301
88,674
95,843
Managed Mineral Resources
Attributable ounces
Americas region
Copper
Tonnes Grade
(% Cu)
(Mt)
Copper
(Mlbs)
Tonnes Grade
(% Cu)
(Mt)
Copper
(Mlbs)
Attributable Copper
(Mlbs)
Cerro Corona Cu only
102.4
0.37
848
107.9
0.39
917
844
913
Managed Mineral Resources
Attributable ounces
Americas region
Silver
Tonnes
(Mt)
Grade
(g/t)
Ag
(koz)
Tonnes
(Mt)
Grade
(g/t)
Ag
(koz)
Attributable Silver
(koz)
Salares Norte Ag only
25.6
53.13
43,664
23.3
66.03
49,458
43,664
49,458
* Including Gruyere and Salares Norte
The Gold Fields Integrated Annual Report 2018
55
Gold Fields Mineral Reserve statement as at 31 December 20181
Headline numbers
Managed Mineral Reserves
Attributable ounces
31 Dec 2018
31 Dec 2017
Tonnes
(Mt)
Grade
(g/t)
589.1
2.74
Au
(Moz)
51.9
Tonnes
(Mt)
Grade
(g/t)
613.1
2.70
Individual metals detailed in table below
1.6
0.6
54.0
31 Dec
2018
31 Dec
2017
Gold (Moz)
48.1
1.6
0.6
50.3
49.0
1.8
—
50.8
Au
(Moz)
53.1
1.8
—
54.9
Managed Mineral Reserves
Attributable ounces
31 Dec 2018
Grade
(g/t)
Tonnes
(Mt)
31 Dec 2017
Gold
(koz)
Tonnes
(Mt)
Grade
(g/t)
3.7
12.6
19.1
47.1
82.5
182.3
182.3
79.9
21.1
101.0
28.9
121.4
73.1
194.5
223.4
4.72
5.54
2.84
1.25
2.43
5.60
5.60
0.68
5.13
1.61
1.74
1.20
0.46
0.92
1.03
560
2,246
1,741
1,894
6,441
3.0
12.4
19.4
48.7
83.6
32,808
32,808
216.8
216.8
5.54
5.51
2.51
1.20
2.30
5.36
5.36
1,737
3,476
5,213
1,616
4,687
1,091
5,778
7,394
86.2
0.70
86.2
0.70
31.9
122.5
72.2
194.7
226.6
1.68
1.23
0.46
0.94
1.05
Gold
(koz)
541
2,203
1,568
1,871
6,183
37,388
37,388
1,937
1,937
1,728
4,831
1,074
5,906
7,634
589.1
2.74
51,856
613.1
2.70
53,143
31 Dec
2018
31 Dec
2017
Reserves (koz)
560
2,246
1,741
1,894
6,441
29,772
29,772
1,729
3,476
5,205
1,454
4,218
982
5,200
6,654
—
48,072
541
2,203
1,568
1,871
6,183
34,023
34,023
1,928
—
1,928
1,555
4,348
967
5,315
6,871
—
49,005
Gold only
Total regions2, 3
Cu and Ag as Au equiv.
Cerro Corona Cu as Au Equiv.8
Salares Norte Ag as Au Equiv.9
Grand total as Au equivalents
Operational summary*
Gold
Australia region
Agnew
Granny Smith
St Ives
Gruyere
Total Australia region
South African region
South Deep4
Total South Africa region
Americas region
Cerro Corona
Salares Norte
Total Americas region
West Africa region
Damang
Tarkwa – open pits
Tarkwa – surface stocks
Tarkwa – Total
Total West Africa region
Gold only
Total Gold
(PERU) – Cerro Corona
Copper
Copper (Cu) only
Tonnes Grade
(% Cu)
(Mt)
Copper
(Mlbs)
Tonnes Grade
(% Cu)
(Mt)
79.9
0.39
695
86.2
0.40
Copper
(Mlbs)
767
Attributable Copper
(Mlbs)
691
764
Managed Mineral Reserves
Attributable ounces
(CHILE) – Salares Norte
Silver
Tonnes Grade
(g/t Ag)
(Mt)
Silver
(koz)
Tonnes Grade
(g/t Ag)
(Mt)
Silver
(koz)
Attributable Silver
(koz)
Managed Mineral Reserves
Attributable ounces
Silver (Ag) only
—
1 Managed unless otherwise stated; Gruyere only reports the 50% share attributable to Gold Fields; Measured and Indicated Mineral Resources are reported
39,263
39,263
57.94
21.1
—
—
—
inclusive of those Mineral Resources modified to produce Mineral Reserves
2 Gruyere and Salares Norte are included in the Australia and Americas regions, respectively
3 Projects – FSE Inferred Resource only
4 Reserve grade is inclusive of in section development tonnes, which cannot be separated from the ore flow, however, capital waste is excluded as there is a
potential to separate it in the future
5 Metal prices used for equiv oz: US$1,400/oz Au and US$3.2/lb Cu. The metallurgical recovery rate (Au=69% and Cu=87%) and selling cost, have not been
applied to the conversion. Calculation: CuMlbs*Cu Price (848*3.2)/Au price (1,400) = 1.9 Au equivalent Moz
6 Metal prices used for equiv oz: US$1,400/oz Au and US$3.2/lb Cu. The selling cost, including refining and royalties, plus metallurgical recovery rate (Au=82%
and Cu=93%) and selling cost have not been applied to the conversion. Calculation: CuMlbs*Cu Price (9,921*3.2)/Au price (1,400) = 22.7 Au equivalent Moz
7 Metal prices used for equiv oz: US$1,400/oz Au and US$20/oz Ag. Equivalency is based on the price ratio only so the metallurgical recoveries (92% Au, 68%
Ag) and selling costs (US$16.76/oz Au, US$1.41/oz Ag), including refining and royalties (1%), have not been included. (43.7*20/1400 = 0.6Moz Au equivalent)
8 Metal prices used for equiv oz: US$1,200/oz Au and US$2.8/lb Cu. The selling cost, including refining and royalties, plus metallurgical recovery rate (Au=69%
and Cu=87%), has not been applied to the conversion. Calculation: CuMlbs*Cu Price (695*2.8)/Au price (1,200) = 1.6 Au equivalent Moz
9 Metal prices used for equiv oz: US$1,200/oz Au and US$17.5/oz Ag. The selling cost, including refining and royalties, plus metallurgical recovery rate
(Au=93% and Cu=68%), has not been applied to the conversion. Calculation: Agkoz*Ag Price (39.3*17.5)/Au price/oz (1,200) = 0.6 Au equivalent Moz
PORTFOLIO MANAGEMENT 56
The Gold Fields Integrated Annual Report 2018
Attributable gold-eq
2.04Moz
KEY MEASUREMENTS – SAFE OPERATIONAL DELIVERY
2018
Status
2017
2016
2015
2014
Total recordable injury frequency rate
(TRIFR) (rate per million)
Fatalities
Gold production – attributable (koz)
Revenue (US$m)
All-in Sustaining Cost (US$/oz)
All-in Cost (US$/oz)
Average gold price received (US$/oz)
Cost of sales before depreciation
and amortisation (US$m)
Headline earnings/(loss)
Net cash-inflow/(outflow)
Free cash-flow (FCF) margin (%)
1.83
1
2,036
2,578
981
1,173
1,252
¢
¢
¢
¢
¢
¢
¢
1,375
61
¢
¢
(132) ¢
¢
16
2.42
2.27
3.40
4.04
3
2,160
2,811
955
1,088
1,255
1
2,146
2,750
980
1,006
1,241
3
2,159
2,545
1,007
1,026
1,140
3
2,219
2,869
1,053
1,087
1,249
1,404
1,388
1,456
1,678
210
(2)
16
204
294
17
(33)
123
8
27
235
13
¢ 2018 performance improvement on 2017 or achievement in line with strategy
¢ 2018 performance drop against 2017
¢ 2018 performance on par with 2017
STRATEGIC GOALS
1 Consecutive six years of exceeding or meeting cost and
production guidance at our Australian, Ghanaian and Peruvian
operations
RESULTS AND IMPACTS
Strategic
responses
– Safe
operational
delivery
Key
initiatives
Related
risks
■■ Eliminate fatalities and serious injuries
■■ Deliver South Deep, Gruyere and Damang
■■ Reduce energy and water costs and secure supply
■■ Ensure we have the right people in the right roles doing the right things
■■ Implementation of organisational restructuring programme at South Deep
■■ Construction and engineering schedules at Damang and Gruyere closely monitored
■■ Establishment of a Group Safety Leadership Forum
■■ All operations certified to OHSAS 18001 health and safety standard
■■ Succession planning and talent review systems in place at mine, regional and Group level
■■ Implementation of the integrated energy and carbon management strategy
■■ Non-achievement of South Deep restructuring plan
■■ Non-delivery of Damang Reinvestment and Gruyere projects
■■ Safety and health of our employees
■■ Attraction and retention of skills
■■ Cost of energy and security of power supply
■■ Increased geotechnical risk underground associated with mining at depth and evolving
mining operations
SUSTAINABLE DEVELOPMENT GOALS
Good Health
and Wellbeing
Decent Work
and Economic
Growth
Industry,
Innovation
and
Infrastructure
Responsible
Consumption
and Production
Climate
Action
KEY STAKEHOLDERS – EMPLOYEES
COMMUNITIES
GOVERNMENTS
SHAREHOLDERS
AND INVESTORS
The Gold Fields Integrated Annual Report 2018
57
In order to deliver sustainable financial
returns, meet our strategic promises
and achieve our aim of zero harm, we
need the right people in the right
roles with the right skills, ongoing
investments in technology, and
an innovative approach to energy
cost management.
■■ Introduction
■■ Operational performance overview
■■ Safety
■■ Health
■■ Energy cost management
■■ Innovation and technology
■■ A fit-for-purpose workforce
p58
p58
p63
p67
p70
p74
p76
COPY TO BE SUPPLIEDPage heading continuedSecondary page heading continuedfor the year ended 31 December 2018Safe operational delivery 58
The Gold Fields Integrated Annual Report 2018
Operational performance
Introduction
During 2018, Gold Fields continued
to expand its international footprint
with the acquisition of a 45% stake
in the Asanko gold mine (AGM) in
Ghana. The portfolio is geographically
diversified, boasting eight mines in
four regions, only one of which is in
South Africa. In addition, investment
into the Gruyere project in Australia
continued as planned during 2018.
The project remains on track to start
contributing to the production profile
during Q2 2019, and is set to reach
steady state production towards the
end of 2019 or early 2020. At name
plate, Gold Fields’ share of Gruyere’s
production is expected to be 150koz,
bringing production in the Australian
region to approximately 1Moz.
In another positive development, the
feasibility study on Salares Norte in
Group operational performance
Chile was completed during the year,
showing an internal rate of return of
25% at a US$1,300/oz gold price
(for more details refer to p47). While
there is more work to be done on the
project, Salares Norte offers longer-
term optionality to the production
base.
The Group’s broader strategy is
focused on reducing Group All-in
costs (AIC) and improving cash
generation. Our international
operations (excluding South Africa)
lived up to this mandate during 2018,
with each mine meeting or exceeding
production and cost guidance for the
year. The solid operational and cost
performances of our Australian,
Ghanaian and Peruvian assets
contributed to strong overall Group
results and enabled Gold Fields to
contain the net debt increase during
a year in which US$295m in project
capital was incurred.
Some of the key investments made
during 2018 in order to bolster the
longevity of our portfolio include:
■■ A$153m (US$115m) (2017:
A$182m (US$139m)) spent on
the Gruyere project in Western
Australia (p44)
■■ US$125m (2017: US$115m)
in project capital spent at our
Damang mine in Ghana (p48)
■■ Near-mine exploration spending of
A$85m (US$63m) (2017: A$95m
(US$72m)) in Australia (including
Gruyere) and US$14m (2017:
US$11m) in Ghana (p50)
■■ US$51m (2017: US$53m) spent on
feasibility study work and further
exploration drilling at Salares Norte
in Chile (p47)
2019 Guidance
Prod
(Moz)
AIC
(US$/oz)
2018 Actual
Prod
(Moz)
AIC
(US$/oz)
2018 Guidance
Prod
(Moz)
AIC
(US$/oz)
2017 Actual
Prod
(Moz)
AIC
(US$/oz)
Group
2.13
-2.18
1,075
-1,095
2.04
1,173
2.08
-2.10
1,190
-1,210
2.16
1,088
In 2018, Gold Fields’ attributable
gold-equivalent production
decreased by 6% to 2.036Moz,
driven predominantly by the
underperformance at South Deep,
which was compounded by a
six-week strike on the mine during
Q4 2018. The Group performance
takes into account attributable
production from AGM from 1 August
2018, with the acquisition having
gone unconditional on 31 July 2018.
The Group achieved AIC of
US$1,173/oz in 2018, which was
lower than guidance (US$1,190/oz
– US$1,210/oz), but higher than the
US$1,088/oz recorded in 2017. The
year-on-year increase in AIC was
driven by an increase in non-
sustaining capital and Salares Norte
expenditure, coupled with the lower
level of gold sold. Group All-in
Sustaining Costs (AISC) increased to
US$981/oz from US$955/oz in 2017,
and were lower than the guidance of
US$990/oz – US$1,010/oz.
During 2018, Gold Fields maintained
the capital expenditure (capex) levels
deemed critical to sustain the
portfolio. With the focus on extending
the life of our ore bodies at all of our
international mines, Group capex
remained elevated at US$814m
(excluding Asanko) (2017: US$834m).
This comprised sustaining capital of
US$524m and project capital of
US$290m.
Regional capex highlights included:
■■ Australia: Our Australian mines
decreased capex to A$373m
(US$279m) in 2018 from A$423m
(US$324m) in 2017, with near-mine
exploration spending amounting to
A$85m (US$63m) in 2018 (2017:
A$95m (US$72m))
■■ South America: At Cerro Corona,
capex decreased slightly to
US$33m in 2018 from US$34m
in 2017
■■ West Africa: Capex declined to
US$290m (excluding Asanko)
(2017: US$313m), mainly as a
result of lower expenditure on the
mining fleet at Tarkwa. Project
capital at Damang increased to
US$125m in 2018 from US$115m
in 2017
■■ South Africa: Capex at South
Deep decreased to US$58m in
2018 from US$82m in 2017, with
project capital remaining stable at
US$18m (2017: US$17m)
The Gold Fields Integrated Annual Report 2018
59
South Africa region
2019 Guidance
2018 Actual
2018 Guidance
2017 Actual
Prod
AIC
Prod
AIC
Prod
AIC
Prod
AIC
South Deep
6,000kg
(193koz)
R610,000/kg
(US$1,394/oz)
4,885kg
(157koz)
R854,049/kg
(US$2,012/oz)
10,000kg
(321koz)
R540,000/kg
(US$1,400/oz)
8,748kg
(281koz)
R600,109/kg
(US$1,400/oz)
As a result of the above factors,
production for the full year decreased
by 44% to 4,885kg (157koz) in 2018
from 8,748kg (281koz) in 2017. Cost
of sales before amortisation and
depreciation reduced by 12% to
R3.586m (US$272m) in 2018 from
R4.062m (US$305m) in 2017, mainly
due to lower production exacerbated
by the industrial action in 2018’s last
quarter.
Capital expenditure decreased by
30% to R770m (US$58m) in 2018
from R1,099m (US$82m) in 2017.
Sustaining capital expenditure
decreased by 40% to R528m
(US$40m) in 2018 from R874m
(US$66m) in 2017, underpinned by
lower spend on fleet and surface
infrastructure. Non-sustaining capital
expenditure increased by 8% to
R242m (US$18m) in 2018 (2017:
R225m (US$17m)) due to higher
expenditure on new mine
development infrastructure and an
increase in development metres.
AISC increased by 41% to
R807,688/kg (US$1,903/oz) from
R574,406/kg (US$1,340/oz) in 2017,
while AIC increased by 42% to
R854,049/kg (US$2,012/oz)
compared with R600,109/kg
(US$1,400/oz) in 2017. The increase
in AISC and AIC was driven mainly
by the lower amount of gold sold.
South Deep recorded a net cash-
outflow of US$141m in 2018.
South Deep got off to a tough start
in 2018, with production in Q1 2018
impacted by a slow build up after
the seasonal holidays, two labour
restructuring processes that took
place at the end of 2017 and during
Q1 2018, and a change in the
underground working shift
arrangements implemented to
increase productivity. In addition,
low mobile equipment reliability, the
intersection of active geological
features (faults and dykes) in the
high-grade corridor 3 and poor
ground conditions in the composites
slowed production rates. The mine
only produced 1,485kg (48koz) in
Q1 2018.
Production was further impacted by
a Department of Mineral Resources
enforced safety stoppage during
April. As a result of these factors,
guidance for the mine was
downgraded to 7,600kg (244koz)
with the release of our Q1 2018
production update on 25 April, from
the original guidance of 10,000kg
(321koz).
Despite the two restructuring
processes, South Deep continued to
face a number of organisational and
structural challenges that directly
impacted performance during Q2
2018, with production during the
quarter only marginally higher than
Q1 2018 at 1,518kg (49koz). As a
result, on 14 August 2018, Gold
Fields announced a material
restructuring of the mine, which
entailed reducing the workforce by
30%. This announcement impacted
the productivity of the mine (Q3
production: 1,539kg (50koz)), and
ultimately resulted in the majority
union (the National Union of
Mineworkers (NUM)) embarking on
industrial action on 2 November
2018. The strike lasted 45 days and
ended on 13 December. Five days
later the NUM signed a settlement
agreement.
46
For details of the South Deep
restructuring, see p46.
Twin shafts,
South Deep
SAFE OPERATIONAL DELIVERY
60
The Gold Fields Integrated Annual Report 2018
Operational performance continued
Americas region
Production overview
Gold-only production
Copper production
Gold-equivalent production
AIC/AISC
AIC/AISC eq-oz
Cerro Corona in Peru had another
solid year in 2018, with total
managed gold-equivalent production
of 314koz (2017: 307koz). This was
12% higher than the 280koz gold-
equivalent production guidance for
the year, underpinned by the higher
copper price ratio and increased
copper production due to a increased
copper head grade.
Cost of sales before amortisation and
depreciation increased marginally to
US$155m in 2018 from US$154m in
2017. The higher cost was due to
Australia region
2019
Guidance
2018
Actual
2018
Guidance
2017
Actual
koz
kt
koz
US$/oz
US$/oz
153
28
291
566
802
150
32
314
282
699
145
30
280
585
810
159
30
307
203
673
higher mining expenditure resulting
from increased tonnes mined in
2018, partially offset by a US$6m
credit to costs of concentrate
inventory in 2018 (2017: charge to
costs of US$3m). Capital expenditure
decreased by 3% to US$33m in
2018 from US$34m in 2017, due to
lower expenditure on the tailings dam
and waste storage facilities.
US$699/oz in 2018 (2017:
US$673/oz). The increase in AISC
and AIC was primarily due to lower
by-product credits, lower gold sold
and higher cost of sales before
amortisation and depreciation. Both
AISC and AIC comfortably beat
guidance for the year of US$585/oz
and, on a gold equivalent basis,
US$810/oz.
AISC and AIC were US$282/oz in
2018 compared with US$203/oz in
2017 and, on a gold equivalent basis,
The region reported net cash-inflow
of US$114m during 2018 (2017:
US$117m).
2019 Guidance
2018 Actual
2018 Guidance
2017 Actual
Prod
(koz)
AIC
Prod
(koz)
AIC
Prod
(koz)
AIC
Prod
(koz)
AIC
St Ives
Agnew
Granny Smith
Darlot
Gruyere (50%)
Region
362
221
260
Sold
59
902
A$1,342/oz
(US$1,007/oz)
A$1,538/oz
(US$1,154/oz)
A$1,370/oz
(US$1,028/oz)
Sold
A$3,178/oz
(US$2,384/oz)
A$1,518/oz
(US$1,139/oz)
367
239
280
Sold
A$1,207/oz
(US$902/oz)
A$1,374/oz
(US$1,026/oz)
A$1,239/oz
(US$925/oz)
Sold
360
230
275
Sold
A$1,250/oz
(US$1,000/oz)
A$1,310/oz
(US$1,050/oz)
A$1,240/oz
(US$990/oz)
Sold
364
241
290
39
A$1,198/oz
(US$916/oz)
A$1,276/oz
(US$977/oz)
A$1,171/oz
(US$896/oz)
A$1,874/oz
(US$1,432/oz)
886
A$1,262/oz
(US$943/oz)
865
A$1,263/oz
(US$1,010/oz)
935
A$1,239/oz
(US$948/oz)
Gold Fields’ Australian operations
delivered another strong operational
performance in 2018. Gold
production of 886koz at an AIC of
A$1,262/oz (US$943/oz) was better
than full year guidance of 865koz at
an AIC of A$1,263/oz (US$1,010/oz),
with Granny Smith, St Ives and
Agnew all outperforming both
production and cost guidance.
Production was 5% lower than
in 2017 (935koz), which included
production from Darlot during three
quarters in 2018. Stripping out
Darlot’s production from 2017
(895koz excluding Darlot), production
would have decreased by only 1%
in 2018.
expenditure decreased to A$373m
(US$279m) from A$423m
(US$324m), including near-mine
exploration expenditure which was
slightly lower at A$85m (US$63m) in
2018 compared to A$95m (US$72m)
in 2017.
Cost of sales before amortisation and
depreciation increased by 13% to
A$690m (US$516m) in 2018, from
A$613m (US$469m) in 2017. Capital
The Australia region reported a net
cash-inflow of US$194m in 2018
(2017: US$188m).
The Gold Fields Integrated Annual Report 2018
61
Mine performances
St Ives continued its transition from
being predominantly open pit to a
predominantly underground operation
during 2018. By end-December,
79koz had been mined from the
Invincible underground mine. The
Invincible open pit will be phased out
during 2019, at which point Invincible
Underground, Hamlet Underground
and the Neptune open pit will be the
main sources of ore.
Production increased marginally to
367koz in 2018 from 364koz in 2017,
and came in slightly ahead of
guidance of 360koz. Cost of sales
before amortisation and depreciation
increased by 20% to A$249m
(US$186m) in 2018 from A$207m
(US$159m) in 2017. The increase in
costs was primarily due to increased
underground mining cost of A$18m
(US$14m) and a lower gold inventory
credit to costs of A$20m (US$15m)
in 2018, compared with A$38m
(US$29m) in 2017.
Capital expenditure decreased by
17% to A$170m (US$127m) in 2018
from A$204m (US$156m) in 2017,
due to lower expenditure at the open
pits following completion of activities
at Invincible open pit stage 5, partially
offset by increased capital
development at the new Invincible
underground mine.
AISC and AIC increased by 1% to
A$1,207/oz (US$902/oz) in 2018
from A$1,198/oz (US$916/oz)
in 2017, and were 3% below full
year guidance of A$1,250/oz
(US$1,000/oz).
At Agnew, gold production
decreased by 1% to 239koz in 2018
from 241koz in 2017, but was 4%
higher than guidance of 230koz. Cost
of sales before amortisation and
depreciation increased by 10% to
A$216m (US$162m) in 2018 from
A$197m (US$150m) in 2017. The
cost increase was driven by higher
mining costs at Waroonga as a result
of increased ground support and
paste fill, as well as an increase in
gold-in-process charge to costs of
A$2m (US$2m) in 2018, compared
with a credit to costs of A$6m
(US$5m) in 2017.
In an important development for
Agnew, Gold Fields made the
decision to invest in a new camp
(we previously rented rooms from
BHP Billiton in Leinster) and a hybrid
power station on site. The first
buildings for the camp arrived on
15 December 2018 and construction
commenced in January 2019.
Commissioning of 450 rooms and the
central facilities is targeted for May
2019. The new power station will
entail a combination of gas, solar
and wind power generation.
AISC and AIC increased by 8%
to A$1,374/oz (A$1,026/oz) in 2018
from A$1,276/oz (US$977/oz) in 2017,
and were 5% above full year guidance
of A$1,310/oz (US$1,050/oz).
Commissioning of the gas and solar
components is scheduled for June
2019, with wind generation to follow
in Q1 2020. Capital expenditure rose
by 2% to A$98m (US$73m) in 2018,
up from A$96m (US$74m) in 2017.
In addition to the camp and power
station, Agnew put out a tender for
an aviation contract, which was
awarded on 30 January 2019.
At Granny Smith, production
decreased by 3% to 280koz in 2018
from 290koz in 2017, but was 2%
ahead of guidance for the year of
275koz. Cost of sales before
amortisation and depreciation
increased by 7% to A$225m
(US$168m) in 2018 from A$210m
(US$160m) in 2017, mainly due to
increased mining costs on the back
of increased ore tonnes mined from
the deeper zones, and an 18%
increase in ore development in 2018.
Capital expenditure was 8% lower
in 2018 at A$105m (US$79m)
(2017: A$114m (US$87m)), due to
completion of the VR8 ventilation
shaft in 2017.
AISC and AIC increased by 6% to
A$1,239/oz (US$925/oz) in 2018
from A$1,171/oz (US$896/oz) in
2017, mainly due to higher cost
of sales before amortisation and
depreciation and lower gold sold,
partially offset by lower capital
expenditure.
The mine generated net cash-flow of
A$131m (US$98m) in 2018.
A review of the three mines’
brownfields exploration activities in
2018 is detailed on p50 – 51.
SAFE OPERATIONAL DELIVERY 62
The Gold Fields Integrated Annual Report 2018
Operational performance continued
West Africa region
2019 Guidance
Prod
(koz)
AIC
(US$/oz)
2018 Actual
Prod
(koz)
AIC
(US$/oz)
2018 Guidance
Prod
(koz)
AIC
(US$/oz)
2017 Actual
Prod
(koz)
AIC
(US$/oz)
Tarkwa
Damang
Asanko1
Region
514
218
1083
838
949
1,100
1,1403
1,102
525
181
45
751
951
1,506
1,175
1,0982
520
160
–
680
970
1,520
–
1,100
566
144
–
710
940
1,827
–
1,119
¹ 45% stake, equity-accounted
² Excludes Asanko contribution
3 Gold Fields’ 45% share of the mid-point of Asanko 2019 guidance
The Ghanaian region is the second
biggest producer in the Gold Fields
portfolio, contributing 34% to Group
attributable production in 2018. Gold
Fields has a shareholding of 90% in
both Tarkwa and Damang, with the
Ghanaian government holding the
remaining 10%. During 2018, Gold
fields acquired 45% of AGM in
August, with our joint venture (JV)
partner Asanko Gold holding 45%,
and the Ghanaian government the
remaining 10%.
The Damang Reinvestment project,
which commenced at the end of
2016, continued to track well against
plan during 2018. Total tonnes mined
were 45.9Mt against the project
schedule of 41.5Mt, while gold
produced was 181koz, compared
with guidance of 160koz. There will
be a material increase in Damang’s
production in 2019, with guidance
of 218koz. Encouragingly, AISC of
US$813/oz and AIC of US$1,506/oz
both came in below guidance of
US$860/oz and US$1,520/oz,
respectively. For an update on the
Damang Reinvestment plan, see p48.
Despite total managed gold
production for the region falling 1%
to 706koz (excluding Asanko) in
2018, it came in 4% ahead of
guidance of 680koz, driven by the
better-than-expected performance at
Damang. Total managed production
(including AGM’s contribution from
1 August 2018) increased to 751koz
from 710koz in 2017.
Cost of sales before amortisation and
depreciation for the region increased
by 1% to US$433m in 2018 from
US$428m in 2017. Capital
expenditure decreased to US$295m
in 2018 from US$313m in 2017,
mainly due to lower expenditure on
the mining fleet at Tarkwa. AIC for the
region was US$1,098/oz, in line with
guidance of US$1,100/oz and 2%
lower than the US$1,119/oz reported
in 2017.
Despite the significant amount of
project capital incurred at Damang,
the region as a whole reported a net
cash-inflow of US$25m during 2018.
Mine performances
During 2018, Tarkwa transitioned
from owner mining to contractor
mining in an attempt to address cost
inflation in the region. The mining
contract was demarcated into two
zones and awarded to two local
contractors: BCM for Zone 1 (Pepe,
Mantraim, Atuabo and Teberebe pits)
and E&P for Zone 2 (Akontansi and
Kottraverchy pits). BCM started
operations in Zone 1 in March, with
E&P following in April. As part of the
tender process, the contractors
undertook to purchase the fleet,
which largely covered the
retrenchment costs incurred
through the process.
Tarkwa’s production decreased 7%
to 525koz in 2018 (2017: 566koz).
However, production beat guidance
of 520koz, a notable achievement
given the transition to contractor
mining. The mine’s Carbon-in-Leach
plant throughput increased slightly to
13.8Mt (2017: 13.5Mt), while its yield
decreased to 1.18g/t (2017:1.30g/t)
due to the lower head grade mined
and processed.
Cost of sales before amortisation and
depreciation increased by 1% to
US$309m in 2018 from US$306m
in 2017 due to a gold-in-process
charge to cost, partially offset by
lower mining costs. Capital
expenditure decreased 14% to
US$156m in 2018 from US$181m
in 2017. AISC and AIC increased
by 1% to US$951/oz in 2018 from
US$940/oz in 2017, and were
comfortably below guidance of
US$970/oz.
Tarkwa generated a net cash-inflow
of US$92m during 2018.
Damang produced 181koz in 2018,
which is 26% higher than the 144koz
produced in 2017 and 13% higher
than guidance of 160koz. While the
reinvestment plan entailed an
increase in both operating costs and
capital expenditure, both AISC
(US$813/oz) and AIC (US$1,506/oz)
came in below guidance. This is a
result of the strict cost controls and
better than expected efficiencies from
the contractors used.
Cost of sales before amortisation
and depreciation increased by 2% to
US$124m in 2018 from US$122m in
2017. This increase was mainly due
to higher operating tonnes mined,
partially offset by a gold-in-process
credit to costs of US$19m in 2018.
Capital expenditure was US$139m in
2018 from US$132m in 2017.
Damang recorded a net cash-outflow
of US$67m in 2018, underpinned by
the US$125m in project capital spent
during the year.
Asanko produced 223koz in 2018,
of which 45koz was attributable to
Gold Fields for the five months from
August to December. AISC was
US$1,069/oz in 2018 and AIC
US$1,175/oz for the five-month
period.
Safety
The Gold Fields Integrated Annual Report 2018
63
Introduction
Gold Fields’ commitment to health
and safety as our foremost priority
reflects the importance of
safeguarding and promoting the
welfare of our employees and
contractors, maintaining operational
continuity and protecting our
reputation. During 2018, we
remained focused on improving our
performance and entrenching the
requirement to operate safely into all
daily activities. Gold Fields’ target is
the elimination of all fatalities and
serious injuries, and our ultimate goal
is zero harm.
Safety forms a fundamental
component of performance
management, and our annual
performance bonus – for executives,
managers and the wider workforce
– contains a substantial safety
component. Furthermore, maintaining
safe and healthy working conditions
is a key compliance issue.
Our first and most important value,
“If we cannot mine safely, we will not
mine”, remains critical to the
sustainability of our organisation. As
specified in our Occupational Health
and Safety Policy Statement,
updated in 2018, we endeavour to
continually improve our occupational
health and safety performance by
providing a workplace that is
conducive to health and safety.
Our Group Safety Leadership Forum,
formed in 2017, is overseeing the
development of the Group-wide
safety strategy to further improve
our safety performance, continually
embed safety as a line management
responsibility, and share learnings
and good practices. The strategy
comprises three pillars, namely
systems and processes, safety
leadership, and safe behaviour, that
will direct our safety programmes.
The most important programmes
focus on the elimination of material
unwanted events (MUEs), fatalities
and serious potential incidents. MUEs
in health and safety, environment and
community have been identified and
prioritised in each region. Gold Fields’
MUEs in the safety and health area
are dropped objects, light vehicles,
working at heights, hazardous
materials, particularly cyanide,
confined spaces, slope stability,
explosives and fires, tailings facility
incidents, community activism and
protests, and surface water pollution.
During 2017 Gold Fields adopted
the International Council on Mining
& Metals’ (ICMM) critical control
management of MUEs, which entails
listing MUEs, identifying controls that
could prevent these incidents from
occurring and reducing the impact
should they occur, selecting those
controls that are critical or essential
and, finally, bedding down the
controls and verifying their
effectiveness. Our regions make
quarterly presentations to the Board’s
Safety, Health and Sustainable
Development (SHSD) Committee on
safety-related MUEs and their critical
controls. Health, environmental and
community MUEs and their critical
controls are presented every alternate
quarter. Critical controls will be
independently verified during 2019.
All of the Group’s operations are
certified to the OHSAS 18001
international health and safety
management system standard. There
are opportunities for us to improve
these systems, including upgrading
to the ISO 45001 standard over the
next two years and increasing use of
leading indicators.
Our safety leadership forum has
initiated the development and roll
out of a “Courageous Leadership”
programme to align all employees to
a common set of beliefs and attitudes
to health and safety. This programme
will be cascaded to every employee
in the organisation. As a supporting
and complementary initiative to the
leadership programme, the “Vital
Behaviours” programmes will be
implemented in all regions, based
on the success of this initiative at our
Australian operations where we have
seen fundamental shifts in the safety
culture.
We are very conscious of major
incidents in the mining industry
globally and consequently implement
mitigating actions to prevent the risk
of similar incidents at our operations.
We have benefited from greater
sharing of information about fatal
incidents between ICMM members.
The work on safety is integral to our
operational discipline and is accepted
as the foundation for improved
operational performance. As such,
pursuing safety and productivity at
the same time are mutually
reinforcing.
For details of our safety and health
management approach, policies
and guidelines go to www.
goldfields.com/sustainability.php.
SAFE OPERATIONAL DELIVERY
64
The Gold Fields Integrated Annual Report 2018
Safety continued
Group safety performance
Our generally improved safety
performance during 2018 was
overshadowed by a fatal incident in
which our South Deep colleague,
Ananias Mosololi, a load haul dump
operator, was trapped between the
door and the cabin of the dumper
he was operating underground.
Following the incident, and the
subsequent joint investigations with
the regulator, South Deep conducted
a comprehensive analysis to
understand what took place and
prevent its recurrence.
In a non-mining-related incident, a
member of the Community Security
Task Force, Francis Yeboah, drowned
in a settling pond at our Tarkwa mine
in Ghana. The local police did not
suspect foul play in the incident.
During 2018, Gold Fields’ safety
performance improved significantly
from 2017. We recorded one fatal
injury compared with three fatal
injuries in 2017. Our TRIFR for the
year improved by 18% to 1.83
injuries per million hours worked in
2018 from 2.24 in 2017, exceeding
our target of a 12% reduction. The
TRIFR among employees in 2018
was 1.94 (2017: 2.69) and among
contractors 1.75 (2017: 2.16). The
number of recordable injuries fell
to 99 in 2018 (2017: 138). Of the
99 injuries, 43 were employee injuries
(2017: 75) and 56 were contractor
injuries (2017: 63).
The elimination of serious injuries,
along with fatalities, is viewed as
a safety priority. During 2018 we
finalised the definition of a serious
injury (see in table footnote below).
Gold Fields recorded 18 serious
injuries in 2018 (2017: 28), which
will serve as a baseline for future
performance.
To further entrench safe behaviour in
our workplace, the Board broadened
the 2019 safety performance
scorecards by adding a number of
leading indicators to the current
lagging indicators to measure safety
performance. These leading
indicators are the number of safety
engagements (introduced to the LTIP
in 2018), improved reporting of
near-miss incidents, and timeous
close-out of corrective actions on
serious potential incidents. The
elimination of serious injuries will be
included in scorecards for the first
time in 2019.
Group safety performance
TRIFR1
Fatalities2
Serious injuries3
Lost time injuries (LTIs)4
Restricted work injuries (RWI)5
Medically treated injuries (MTI)6
Total recordable injuries
2018
2017
2016
2015
2014
1.83
1
17
34
45
19
99
2.42
3
26
52
60
23
138
2.27
1
19
39
59
25
124
3.40
4
27
68
68
35
174
4.04
3
–
75
84
38
200
1 TRIFR = (fatalities + LTIs + RWIs + MTIs) x 1,000,000/number of hours worked.
2 In both 2017 and 2018 we also recorded non-occupational fatalities at our mines. In 2017, a member of the protection services team at South
Deep was shot and killed during a robbery at the mine, while in 2018 a member of Tarkwa mine’s Community Security Task Force drowned in a
settling pond on the mine
3 A Serious injury is an injury that incurs 14 or more days lost and results in:
– A fracture of any bone (excluding hairline fractures and fractures of fingers, toes or nose)
– Internal haemorrhage
– Head trauma (including concussion, loss of consciousness) requiring hospitalisation
– Loss of all or part of a limb (excluding bone dressing to facilitate medical treatment of injured fingers and toes)
– Permanent loss of function and/or permanent disability such as hearing loss or damage to lung function
– Permanent disfigurement where the injury has resulted in the appearance of a person being deeply and persistently harmed medically and that
is likely to lead to psychosocial problems
Numbers exclude our projects
4 An LTI is a work-related injury resulting in the employee or 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
5 An 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 his/her 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
6 An MTI is a work-related injury sustained by an employee or contractor which does not incapacitate that employee or contractor 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
The Gold Fields Integrated Annual Report 2018
65
Regional safety performance
Americas region
Fatalities
TRIFR
Recordable injuries
Safety Engagement Rate (SER)*
2018
0
0.54
3
1.14
2017
0
0.19
1
0.70
* The SER is an LTIP metric and equals the number of in field engagements divided by the number of man hours, multiplied by 1,000. The SER index
for 2017 is used as our baseline.
Gold Fields’ external auditors
recommended Cerro Corona for
recertification to OHSAS 18001
in 2018. There were no non-
conformances.
Our visible leadership programme
obtained an SER of 1.14 for 2018,
above the target of 0.73. Our
behaviour-based safety programme
had a 165% compliance, which was
65% above target. We trained 148
new employees to act as observers
of critical tasks, of which 36 are
Gold Fields employees and
112 contractors.
Australia region
We continued to invest in the training
and development of our employees and
contractors to reinforce their safety
knowledge and to motivate good
behaviour. We conducted two-hour
workshops throughout the year, where
all Gold Fields employees and
contractors completed awareness
programmes on critical control
management. Our Cerro Corona mine
has developed a mobile phone app
which allows managers and employees
to capture safety-related information
and share this immediately with their
colleagues.
Coca leaf usage has an adverse
impact on alertness levels, and
progressive efforts to eradicate the
consumption thereof through
awareness programmes for
employees and contractors to
improve their safety, health and
wellness, continued in 2018. These
programmes are also part of our
induction programme for new
employees. Furthermore, we
completed an awareness programme
with 130 families in our host
communities.
Fatalities
TRIFR
Recordable injuries
SER
2018
0
8.27
46
6.50
2017
0
10.44
61
4.84
The region’s TRIFR reduced to an
all-time low of 8.27. This represents
a 67% improvement in the rate since
the current safety strategy was
introduced in 2013.
At the heart of Gold Fields Australia’s
safety efforts are the ongoing “Visible
Felt Leadership” and “Vital
Behaviours” programmes, both of
which were introduced in 2014. Our
annual survey among employees
indicated that the workforce believe
that safety rules are carefully observed
even if it means work is slowed down
(82% agreement). These programmes
have also been integrated into the
construction activities at Gruyere.
Another important component of our
strategy is the use of innovation and
technology to reduce exposure to
risk. A key project has been the
deployment of the Newtrax system at
our Granny Smith mine. This system
allows for real time monitoring of
personnel underground and also
immediately notifies personnel of
an emergency that requires them
to move to a refuge chamber. In
addition, the deployment of proximity
detection has been completed for
heavy equipment in the St Ives pits
and underground at Granny Smith – it
integrates with the Newtrax system and
operates on a frequency that provides
for better signal penetration around
corners.
Remote loading at Granny Smith and
at the Invincible underground at
St Ives has also been introduced, which
allows an operator to move material
underground from a dedicated
operating room on surface. The remote
loading system at Agnew is still
operated from underground with plans
to move this activity to the surface.
By moving personnel to a surface
environment we are reducing
employees’ exposure to risk. The
system also includes guidance and
automation technologies which will
remove risks associated with human
error.
A biannual review of all safety and
environmental-related incidents at
our sites identified that field-level risk
assessments were not being
undertaken to the extent and quality
required. Based on the outcomes of
our 2018 reviews, we will focus on
the following in 2019:
■■ Refresher training to emphasise
the importance of anticipating risk,
and to ensure that field-level risk
assessments are being conducted
as required
■■ The majority of incidents, though
relatively minor in nature, are
dominated by employees placing
themselves, particularly their hands
(50% of the injuries in 2019), at risk
■■ Integration of safety performance
into talent management protocols
needs to be investigated
■■ A renewed focus on safety among
contractor workers
■■ Aligning our operations to a
common leading and lagging
indicator scorecard
The implementation of the SER
continues to gain momentum at
all sites, and a standard has been
developed to ensure that appropriate
governance protocols are in place.
SAFE OPERATIONAL DELIVERY 66
The Gold Fields Integrated Annual Report 2018
Safety continued
West Africa region
Fatalities
TRIFR
Recordable injuries
SER
2018
0
0.49
12
4.30
2017
1
0.50
12
2.23
Damang’s TRIFR in 2018 was
0.80 and Tarkwa’s 0.31, resulting in a
combined rate of 0.49 for 2018 (2017:
0.50). Both mines accelerated their
SERs, with Damang and Tarkwa
recording 5.17 and 3.82, respectively.
Both mines have observed
improvements in safety behaviour
since the introduction of this leading
indicator.
■■ Maintenance culture and operation
of defective equipment
■■ Supervision and risk assessments
■■ Limited fatigue management training
for some contract drivers
All significant investigation findings were
either rectified immediately or action
plans were put in place to address
them.
37 near-miss incidents were
investigated by the mines during 2018
to identify their main causes, which
included:
A focus of safety management in 2018
was our open pits at both mines.
High-risk working areas were being
cordoned off and access limited,
potential water seepages through
the pit high walls were re-engineered,
and warning signs were erected at
designated areas in the pits to caution
all personnel of possible dangers of
rock falls.
Tarkwa and Damang launched a joint
”Take 5” safety campaign to reinforce
the five steps required to ensure
safety at the mine, being Stop and
Think, Look for Hazards, Assess the
Risk, Make the Changes, and Do the
Job Safely.
South Africa region
Fatalities
TRIFR
Recordable injuries
SER
2018
1
2.07
38
0.49
2017
2
2.91
64
0.80
All lagging safety indicators showed
an improvement at South Deep during
2018. However, these were
overshadowed by the fatal incident
recorded in October (2017: two
fatalities). The mine’s TRIFR improved
by 29%, LTIFR by 41%, and serious
injury frequency rate (SIFR) by 43%,
due, in part, to the 45-day strike
action at South Deep which halted
operations.
The improvement in safety can be
attributed to the Purposeful Visible
Felt Leadership initiative launched
during the year, which demonstrated
safety leadership to all employees by
focusing on engagement, key leading
indicators and critical controls. The
introduction of new shift arrangements
resulted in improved supervision,
which enabled employees and
supervisors to focus more on
safety-related issues.
Prior to the fatality in October, South
Deep achieved over two million
fatality-free shifts. After the fatal
incident, an in-loco investigation
was conducted by the DMR, in
conjunction with organised labour and
management, which led to a section 54
instruction being issued to halt all
trackless mobile machinery.
The DMR issued an additional eight
section 54 instructions during the year
(2017: 15) for, among others, ineffective
secondary support, poor housekeeping,
inadequate dust suppression, poor
water controls, and unsafe working
conditions. These resulted in partial
production stoppages. The mine seeks
to address the underlying reasons for
section 54 instructions as soon as
feasible, and has over the year
implemented mitigation strategies, such
as a change in shift configuration to
improve supervision, changes to
tramming shift arrangements and
dedicated operational maintenance
teams.
Seven gravity-related fall-of-ground
accidents occurred in 2018 compared
to nine in 2017, amid a strong focus on
primary and secondary ground support.
Seismic-related events at South Deep
occur frequently, but the mine is
working with a number of academic
institutions to achieve greater
predictability of events. As a result, the
number of seismic damage incidents
in 2018 fell by 33% to 26. No injuries
were reported during these events,
but the resultant rock bursts did
damage sidewalls and/or hanging
walls. This required that the affected
areas to be cleaned out and re-
supported.
As part of South Deep’s effort to
engineer-out safety risks, a proximity
detection system (PDS) was rolled out
which warns both pedestrians and
drivers of railed and trackless vehicles
of each other’s proximity. South Deep
made steady progress on the
implementation of the remedial action
plan on the PDS for both rail-bound
equipment and trackless mobile
machinery. Our aim for this system is
to stop and slow down vehicles, as
well as warn of unauthorised positions
and entries.
Health
Introduction
Occupational health is critical to Gold
Fields’ operations and we are
committed to reducing our
employees’ exposure to occupational
health risks, including those
associated with silicosis, tuberculosis
(TB), noise-induced hearing loss
(NIHL), diesel particulate matter
(DPM) and hearing loss.
Our Occupational Health and Safety
Policy Statement, revised in 2018,
sets out our approach and we
endeavour to provide a workplace
that is conducive to the health of our
employees. The implementation of
the ICMM’s critical controls guidelines
(p63) is key to ensuring healthy
workplaces and assists with the
identification and mitigation of
adverse health impacts on our
employees.
Longer term, we are working in a
collaborative initiative with the ICMM
on Innovation for Cleaner, Safer
Vehicles (p75). In addition, we are
implementing new technologies
that allow us to move material
underground through remote loading
via an operating room on surface,
thus moving operations away from
potential risks.
All of Gold Fields’ regions run
dedicated health 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,
while also maximising its productive
capacity and reducing absenteeism.
Health programmes are a strong
focus for our South Deep mine,
due to the heightened health risks
associated with deep-level
underground mining, as well as the
prevalence of many chronic diseases
as a result of the relatively poor socio-
economic conditions in the country.
While there were no occupational
health related deaths at our mines
during 2018, seven contractors and
employees in our service died as a
result of wider health related issues:
five from HIV/Aids-related
complications, one from cerebral
malaria and one from drug-resistant
TB. Our condolences go out to the
families and friends of our colleagues.
The Gold Fields Integrated Annual Report 2018
67
Regional performance
South Africa
region
Silicosis and TB
As per the South African mining
industry regulations for silica dust
exposure, 95% of all personal silica
dust samples taken must be below
0.05mg/m3 by 2024. By the end of
2018, 18% of the employee silica
dust samples exceeded this level,
compared with 24% in 2017. This
was mainly attributed to the progress
made in improving engineering
controls, such as improved dust
allaying and footwall treatment in high
risk areas. Installation of automated
footwall treatment and upgrading of
internal tip dust suppression systems
will further improve conditions in
2019.
During 2018, the number of silicosis
cases submitted to the health
authorities decreased to eight from
11 in 2017, while the silicosis rate
per 1,000 employees increased to
1.72 from 1.71 in 2017 because of
the reduced workforce. All employees
diagnosed with silicosis were initiated
on a six-month course of TB
prophylaxis. However, as per the
2014 Mine Health Safety Council
milestones, no South Deep employee
who joined the mine after 2008 and
had previously not been exposed to
silica dust has contracted silicosis.
Continued focus is being placed on
the dust mitigation strategy.
Since 2014, Gold Fields, along with
five other companies in South Africa,
has been involved in negotiations
with the legal representatives of
former mineworkers suffering from
Silicosis in the so-called ”Silicosis
class action case”. In May 2018, the
companies and legal representatives
reached an historic settlement in this
matter, whereby the gold companies
will contribute over R5.2bn
(US$400m) towards a settlement
trust fund, which will be used to pay
compensation to all former
mineworkers who are confirmed to
have contracted Silicosis during their
time working on the mines. In
instances where these workers may
have passed away, their dependants
will receive a benefit. Gold Fields has
provided an amount of US$32m
(R390m) for its share of the
settlement cost.
The settlement also provides for
compensation for workers who have
been diagnosed with certain severe
forms of TB. In December 2018, the
Johannesburg High Court initiated
the process by which the settlement
could eventually be made an order of
court and subsequently implemented.
The mine recorded 15 CRTB cases in
2018, compared to 21 in 2017, and
the CRTB rate improved to 3.23 per
1,000 employees in 2018 from
3.26 in 2017. Due to the mechanised
nature of our operation, this rate
is significantly better than the
5.45/1,000 recorded for the rest of
the mining industry and 5.67/1000 for
South Africa in 2017.
Occupational diseases at South Deep (rate per 1,000 employees
and contractors at year-end)
2018
2017
2016
2015
2014
Noise Induced Hearing Loss
(NIHL)1
Cardio-Respiratory
Tuberculosis (CRTB)
Silicosis
Chronic Obstructive Airways
Disease (COAD)2
South Deep workforce
0.86
0.78
0.80
0.68
1.52
3.23
1.72
0.65
3.26
1.71
0.47
5.26
1.12
0.64
6.16
1.54
0.17
9.15
2.67
0.76
4,643
6,432
6,277
5,837
5,246
1 Numbers are now presented per 1,000 employees and contractors. Comparatives have been
restated
2 Based on the number of cases submitted for compensation
SAFE OPERATIONAL DELIVERY 68
The Gold Fields Integrated Annual Report 2018
Health continued
HIV/Aids
HIV/Aids management is integrated
into Gold Fields’ mainstream health
services at South Deep. Voluntary
counselling and testing (VCT) is
offered to prospective and permanent
employees, including contractors, by
the occupational health practitioners
during regular employee health
assessments. This has the added
benefit of directly addressing the
interaction of HIV/Aids with related
health issues such as TB.
Gold Fields is committed to lowering
the HIV/Aids levels at South Deep,
where the prevalence rate is 5.6%
(percentage of the workforce living
with HIV/Aids). There was an increase
in the number of employees who
tested positive for HIV/Aids in 2018,
from 45 in 2017 to 79 in 2018. From
2014 to 2018, approximately 5,786
employees have been counselled
and tested for HIV. A total of
326 employees are currently on the
highly-active anti-retroviral treatment
(HAART) programme.
South Deep’s integrated HIV/Aids
and TB strategy directly addresses
interactions between these diseases.
It has four key pillars:
■■ Promotion: This includes regular
publicity campaigns and condom
distribution at all workplaces
■■ Prevention: VCT is provided to all
mine employees and contractors
on a confidential basis. In 2018, the
mine’s VCT participation rate was
around 17% (2017: 29%)
■■ Treatment: Free HAART is
provided to HIV-infected employees
through onsite, medical doctor-
staffed clinics. In 2018,
31 employees joined the HAART
programme (2017: 36). This takes
the total number of active
participants to 326 (2017: 336),
with 605 cumulatively enrolled
since the HAART programme
began in 2004. Employees’
dependants can also receive
HAART via the Company’s medical
aid schemes. We do not provide
treatment to employees from
contracting firms, which provide
their own support
■■ Support: This includes doctor-
based primary healthcare,
psychological counselling and
social services for all employees
and contractors. South Deep also
supports a number of community-
based HIV/Aids projects
Malaria
South Deep conducts quarterly
wellness and wellbeing campaigns,
during which employees and
community members are informed
about chronic medical diseases,
including malaria, and are made
aware of the risks associated with the
discontinuation of medical treatment.
During 2018, 19 employees were
tested for malaria, of whom 10 tested
positive.
Noise
There were four new cases of NIHL
at South Deep mine (2017: five).
Personal noise samples above the
regulated occupational exposure limit
of 85 dB(A) improved from 1.8% in
2017 to 0.9% in 2018 – by 2024 no
noise samples should be above that
level. In line with the industry
regulators’ 2024 milestones, all noise
emitting equipment should be below
107 dB(A) by then. Only 1.7% of
South Deep’s equipment was still
above that level at year-end.
A survey indicated 87% compliance
among employees in terms of
wearing hearing protection devices
in the working places. In response,
South Deep has rolled out ear-
moulded protection devices to all
underground employees exposed to
high noise levels. The mine is also
working through the Minerals Council
of South Africa to encourage
equipment manufacturers to produce
low noise emission equipment.
During 2018, the mine’s auxiliary fans
were sound attenuated or retrofitted
with silencers to ensure fan noise
levels do not exceed 107dB(A).
DPM
Diesel Particulate Matter (DPM) is a
critical health issue at underground
mines in South Africa. Although the
Occupational Exposure Limit (OEL)
for DPM has not yet been
promulgated by the regulator, an
industry-best practice limit of
0.16mg/m3 has been adopted in
South Africa. South Deep has set a
benchmark to have 95% of all
personal samples measured below
0.16mg/m≥ by 2024. DPM results
above the 0.16mg/m≥ limit improved
slightly from 11.54% in 2017 to
10.96% in 2018. In an effort to
reduce DPM exposure, South Deep
continues to drive compliance to
maintenance schedules and utilises
only tier 3 and 4 machinery running
on lower sulphur content diesel. Drill
rigs only use diesel when travelling
and switch to electrical when drilling.
Substance abuse
During 2018, 6,206 cannabis (2017:
7,755) and 277,100 (2017: 273,500)
alcohol tests were performed. Nine
employees were tested positive for
cannabis and 82 were tested positive
for alcohol. All employees who tested
positive for these substances were
put through an employee assistance
programme. Should an employee be
tested positive for a second time, a
formal hearing is conducted that
could lead to dismissal.
The Gold Fields Integrated Annual Report 2018
69
Americas
region
There were no new cases of NIHL
reported during 2018. Furthermore,
due to the nature of our Cerro
Corona operation, the exposure
levels and concentration of personal
and area DPM samples are
insignificant.
Chewing coca leaves is a cultural
practice in the high altitude areas
of Latin America, but which has
deleterious impacts on those who
practice it. Cerro Corona’s ongoing
programme to eradicate coca leaf
consumption covers topics such as
loss of insurance coverage, chronic
fatigue and malnutrition. The entire
workforce was taken through an
awareness-raising refresher
programme in 2018, which was
incorporated into the new employee
induction course. Six of the mine’s
host communities and 130 family
members of employees were also
taken through the course.
The Chilean Ministry of Health
inspected Salares Norte’s polyclinic,
focusing on verifying compliance
with hypobaric requirements and
emergency response. The regulator
verified the project’s compliance with
health and emergency requirements.
We also implemented the regulator’s
occupational health protocols at the
project.
Australia
region
No new cases of NIHL were reported
during the year.
Our control strategies with regard to
DPM are effective, with the majority
of our samples yielding results
substantially below the exposure limit
recommended by the Australian
Institute of Occupational Hygienists.
Mental health has been highlighted
as a problem that is particularly acute
among Fly-In, Fly-Out workers at
mining camps. Historically, our
operations have implemented a range
of initiatives to promote mental health
amongst our employees. However,
additional initiatives have been
identified for implementation:
■■ At St Ives, we have introduced
“Mates in Mining” as part of our
“Vital Behaviours” programme,
through which 400 employees
received training in mental health
during 2018. This programme
includes providing them with the
necessary skills to identify and
facilitate early interventions when
mental health issues become
evident
■■ At Granny Smith, our “Vital
Behaviours” programme absorbed
an initiative known as LIVINWell,
which aims to enhance employee
wellbeing by encouraging them to
speak up when challenged with
mental health issues and to seek
help. The intent is to abolish the
stigma associated with mental
health
■■ Gold Fields Australia also support
the national “RU OK day” initiative,
which supports our mine-specific
programmes. Our sites launched
specific interventions on the day,
and provided information sessions
on mental health. For employees
who are experiencing mental health
problems, we are providing
assistance in helping them address
their problems
West Africa
region
Contact with silica dust is limited at
our Ghanaian operations. Mitigation
measures have been implemented to
ensure efficiency of existing controls,
which have proven to be effective in
reducing silica concentration levels.
Our workforce in Ghana faces a high
risk of exposure to malaria and we
have a comprehensive malaria control
strategy in place, which incorporates
education, prevention, prophylaxis
and treatment. It also includes
provision of mosquito repellent for
workers, support for community
health facilities and rapid diagnosis
and treatment. In 2018, 227
employees (2017: 392) tested
positive for malaria after 1,405
individuals (2017: 2,460) were tested
at both Tarkwa and Damang. None of
the treated cases proved fatal. The
lower treatment numbers were due
to the move to contractor mining at
Tarkwa. During the year, 279
company housing units were covered
under the malaria vector control
indoor spraying programme, and
700 insecticide-treated bed nets
were distributed to community
residents.
HIV/Aids management is integrated
into Gold Fields’ mainstream health
services, and VCT takes place
during regular employee health
assessments. In Ghana, where the
national HIV/Aids rate is around 2%,
employees and contractors have
access to a confidential VCT
programme which they receive free of
charge. During 2018, about 60% of
the workforce underwent the VCT,
of whom two tested positive. By year-
end, Ghana had 10 employees on
HAART (2017: 34).
Both Tarkwa and Damang identified a
number of personal noise exposures
exceeding the regulated limit of
85dB(A). Employees were educated
and counselled to use existing control
measures to prevent hearing
damage. On average, 43% of tested
vehicles and machines exceeded the
noise limit, but the use of hearing
protection reduced the noise
exposure by employees to below
regulated limits. Equipment that
exceeds the limits is also being
re-engineered to reduce noise levels.
During Tarkwa’s contract mining
transition, employees underwent
compulsory exit medical
assessments. Two cases of
silicosis, nine cases of NIHL and
67 musculoskeletal disorders were
identified. Employees retired on
medical grounds were duly
compensated as per regulations
and the collective agreement.
Drug and alcohol testing continued at
both our Ghanaian operations, and
87 contractors and three Gold Fields
employees tested positive either for
alcohol or drugs at Tarkwa. In line
with the region’s zero tolerance for
drug and alcohol policy, all employees
who tested positive have either been
dismissed or banned from the site.
Testing is compulsorily for all
employees and contractors entering
the mine.
SAFE OPERATIONAL DELIVERY 70
The Gold Fields Integrated Annual Report 2018
Energy management
Amid rising energy costs, increasing
depth of our underground mines and
longer hauling distances for our open
pits, our energy strategy focuses on
ensuring security of supply, improving
energy efficiencies and reducing the
cost of energy while, at the same time,
minimising our contributions to and
building resilience against climate
change.
Group energy performance
Gold Fields’ energy spend, which
combines our spending on electricity
and fuels, accounts for a significant
portion of our operating costs. During
2018, this percentage rose to 22% of
operating costs from 17% in 2017, or
15% of our AISC (2017: 12%).
Given the importance of energy to
the Group operations, we have set a
number of aspirational goals for the
year 2020:
■■ Maintain energy security outside the
top 10 Group risks
■■ Achieve 5% to 10% energy savings
off our annual energy plans each year
■■ Achieve 17% carbon emission
reductions each year up to 2020,
equivalent to 800,000t CO2-e of
cumulative carbon emission
reductions over the two years
Gold Fields has developed integrated
energy and carbon management
strategies at both Group and
operational level that are aligned with
the global ISO 50001 energy
management system standard. The key
pillars of this strategy are to reduce our
diesel usage, to switch from diesel-
generated electricity to cleaner
gas-generated, increasing the use
of renewables and rolling out training
and awareness programmes. During
2018, Cerro Corona in Peru became
the first Gold Fields mine – and the first
mine in Peru – to be certified to the ISO
50001 standard, and we aim to have all
our operations aligned with the
standard by 2020.
Total energy consumption decreased
by 4% to 11,628TJ in 2018, from
12,178TJ in 2017, with 69%
comprising fuel usage and 31%
electricity, compared to a 67%/33%
split in 2017. Fuel spend amounted to
52% (2017: 44%) of the total energy
spend, and electricity spend accounted
for the rest.
Total Group energy spend increased by
17% to US$302m (US$146/oz) in 2018
from US$258m (US$115/oz) in 2017,
largely due to an average 23% increase
in diesel prices paid by our Ghanaian
and Australian mines. This was slightly
offset by oil price hedges at our
Ghanaian and Australian operations,
which realised net gains of US $14m
during 2018. In 2018, we invested
US$3m in energy initiatives, which
delivered 411TJ of savings and resulted
in long-term cost savings of US$29m
(US$14/oz), compared with US$22m
(US$10/oz) in 2017.
With the exception of our South Deep
mine in South Africa, which is still
heavily reliant on coal-fired electricity, all
of our operations are using low-carbon
gas, with grid and diesel generators as
emergency supply. During 2018, our
Group had 134MW in installed gas
capacity – about 54% of total electricity
capacity – with an additional 16MW
of capacity being evaluated. The
independent power producers (IPPs)
supplying the gas are finalising the
construction of the gas pipeline to our
Tarkwa and Damang mines in Ghana
(77km) and have completed the
pipeline to the Gruyere project in
Australia (200km). This is a safer and
more reliable option for supplying gas
than trucking it to these operations.
Renewable energy is also becoming a
viable option for our operations, not
only due to their positive impact on
our carbon emissions but also because
the cost of renewables is rapidly
decreasing. At present, Gold Fields has
55MW of solar capacity and 18MW of
wind capacity under study at our South
African, Australian and Ghanaian mines.
Two of our Australian mines, Granny
Smith and Agnew, are also finalising the
construction of battery storage facilities
(p72). Our investments in renewables
will result in solar and wind being added
to our supply mix, initially at our
Australian mines, where it is set to
reach at least 10% of total energy
usage by 2020. Several additional
opportunities are being assessed at the
rest of our operations. We also remain
committed to our target of using
renewables for 20% of the energy
requirements of new projects over
their life-of-mine.
More details on Gold Fields’ climate
change management and carbon
emission performance can be found
on p97 – 99.
Gold Fields’ electricity consumption by source
Group energy consumption
0%
9%
2%
35%
2018
8%
2%
3%
34%
2020
(Estimated)
54%
53%
TJ
15,000
12,500
10,000
5,000
2,500
5
1
1
5
8
2
4
,
6
6
0
,
6
7
0
1
3
0
2
4
,
0
3
9
,
6
5
9
7
4
9
2
4
,
8
0
6
,
6
0
1
4
1
,
3
0
0
4
,
5
6
7
,
6
5
7
3
,
1
4
5
6
3
,
9
9
5
,
6
■ Coal based
■ Gas generated
■ Diesel generated
■ Hydro (largest scale)
■ Solar/wind
0
2014
■ Diesel
2015
2016
2017
2018
■ Electricity
■ Other fuels
The Gold Fields Integrated Annual Report 2018
71
Energy savings initiatives
Since 2013, the implementation of
our integrated energy and carbon
management strategy has realised
cumulative savings totalling 1,685TJ,
or 2.2%, of total energy consumption
over the period. These savings
amounted to US$92m and avoided
432kt CO2-e in carbon emissions (6%
of our total Scope 1 and 2 emissions
over the same period). During 2018,
Scope 1 and 2 carbon emissions,
totalling 149kt CO2-e, were abated.
Our Scope 1, 2 and 3 emissions
decreased to 1,852Mt CO2-e from
1,959Mt CO2-e in 2017.
While energy efficiency initiatives have
a dual benefit of improving energy
productivity and reducing our carbon
footprint, a number of our energy
initiatives have significant carbon
footprint reduction impacts without
necessarily reducing energy usage.
These include fuel switching from
diesel to gas-generated electricity
or renewable energy technologies).
For more details on our energy
management approach, policies
and guidelines, visit www.
goldfields.com/sustainability.php.
Gold Fields aims to deliver further
energy savings through greater
energy efficiencies and the use of
new technologies. We implemented
16 new energy saving projects in
2018, which include:
■■ Changing lighting systems to new,
efficient, light-emitting diode (LED)
systems which, are expected to
save 5.53TJ at Tarkwa, with
emission reductions of 830t CO2e
and cost savings of US$338,000 a
Eskom electricity supply to
South Deep
South Deep’s electricity is supplied by
Eskom, the state-owned utility which
generates 95% of its electricity from
coal-fired power stations. As a result,
South Deep is Gold Fields’ electricity
most carbon intensive operation.
Eskom remains a critical risk to our
South Deep operations, both from a
supply reliability and a cost perspective.
Eskom’s financial and operational
viability have significantly weakened
over the past few years, given the
utility’s inability to service its debt
obligations and keeping its power
plants running consistently and
efficiently. Since June 2018, Eskom
has issued several emergency notices
and initiated rolling blackouts, calling on
large power users to reduce demand.
Eskom has been plagued with coal
shortages at its coal power stations and
frequent plant breakdowns, given the
ageing fleet whose maintenance has
been deferred over the years.
South Deep, like other large power
users, has a curtailment agreement
with Eskom under which the mine is
expected to reduce power demand
when called upon by Eskom, but
preserving a minimum critical load to
achieve hoisting of staff and water
pumping. As a short-term response, we
reschedule our operations by stopping
our process plant, when possible, and
reschedule hoisting of ore and
equipment.
Regional energy spend
US$m
200
5
7
1
0
3
1
150
100
50
0
3
3
3
2
2014
3
6
1
3
5
1
4
6
1
0
3
1
0
2
1
6
9
4
8
1
8
1
3
1
2
2
3
1
2
4
3
2
2
3
3
6
2
2015
■ South America
2016
■ West Africa
2017
2018
■ Australia
■ South Africa
year, and an annual saving of
US$60,000 at Cerro Corona
■■ Rolling out more fuel efficient drill
rigs and hauling trucks
■■ Replacing diesel generators with
gas and solar systems
■■ Optimising compressed air
systems
■■ Replacing inefficient cooling fans
■■ Comminution circuit optimisation.
Our medium-term responses include
running our own emergency diesel
generators to ensure safe operations,
but also continue investing in energy
efficiency initiatives, to improve our
energy productivity, reduce our carbon
footprint and save energy costs. Our
long-term solution is to increase our
own supply capacity, including bringing
in renewables into the power mix,
including the solar photovoltaic plant
currently in the review phase (p73).
On the cost side, Eskom tariffs have
escalated sharply well ahead of
inflation over the past few years and
the tariff trajectory going forward
remains uncertain. In 2010 a unit of
electricity cost R0.36/kWh (in nominal
terms); in 2018 the equivalent unit
cost was R0.85/kWh for large
industrial customers. In March 2019,
Eskom received the go-ahead to
raise its average tariff by 14% for
2019 followed by increases of 8%
and 5% for 2020 and 2021
respectively. These will add significant
cost pressures on South Deep and
strengthen the case for reduced
dependence on the utility.
SAFE OPERATIONAL DELIVERY
72
The Gold Fields Integrated Annual Report 2018
Energy management continued
Regional performance
Regional performance
2018 vs 2017 performance
Americas
KEY RISKS
■■ Stable electricity supply and
pricing
■■ Limited renewable energy
opportunities
STRATEGIC RESPONSES
■■ Long-term energy supply
agreements
■■ Energy reduction target set
Total energy usage (TJ)
Energy split electricity/fuel (%)
Total energy spend (US$m)
Energy spend per oz (US$/oz)
Energy initiatives savings (TJ)
Energy cost savings (US$m)
CO2-e emissions abated (kt)
2018
1,082
50/50
26
82
34
0.8
2.56
2017
997
55/45
22
72
27
0.6
2.00
2018 KEY DEVELOPMENTS
Electricity to Cerro Corona is
supplied by an independent power
producer, generated from hydro
(30%) and gas (70%), and supplied
via a transmission line. This makes it
the least carbon intensive electricity
in our portfolio.
Cerro Corona energy spend and
consumption increased in 2018
compared to 2017, due to greater
tonnages mined in 2018 and
consequently higher diesel and
electricity consumption.
Among efficiency initiatives, Cerro
Corona recently upgraded the
haulage fleet to higher capacity
trucks to improve diesel usage
intensity, has been applying a diesel
additive in its mining fleet and rolled
out an LED lighting initiative for its
pit lighting. Cerro Corona is also
evaluating battery-operated vehicles
for the transport of personnel within
the mine. A pilot project was
initiated in Q1 2019, and,
depending on the results, we will
investigate gradually replacing the
diesel bus fleet with electric buses.
Australia
Regional performance
2018 vs 2017 performance
KEY RISKS
■■ Increase in oil and diesel prices
■■ Remote location of our
operations
■■ Reliance on energy supplies
from third parties
STRATEGIC RESPONSES
■■ Increased investment in energy
self-sufficiency
■■ Investment in renewables
commenced
Total energy usage (TJ)
Energy split electricity/fuel (%)
Total energy spend (US$m)
Energy spend per oz (US$/oz)
Energy initiatives savings (TJ)
Energy cost savings (US$m)
CO2-e emissions abated (kt)
2018
3,142
41/59
78
88
207
10.5
33.60
2017
3,631
41/59
81
86
21
3.4
25.82
2018 KEY DEVELOPMENTS
Our Australian operations run on
gas-generated electricity. Diesel is
used primarily for our fleet vehicles
and machinery. To further embed
energy management into operational
activities, we implemented an energy
steering committee during the year.
Energy spend at our Australian
operations was lower in 2018 than
2017 due to the divestment from
Darlot and operational adjustments.
These included a 20% decrease in
diesel usage as St Ives moved to
increased underground operations.
Hedging 50% of our diesel
purchases during 2018, realised a net
gain of US$4.6m in 2018, cushioned
the impact of higher diesel prices.
At Granny Smith, we increased the
generation capacity of the gas power
station’s turbines and started
development of a 8MW solar farm
with 2MW battery storage facility,
due for completion in Q4 2019. Both
projects will address growing energy
demand from the Wallaby
underground mine, reduce gas
consumption and cut carbon
emissions.
Agnew is investing in a hybrid gas
and renewable energy power supply
with the capacity to expand to meet
future mine growth. The gas supply
and base load power plant is under
construction and will start supplying
energy to the mine in Q3 2019.
Additional phases of the project are
being investigated, with further
development likely to occur during
H2 2019.
At Gruyere, the 200km gas pipeline
was completed, and gas introduced
into the 45MW power plant. We
are also piloting five solar power
depressurisation pumps around
the open pit.
The Gold Fields Integrated Annual Report 2018
73
Regional performance
2018 vs 2017 performance
West
Africa
KEY RISKS
■■ Costly, unreliable national grid
■■ Gas supply concerns
■■ Mandatory renewable energy
targets
STRATEGIC RESPONSES
■■ Gas pipeline construction
■■ Energy reduction targets set
■■ Investigating renewable energy
Total energy usage (TJ)
Energy split electricity/fuel (%)
Total energy spend (US$m)
Energy spend per oz (US$/oz)
Energy initiatives savings (TJ)
Energy cost savings (US$m)
CO2-e emissions abated (kt)
2018
5,709
28/72
164
233
145
17.0
106.61
2017
5,647
28/72
143
201
102
18.0
80.94
2018 KEY DEVELOPMENTS
Our Ghanaian mines completed
their transition from the national grid
to an independent power producer
(IPP), Genser Energy, during 2018.
The IPP commissioned the last of
the gas units at the Tarkwa power
plant in February 2018 and now
supplies 40MW to Tarkwa and
18MW to Damang mine. We
maintain nominal grid electricity
consumption and our own
emergency diesel generators
ensure we have sufficient back-up
infrastructure. Since the switch over,
we have realised operational costs
savings and processing efficiency
gains.
During 2018, energy spend at our
Ghanaian operations was higher than
in 2017 primarily due to higher diesel
prices. We hedged 50% of our diesel
purchases against Brent crude
prices, realising a net gain of
US$7.9m in 2018. Heavy rainfalls and
increased pit dewatering contributed
to higher diesel consumption in 2018.
Genser Energy is advanced with
construction of a 77km buried natural
gas pipeline from the port of Takoradi
to our mines, which is expected to
be commissioned during Q2 2019.
This will enable the IPP to convert
both plants from propane to natural
gas and discontinue transportation
of gas on public roads, minimising
road transportation risks.
Assessment for renewable energy is
at an advanced stage, in support of
the government efforts to increase
the use of renewable energy by
2020, especially for mining.
Regional performance
2018 vs 2017 performance
South
Africa
KEY RISKS
■■ Eskom’s future electricity tariff
increases
■■ Increased risk of load-shedding
■■ Uncertainty around renewable
energy rules
STRATEGIC RESPONSES
■■ Industry pressure against hefty
Eskom tariff hikes
■■ Implementing energy efficiency
initiatives
■■ Finalisation of the solar
photovoltaic power usage
Total energy usage (TJ)
Energy split electricity/fuel (%)
Total energy spend (US$m)
Energy spend per oz (US$/oz)
Energy initiatives savings (TJ)
Energy cost savings (US$m)
CO2-e emissions abated (kt)
2018
2017
169
96/4
33
211
24
0.8
6.43
190
94/6
34
122
26
0.4
7.10
2018 KEY DEVELOPMENTS
South Deep’s electricity is supplied
by Eskom, the state-owned utility
which generates 95% of its
electricity from coal-fired power
stations. As a result, South Deep is
Gold Fields’ most carbon intensive
operation.
Total energy usage was down
by 21TJ in 2018 due to lower
production, primarily due to a halt in
production as a result of the labour
strike during the fourth Q4. Energy
spend, however, did not decline at
the same rate due to a high baseload
demand profile and an average 5.2%
electricity tariff increase during the
year. (See p71)
Due to regulatory uncertainty around
the use of private power purchase
agreements, South Deep has delayed
the signing of a 25-year power
purchase agreement with an IPP for a
40MW solar photovoltaic facility at
the mine. We are exploring ways to
develop the facility incrementally in
line with government’s recent
Integrated Resource Plan, which for
plants with a generation capacity
above 10MW, requires both
ministerial exemption and a power
generation licence for IPPs.
SAFE OPERATIONAL DELIVERY 74
The Gold Fields Integrated Annual Report 2018
Innovation and Technology
We need to operate as a low-cost
gold producer in order to achieve our
free cash-flow margin target. To this
end we have set ourselves a
medium-term aspiration of AIC of
approximately US$900/oz by 2020.
We need to do this within the context
of a number of industry-wide
challenges that include longer
discovery to development times, a fall
in average gold grades and a gold
price that has declined around 30%
since September 2011.
Advances in innovation and
technology provide an opportunity for
gold miners to digitise and automate
their operations, which will help
increase levels of efficiency, reduce
costs, improve safety and further
mitigate environmental impacts.
Gold Fields’ I&T strategy has five key
objectives:
1. Grow reserve life: reduce
discovery cost and cycle time
from discovery to development
handover
2. Sustain and grow cash margin:
improve operational efficiencies
to sustain cash margin by the
use of automation, information,
integration and innovation
3. Implement a future operating
platform: develop a fully
connected mine with a
manufacturing culture of
collaboration and innovation
4. Improve health and safety:
distance people from active
mining areas
5. Maintain social licence to operate:
reduce mining waste/tailings and
emissions
To guide the delivery of these
objectives, clear execution principles
have been defined, and the strategy
will be selectively applied at each
mine based on relevance and robust
business cases. Other principles
include that only proven technology
will be deployed, a “fast follower”
approach will be used and each
region will have its Innovation and
technology champion.
We are following a staged approach
that will progressively move our
operations through the phases of
modernisation, integration and
ultimately automation, when
appropriate and within strict cost
parameters. These stages have been
broken into three “horizons”.
■■ Horizon 1 – Modernisation phase:
foundations are put in place to
support the use of future
technologies. This involves:
– Increasing the use of sensors to
improve the data we receive from
our machines
– Upgrading our data backbone to
allow our IT systems to efficiently
manage higher volumes of data
– Pulling data from all areas onto
an integrated platform to enable
more effective operational
decisions
■■ Horizon 2 – Transformation phase:
completing the integration and
optimisation of our data and
systems and developing an
innovative culture. This will allow us
to develop a single, real-time view
of all operating aspects of a mine,
which in turn enables more flexible
and responsive production
planning and scheduling, all of
which can be managed from
remote operating centres. To be
successful and sustainable, the
mine of the future needs to be
supported by new ways of working
and a culture of innovation –
building this culture is an additional
area of focus during Horizon 2
■■ Horizon 3 – The Gold Fields mine
of the future is delivered during this
horizon, when and where
appropriate. A new level of
productivity and safety is achieved
through automation, robotics and
autonomous operations that are
connected through remote sensors
The Gold Fields Integrated Annual Report 2018
75
GROW RESERVE PROJECT AND MINE LIFE
■■ Halve discovery cost and cycle time from
discovery to development handover
SUSTAIN AND GROW CASH MARGIN
■■ Improve operational efficiencies to sustain
cash margin by the use of automation,
information, integration and innovation
FUTURE OPERATING PLATFORM
■■ Develop a fully connected mine with a
manufacturing culture of collaboration and
innovation
IMPROVE HEALTH & SAFETY
■■ Distance people from active mining areas
MAINTAIN SOCIAL LICENCE TO OPERATE
■■ Halve mining waste/tailings and emissions by
2026
GOLD FIELDS’ INNOVATION & TECHNOLOGY STRATEGY
e
t
a
t
s
e
r
u
t
u
f
g
n
i
r
e
v
i
l
e
D
e
s
a
h
p
l
a
n
o
i
t
a
m
r
o
f
s
n
a
r
T
e
s
a
h
p
l
a
n
o
i
t
a
d
n
u
o
F
)
s
d
r
a
w
n
o
n
e
v
e
s
s
r
a
e
y
(
)
n
e
v
e
s
o
t
e
e
r
h
t
s
r
a
e
y
(
)
o
w
t
o
t
e
n
o
s
r
a
e
y
(
3
n
o
z
i
r
o
H
2
n
o
z
i
r
o
H
1
n
o
z
i
r
o
H
Gold Field
s
M
i
n
e
o
f
t
h
e
F
u
t
u
r
e
Integratio
n a
n
d
o
p
t
i
m
i
s
a
t
i
o
n
Mod
e
r
n
i
s
a
t
i
o
n
Components of new operating platform to embed in our operations
Progress to date
During 2018 we advanced a number
of important Horizon 1 projects:
■■ Fibre networks were installed
underground and in some mining
pits – these lay the foundation for
connecting people and machinery
at the face to employees and
systems on-surface
■■ At Granny Smith we trialled new
technology to improve the
precision alignment of drills, and
increased the number of tele-
remote systems that control
machinery at both this operation
and St Ives
■■ Drones were deployed at Tarkwa
and Damang to conduct surveying
by remote
■■ Cerro Corona rolled out new fleet
management software
■■ Granny Smith, South Deep and St
Ives improved their people and
equipment tracking systems which
are designed to improve man-
machine interface safety.
Looking ahead
In the year ahead, each Region will
define the operating platform,
systems and technology required to
achieve the strategic goals of Horizon
2, thereby laying the platform
required for digital mining. These
plans will also outline the technical
design, resources, skills, funding and
training required to support the
successful roll-out of I&T projects at
each site. Furthermore, the regions
have been asked to bolster their I&T
resources, appoint an I&T lead and
roll-out workforce communication on
their I&T programmes. Around
US$9m has been set aside for I&T
projects during 2019.
In the longer term, Gold Fields is
working with the ICMM on a plan to
make mining vehicles cleaner and
safer. Under the Innovation for
Cleaner Safer Vehicles (ICSV)
programme, the ICMM is working
with leading truck and mining
equipment suppliers to accelerate
innovation and develop a new
generation of mine vehicles. The
programme aims to:
■■ Introduce greenhouse gas
emission-free surface mining
vehicles by 2040
■■ Minimise the operational impact
of diesel exhaust by 2025
■■ Make collision avoidance
technology available to mining
companies by 2025
Gold Fields CEO Nick Holland is one
of three ICMM member CEOs on the
ICSV advisory council.
SAFE OPERATIONAL DELIVERY
76
The Gold Fields Integrated Annual Report 2018
A fit-for-purpose workforce
Workforce profile
Our workforce is structured to
support the delivery of immediate and
long-term strategic objectives. During
2018, the two most significant
people-related developments were
the restructuring exercise and related
strike action at South Deep, as well
as the transition from owner to
contractor mining at Tarkwa. The key
people-related balanced scorecard
objectives were driving diversity and
inclusion, managing the talent
pipeline and ensuring succession
planning for critical roles, and
strengthening a values-based culture
that drives delivery.
Due to the workforce restructuring at
South Deep, Tarkwa and Damang,
overall workforce numbers dropped
5% from 18,594 (2017) to 17,611
(2018). The number of full-time
employees declined by 37% from
8,856 to 5,601, while the number of
contractors rose 23% from 9,738 to
12,010.
Workforce by region (end December)
Total
workforce
2018
2,322
3,1761
4,643
7,370
100
17,611
Employees
Contractors
Proportion
of Nationals
2018
373
1,577
2,472
1,079
100
5,601
2017
365
1,449
4,012
2,910
120
8,856
2018
1,949
1 5992
2,171
6,291
0
12,010
2017
1,669
888
2,420
4,761
0
9,738
2018
100%
100%
85%
99%
94%
Total workforce by region
Americas
Australia
South Africa
West Africa
Corporate
Total
Key HR metrics (end December)
Category
2018
2017
2016
2015
2014
Total workforce
HDSA employees South Africa (%)3
HDSA employees South Africa – senior
management (%)3
Minimum wage ratio4
Female employees (%)
Ratio of basic salary men to women
Employee wages and benefits (US$m)
Average training hours per employee
Employee turnover (%)
17,611
72
18,594
71
18,091
72
16,850
71
15,440
71
435
2.396
19
1.25
442
262
357
57
2.43
16
1.25
506
223
6
55
2
15
1.31
482
273
12
48
2
14
1.09
435
240
8
47
2
14
1.10
468
181
20
1 Includes Gruyere
2 High increase due to the employment of contractors for Gruyere construction phase
3 Excluding foreign nationals, but including white females; HDSAs - Historically Disadvantaged South Africans
4 Entry level wage compared to local minimum wage
5 Lower ratio due to South Deep restructuring
6 Excluding Ghana, as the region only employs management level employees with the move to contractor mining. Ratio is 3.39 if Ghana is included
7 High turnover due to South Deep restructuring and transition to Tarkwa contractor mining
The Gold Fields Integrated Annual Report 2018
77
Key developments in 2018
South Deep restructuring
Ongoing losses at South Deep during
2017 led to a restructuring exercise in
Q4 2017 and Q1 2018 during which
261 employees and 47 managers
(25% of management level
employees) accepted voluntary
severance packages. Despite these
interventions the mine continued to
experience a cash burn of around
R100m (US$8m) a month, and, in
August 2018, South Deep embarked
on its most significant restructuring
to date. In addition to operational
interventions, the mine issued a
section 189 notice in terms of South
Africa’s Labour Relations Act to its
trade unions, the National Union of
Mineworkers (NUM) and UASA, to
reduce the workforce by around
30%.
At the end of the 60-day consultation
period and after receiving
submissions from the unions, South
Deep started implementing the
retrenchments of 1,082 employees
and 420 contractors. The NUM
opposed these retrenchments and
commenced a legal, “no work, no
pay” strike action on 2 November
2018.
The strike was characterised by
violence and intimidation, with
protesters blocking access to the
mine in contravention of the collective
agreement and court interdicts
served on the NUM and its members.
Although critical essential services
were maintained, employees who
wished to return to work were
prevented from doing so by a group
of around 200 NUM branch members
and supporters. The mine
experienced a cash burn of around
R6m (US$450,000) per day during
the 45-day strike as no production
was possible.
Amid the continued violence, and
following representations from many
NUM members wanting to return to
work, the NUM National and Regional
suspended the NUM branch and
called off the strike on 13 December
2018. On 18 December 2018 a
settlement agreement was signed
with the trade unions, which included
the retrenchment of the affected
employees and contractors.
Retrenched employees received the
agreed upon financial packages,
portable skills training and financial
advice.
As part of the settlement agreement,
the NUM and management also
agreed to renegotiate key aspects
of the collective and other labour
agreements. These were concluded
in March 2019.
Tarkwa contractor mining
Our Tarkwa mine in Ghana made the
transition from owner to contractor
mining during 2018. As the mine
matures it will incur increasing costs,
which would have made the current
owner mining model unsustainable.
These costs include higher blasting
costs as the pits deepen, increased
fuel costs due to longer hauling
distances, increasing cost of reagents
and other input materials, high
exploration costs, the cost of
replacing an ageing fleet, and the
year-on-year escalation of union-
negotiated wage increases. A change
to contractor mining at our Damang
mine in 2016 has seen a significant
turnaround in productivity and
operational flexibility, with a potential
upside in terms of the mine’s
longevity.
The Ghana Mineworkers’ Union
(GMWU) opposed the move to
contractor mining on the basis that
Gold Fields had no justifiable basis to
change its business model. However,
its application to the Labour Division
of the High Court was dismissed,
following which Gold Fields issued
severance letters to 1,346 employees
in the mining and heavy equipment
(HME) department and
765 employees in other departments.
Of these, 1,209 of affected HME
employees were absorbed by the two
mining contractors appointed and
505 of the other affected employees
were re-engaged by the mine on
fixed-term contracts. In Damang, a
further 306 employees were moved
from a full-time to a contractor basis.
All affected employees received
generous retrenchment packages
– in line with Ghana’s labour laws –
and were offered financial wellness
training.
Balanced scorecard
objectives
Driving diversity and inclusion
We continued to focus on building a
more diverse and inclusive workforce,
with particular emphasis on
employing more women, residents
from our host communities and, in
South Africa, people from historically
disadvantaged communities. This
forms a key pillar of the HR strategy.
A diversity policy was approved by
the Board during the year – in
addition to increasing employee
representation from diverse groups,
it also emphasises the importance of
ensuring that all people are treated
with dignity and respect.
Diversity training was rolled out to
managers, with a particular emphasis
on cultural awareness and how to
identify and overcome unconscious
bias. This training will support our
efforts to increase and retain the
number of people we employ from
diverse backgrounds.
Key diversity indicators include the percentage of women among our employees (excluding contractors) in management,
women in mining and Indigenous/local/HDSA people:
Australia
Ghana
Peru South Deep Corporate
Group
Total women
Women in management
Women in mining
Indigenous people/localisation/
HDSA
20%
17%
13%
2%
9%
5%
9%
3%
18%
16%
4%
99%
23%
17%
17%
50%
49%
43%
0%
79%
19%
18%
13%
56%
SAFE OPERATIONAL DELIVERY 78
The Gold Fields Integrated Annual Report 2018
A fit-for-purpose workforce continued
Managing talent pipeline and
ensuring succession for critical
roles
We continued to monitor succession
planning and regional and operational
level by tracking turnover rates with a
focus on critical roles. The following
figures indicate the extent of
succession cover across the group:
■■ Australia: 73% of Regional Exco
and 100% of Mine Exco roles
■■ Ghana: 10% of Regional Exco and
46% of Mine Exco roles
■■ Peru: 33% of Regional Exco and
91% of Mine Exco roles
■■ South Deep: 44% of management
roles
■■ Corporate: 19% of all corporate
roles
The reason for the low rate at
Corporate level is that we have a
lean corporate structure with few
supporting roles. The low rate in
Ghana reflects the move to
contractor mining at both mines.
Strengthening a values-based
culture that drives delivery
At the end of 2018, we rolled out an
employee engagement survey as part
of the ongoing work to drive a
values-based, high-performance
culture. Amongst other things, the
survey measured employee
satisfaction; understanding of
strategy; and the extent to which
the work environment supports
employees in the achievement of their
objectives. Its findings will feed into
our HR work during 2019.
In 2019, initiatives are set to be
implemented to address key areas
of concern in each region and
measurements of living the Gold
Fields values will be incorporated into
employees’ balanced scorecards.
Workforce remuneration,
benefits and wellness
We successfully concluded wage
negotiations in:
■■ Ghana: a 4% average salary
increase was finalised with the
GMWU, backdated for 2018 for all
qualified active and ex-employees
■■ Peru: wage increases varying
between 5.3% and 5.8% a year
for 2017, 2018 and 2019 were
awarded to the unionised
contractor workforce
■■ South Deep: a three-year wage
agreement for 2018 to 2020 was
concluded, with an average annual
compounded salary increase of
7.31% over three years for
Category 4 to 8 employees,
miners, artisans and officials. Other
benefits included higher loco driver
allowances, an increase in the
housing allowance, introduction of
a funeral benefit plan and improved
maternity leave
High levels of employee indebtedness
have resulted in the approval of just
47% of bond applications by our
South Deep employees, equating to
the sale of only 126 houses under the
mine’s Tswelopele Homeownership
Scheme. A review of the scheme
considered employee willingness to
invest in property close to the mine
and the time it could take for
employees to clear their debts.
Alternative options to house our
employees and their families are
currently being considered.
A Group Flexible Work Guideline was
approved by Exco and provides
regions with a framework to
implement flexible work practices
where appropriate and suited to local
conditions.
The mental health of Fly-In Fly-Out
(FIFO) employees remains an
industry-wide issue in Australia. Detail
on how we are addressing this issue
can be found on p69.
Training and developing
our people
Gold Fields continued to focus on
programmes and policies that
develop and retain people who are
skilled and motivated to deliver
sustainable value creation. These
programmes and policies are
fundamental to ensuring we have the
skills needed to keep our business
agile, innovative and well-positioned
to take on the challenges in our
sector. They include:
■■ Our new diversity policy
■■ Our employee climate survey
■■ Disciplinary and grievance
processes
■■ Talent management processes
■■ Learning and development
approach
■■ Human rights
■■ Our approach to vulnerable people
■■ Focus on gender rights
For more details on the progress
made in these programmes during
2018, visit www.goldfields.com/
integrated-annual-reports.com.
Looking ahead to 2019
HR targets and focus areas for 2019
include the following:
■■ Achieve 5% increase in productivity
beyond the business plan
■■ Further enhance leadership
capability to align leadership skills
with new competency framework
■■ Continue to entrench diversity by:
– Accelerating the development
of female employees
– Training leadership to embrace
multicultural diversity
– Improving ranking in the
Bloomberg Gender Equality
Index
– Implementing a transformation
strategy
– Developing a baseline for
measurement of the employment
of vulnerable people across
regions
– Achieving >54% HDSA
representation among South
Deep management and <4%
expatriate representation in
Ghana
■■ Decrease turnover of critical roles
to 5%
■■ Improve performance management
though line manager coaching
programmes
The Gold Fields Integrated Annual Report 2018
79
Summarised Remuneration Report
This is a summarised version of the
Remuneration Committee’s
Remuneration Report, the full version
of which can be found in the Annual
Financial Report on p28 – 60.
ensures that each individual’s
objectives are aligned to the Gold
Fields strategy and all employees play
a role in contributing to the overall
value creation of the Group.
Our remuneration philosophy
and practices
Gold Fields’ remuneration philosophy
is underpinned by a pay-for-
performance approach, in which
people are rewarded for delivery
against Balanced Scorecard (BSC)
objectives.
There is a direct cascade of strategic
objectives from the Group BSC —
which is informed by the Group
strategy — to the regional,
operational, departmental and,
ultimately, individual BSCs. This
During 2018, the overall framework of
our Remuneration Policy remained
unchanged and no changes were
made to the remuneration mix for
executives. We did, however, make a
number of enhancements and
refinements to the implementation,
including:
■■ Enhancing the link between
performance and strategy by:
– Simplifying the Gold Fields
strategy to a “strategy-on-a-
page” to enhance
communication
– Implementing the cash-settled
LTI plan for management-level
employees, complete with
localised targets
– Refreshing the four drivers of the
strategic objectives to maximise
total shareholder return (TSR)
sustainably
– Ensuring strategic alignment
between Group, regional and
personal scorecards
■■ Clarifying policies, where
appropriate, to remove ambiguity
and to cater to the numerous
jurisdictions in which Gold Fields
operates
Gold Fields’ remuneration practices
We do:
■■ Provide pay for performance:
■■ 75% of CEO’s total remuneration is pay-at-risk
■■ A significant percentage of the CEO’s short-term incentive is based on corporate performance
■■ The CEO’s long-term incentive is entirely performance-based through performance shares
■■ Performance share awards are earned based on absolute and relative TSR and free cash-flow margin (FCFM)
■■ Threshold (partial) performance share payouts require relative TSR performance at least at the median when
compared to the performance comparator group and absolute TSR to exceed the cost of equity
■■ Have a clawback policy
■■ Have executive director share ownership guidelines through the executive minimum shareholding plan
■■ Require a double-trigger for CEO and CFO upon a change of control
■■ Promote retention with equity awards that vest over three years
■■ Have an independent Remuneration Committee, with all members being independent directors
■■ Retain an independent remuneration consultant whose primary purpose is to advise the Remuneration Committee
■■ Conduct annual advisory votes on our remuneration policy and implementation report, as they appear in the
Remuneration Report
We do not:
■■ Reprice ‘underwater’ share options
■■ Pay dividends on unearned performance shares
■■ Provide guaranteed bonuses
■■ Grant share awards to non-executive directors
■■ Allow the use of unvested LTI awards as collateral, or protect the value of unvested awards, or the value of any
shares and securities held as part of meeting the MSR provisions
■■ Provide financial assistance to directors or prescribed officers
SAFE OPERATIONAL DELIVERY
80
The Gold Fields Integrated Annual Report 2018
A fit-for-purpose workforce continued
Our remuneration mix
GUARANTEED PAY
BASE PAY
(EITHER GRP OR BRP)
BENEFITS AND
ALLOWANCES
Link to strategy
Link to strategy
A competitive salary for executives to ensure that
their experience, contribution and appropriate market
comparisons are fairly reflected. This also allows us to
attract and retain the skills required to deliver on our
strategic goals.
Market-related benefits are guided by local legislation
and internal policies, and aim to strengthen the employee
value proposition. This provides an additional level of
competitiveness in line with Gold Fields’ strategy to attract
and retain highly skilled and motivated employees.
Implementation
Implementation
Based on local market trends and can include items such
as group life insurance, disability and accidental death
insurance, etc.
The Expatriate Policy provides that special allowances may
be made in respect of, among others, relocation costs,
cost of living, and the cost of education for children and
their families.
Policy / practice
In line with the approved policy, the provision of benefits
complies with legislation across the jurisdictions in which
we operate, and benchmarking ensures that there are
competitive benefits aimed at attracting and retaining key
employees.
Performance measures
Not applicable
Base pay for all employees is reviewed annually after
considering benchmarks against comparator group. Group
performance, economic circumstances, affordability,
individual performance, changes in responsibility and levels
of increase for the broader employee population are also
taken into account. Changes are effective from 1 March
each year.
The CEO makes Exco recommendations, excluding his
own base salary, to the RemCo for approval by the Board.
Policy / practice
We seek close alignment between executive salary
increases and increases for all non-bargaining unit
employees, where practical. This is informed by inflation,
which can be matched directly or above/below consumer
price index (CPI).
The guaranteed pay benchmark is the market median,
with a significant proportion of performance-related
variable pay comprising STIs and LTIs, especially for senior
employees.
Performance measures
Both Company performance and individual performance
against the BSC informs the individual base salary review.
This is in addition to economic circumstances, affordability,
changes in job responsibility and alignment across
employee group.
The Gold Fields Integrated Annual Report 2018
81
VARIABLE PAY
SHORT-TERM
INCENTIVE (STI)
LONG-TERM
INCENTIVE (LTI)
MINIMUM SHARE
REQUIREMENTS (MSR)
Link to strategy
Link to strategy
Link to strategy
Executives are required to hold shares
in Gold Fields, in line with best practice.
This ensures alignment between
executive and shareholders’ interests.
Implementation
CEO required to hold 200% of GRP
by 31 December 2020. All other Exco
members to hold 100% of GRP/BRP
within five years of entry.
Policy / practice
RemCo makes matching shares
available on a ratio of 1:3, which vest at
the end of a 5-year period.
Capped at 67% of GRP for CEO, 33%
for others.
Execs may elect to defer certain cash
or equity awards to increase their MSR
holdings.
Performance measures
Not applicable
This is a performance-based Group
annual incentive scheme that supports
value creation and motivates our people
to help us achieve success.
Implementation
All Group executives, regional
executives and management-level
employees (Patterson D-band and
above) categories are eligible to
participate in the STI, subject to the
achievement of applicable performance
conditions.
Policy / practice
Employees can receive up to 200% of
their target bonus, based on their
personal performance rating in
their BSC. No bonus is paid for a
performance rating between 0 and 1,9,
100% of the bonus is paid for a
performance rating of 3 and 200%
of target is awarded for a rating of
4,7 to 5.
Job
grade
Bonus target incentive
as % of GRP
Threshold
Target
Stretch
EVP
CFO
CEO
0%
0%
0%
55%
60%
65%
110%
120%
130%
Performance measures
Individual BSC performance (35%)
Company performance conditions 2018
(65% or 45% for RexCo):
■
Safety (TRIFR 20%) (changed for
2019)
■ Gold production (20%)
■ AIC (40%)
■ Development and waste stripping
(20%)
Regional performance conditions (20%
for RexCo)
The long-term incentive plans award
shares and/or cash to participants. This
instills a sense of ownership among
employees and executives, enabling:
■ Alignment of executive rewards
with shareholder interests
■ Retention of key people
■ Alignment of people costs with
business results
Implementation
Previously, all eligible management-level
employees who participated in the LTI
plan received performance shares. From
2018 onwards, the following changes
apply:
■ Exco members: 100% of LTI
award under the Share Plan
■ Regional Exco: 30% of LTI award
under the Share Plan and 70%
under the cash-settled LTI plan
■ Other participants under the LTI
receive 100% under the cash-
settled LTI plan
Both cash and equity-settled plans
have 3-year vesting periods and annual
awards with performance conditions
Policy / practice
On-target
award as % of
GRP or BRP
Business
104
96
88
208
192
176
18-20
36-40
Role
CEO
CFO
Exco
Regional
Exco1
Performance measures
Performance shares and Group cash-
settled
■ Absolute US Dollar Total
Shareholder Return (33% weighting)
■ Relative US Dollar TSR
(33% weighting)
■ Free cash-flow Margin
(34% weighting)
Regional cash-settled:
■ Decreasing AIC (40%)
■ Sustainably extending reserves -
Australia, Ghana, Peru (40%)
■ Three-year production targets -
South Deep (40%
■ Safety, licence to operate, reputation
(20%)
SAFE OPERATIONAL DELIVERY
82
The Gold Fields Integrated Annual Report 2018
A fit-for-purpose workforce continued
A fit-for-purpose workforce continued
Executive directors’ and prescribed officers’ remuneration
The table of remuneration for executive directors and prescribed officers based on the total single-figure remuneration prescribed by King IV is displayed below.
King IV requires the disclosure of a total single figure of remuneration, received and receivable for the reporting period that ties remuneration to the individual’s
performance for the period.
The definitions used in the adoption of these remuneration reporting requirements under King IV follow below. These should assist in a clearer understanding of
the values and related terminology used in the table of remuneration.
Reflected
In respect of the LTI plans, remuneration is reflected when performance conditions have been met during the reporting period. If the only remaining vesting
condition is continued employment, the remuneration is reflected in the period when all other performance conditions have been met. Remuneration included
may not have legally transferred to the individual, and the individual may not yet have the unconditional right to enjoy the benefits thereof.
Settlement
This refers to remuneration that has been included in the total-single figure remuneration in respect of any prior period but has only been unconditionally
transferred to the individual concerned in the current period.
Remuneration for executive directors and prescribed officers – All figures in US$’000
Name
Status
N Holland
Executive Director
P Schmidt
Executive Director
L Rivera8
Prescribed Officer
A Baku9
Prescribed Officer
R Butcher
Prescribed Officer
N Chohan
Prescribed Officer
B Mattison10
Prescribed Officer
T Harmse
Prescribed Officer
A Nagaser
Prescribed Officer
S Mathews11
Prescribed Officer
M Preece
Prescribed Officer
R Bardien12
Prescribed Officer
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
Pension
fund
contribution
26.5
26.3
48.2
48.2
72.8
48.4
185.8
180.5
37.3
37.9
26.5
26.3
26.5
26.3
26.5
26.3
27.0
25.3
29.5
21.2
26.5
16.6
24.3
Salary1
1,251.6
1,186.9
626.6
588.6
668.6
626.3
808.0
784.7
384.5
353.0
367.2
342.8
453.6
426.7
369.7
344.7
243.3
228.1
438.2
397.5
541.7
338.2
274.3
Cash
incentives2
661.5
1,002.2
306.2
542.7
134.0
270.4
634.8
719.8
192.4
278.5
213.9
288.3
271.9
369.9
215.3
290.1
131.1
192.0
289.4
326.1
168.8
—
150.5
Average exchange rates were US$1 = R13.20 for FY2018 and US$1 = R13.33 for FY2017. No termination payments during the year
1 The total US$ amounts paid for 2018, and included in salary were as follows: NJ Holland US$406,700, P Schmidt US$124,150 and BJ Mattison
US$88,200. The total US$ amounts paid for 2017, and included in salary were as follows: NJ Holland US$396,500, P Schmidt US$121,000 and
BJ Mattison US$86,000
2 The annual bonus accruals for the year ended 31 December 2017 and 31 December 2018, paid in February 2018 and February 2019, respectively
3 The values of the 2015 LTI Plan with a performance period ending 31 December 2017 is reflected in the 2017 figures
The values of the 2016 performance shares with a performance period ending 31 December 2018 is reflected in the 2018 total single figure of
remuneration based on a US$3.29 price as at 31 December 2018. The vesting date is 1 March 2019 and will be reflected in the 2019 cash value
equivalent on settlement
4 The 2017 total single figure of remuneration includes the cash equivalent value of matching shares awarded in terms of the MSR policy in 2017
5 Other includes special bonuses and incidental payments unless otherwise stated
6 Includes cash incentive, cash LTI plan and matching shares reflected for the year
Matching
shares
reflected4
Other5
remuneration
Add:
cash
Total
cash
value on
equivalent
settlement7
remuneration
LTI plan
reflected3
1,027.2
463.5
646.4
459.0
—
—
621.9
463.5
90.3
—
248.7
126.0
410.1
297.0
331.6
252.0
124.8
90.0
274.2
—
—
—
—
942.8
157.5
51.9
54.0
—
55.4
—
10.0
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
-
2.1
4.0
385.7
253.3
68.0
150.2
—
—
1.8
3.3
2.5
1.0
7.8
6.8
0.4
0.7
4.9
10.0
0.4
—
106.1
Total
single
figure
of
2,966.8
3,621.7
1,629.4
1,800.0
1,261.3
1,198.4
2,318.6
2,350.6
704.5
669.4
858.2
840.7
1,164.6
1,176.3
1,036.3
950.8
929.9
526.6
536.1
754.8
737.3
354.8
555.2
Less:
amounts
not yet
settled6
(1,688.7)
(2,408.5)
(952.6)
(1,159.2)
(519.7)
(486.7)
(1,256.8)
(1,235.2)
(282.7)
(278.5)
(462.7)
(468.3)
(681.9)
(722.3)
(546.9)
(552.1)
(255.9)
(282.0)
(563.6)
(326.1)
(168.8)
—
(150.5)
1,475.6
677.6
1,011.2
891.2
481.3
111.0
1,237.2
924.4
267.6
323.2
403.5
417.2
672.5
622.2
548.0
484.3
245.1
221.1
514.2
—
—
—
—
2,753.7
1,890.8
1,688.0
1,532.0
1,222.9
822.7
2,299.0
2,039.8
689.4
714.1
799.0
789.6
1,155.1
1,076.2
951.9
862.1
515.8
475.2
986.9
428.7
568.6
354.8
404.7
Remuneration for executive directors and prescribed officers – All figures in US$’000
Name
Status
Salary1
contribution
incentives2
N Holland
Executive Director
P Schmidt
Executive Director
L Rivera8
Prescribed Officer
A Baku9
Prescribed Officer
R Butcher
Prescribed Officer
N Chohan
Prescribed Officer
B Mattison10
Prescribed Officer
T Harmse
Prescribed Officer
A Nagaser
Prescribed Officer
S Mathews11
Prescribed Officer
M Preece
Prescribed Officer
R Bardien12
Prescribed Officer
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
Pension
fund
26.5
26.3
48.2
48.2
72.8
48.4
185.8
180.5
37.3
37.9
26.5
26.3
26.5
26.3
26.5
26.3
27.0
25.3
29.5
21.2
26.5
16.6
24.3
Cash
661.5
1,002.2
306.2
542.7
134.0
270.4
634.8
719.8
192.4
278.5
213.9
288.3
271.9
369.9
215.3
290.1
131.1
192.0
289.4
326.1
168.8
—
150.5
1,251.6
1,186.9
626.6
588.6
668.6
626.3
808.0
784.7
384.5
353.0
367.2
342.8
453.6
426.7
369.7
344.7
243.3
228.1
438.2
397.5
541.7
338.2
274.3
The Gold Fields Integrated Annual Report 2018
83
Not yet settled
This refers to remuneration that has been included in the total single figure of remuneration in the current period but has not been unconditionally transferred to
the individual concerned in the current period, or where an election has been made by the individual to defer the settlement thereof in fulfilment of their minimum
shareholding requirement.
Unconditional transfer
Means that the individual now enjoys full right to the remuneration (excluding any applicable clawback), and it is no longer subject to any further service,
employment or other conditions.
For the two executive directors, the 2018 total single figure of remuneration reported is lower than was reported for the 2017 period. The reasons are as follows:
■■ Matching shares awarded (US$942,800 and US$157,500 for the CEO and CFO respectively) were included in the reporting for the 2017 period as required,
with none in 2018
■■ Both the CEO and CFO have lower cash-incentives in 2018 than in 2017 due to these being performance-related outcomes as described in Section 2
LTI plan
reflected3
1,027.2
463.5
646.4
459.0
Matching
shares
reflected4
—
942.8
—
157.5
—
—
621.9
463.5
90.3
—
248.7
126.0
410.1
297.0
331.6
252.0
124.8
90.0
274.2
—
—
—
—
—
—
—
51.9
—
—
—
54.0
—
55.4
—
10.0
—
—
—
—
—
—
—
Total
single
figure
of
remuneration
2,966.8
3,621.7
1,629.4
1,800.0
1,261.3
1,198.4
2,318.6
2,350.6
704.5
669.4
858.2
840.7
1,164.6
1,176.3
950.8
929.9
526.6
536.1
1,036.3
754.8
737.3
354.8
555.2
Other5
—
-
2.1
4.0
385.7
253.3
68.0
150.2
—
—
1.8
3.3
2.5
1.0
7.8
6.8
0.4
0.7
4.9
10.0
0.4
—
106.1
Less:
amounts
not yet
settled6
(1,688.7)
(2,408.5)
(952.6)
(1,159.2)
(519.7)
(486.7)
(1,256.8)
(1,235.2)
(282.7)
(278.5)
(462.7)
(468.3)
(681.9)
(722.3)
(546.9)
(552.1)
(255.9)
(282.0)
(563.6)
(326.1)
(168.8)
—
(150.5)
Add:
cash
value on
settlement7
Total
cash
equivalent
remuneration
1,475.6
677.6
1,011.2
891.2
481.3
111.0
1,237.2
924.4
267.6
323.2
403.5
417.2
672.5
622.2
548.0
484.3
245.1
221.1
514.2
—
—
—
—
2,753.7
1,890.8
1,688.0
1,532.0
1,222.9
822.7
2,299.0
2,039.8
689.4
714.1
799.0
789.6
1,155.1
1,076.2
951.9
862.1
515.8
475.2
986.9
428.7
568.6
354.8
404.7
7 The 2018 figure includes the bonus related to the 2017 financial year paid in February 2018 and the 2015 cash LTIP vested and settled in March
2018. The 2017 figure includes the bonus related to the 2016 financial year paid in February 2017 and the 2014 cash LTIP vested and settled in
March 2017.
8 L Rivera – other payments for 2018 relate to cash in lieu of 2016 share award payable upon vesting in March 2019. His appointment package and
conditions were approved by RemCo but the LTI award was inadvertently not executed hence he was never physically awarded. This value reflects
the equivalent cash compensation in this regard. Cash Incentives include legislated bonus portion. Company contributions to pension erroneously
not reported previously
9 A Baku – other payments for 2018 relate to approved profit share bonus payment approved and 2017 relates to leave allowance in line with related
policy.
10 BJ Mattison – other payments for 2018 relate to a service award in line with Company practice.
11 S Mathews – other payments for 2018 relate to bonus payment in lieu of most improved operation bonus scheme.
12 R Bardien – Appointed on 1 February 2018. Other payments relate to sign on bonus.
SAFE OPERATIONAL DELIVERY 84
The Gold Fields Integrated Annual Report 2018
Average US$ gold price received
US$1,252/oz
KEY MEASUREMENTS – CAPITAL DISCIPLINE AND FINANCIAL PERFORMANCE1
2018
Status
2017
2016
2015
2014
US$/A$ (average)
R/US$ (average)
Average US$ gold price received
(US$/oz)
Average A$ gold price received
(A$/oz)
0.75
13.20
1,252
1,694
Average Rand gold price received
(R/kg)
531,253
Revenue (US$m)
All-in Sustaining Costs (AISC) (US$/oz)
All-in Costs (AIC) (US$/oz)
Cost of sales2 (US$m)
Total capital expenditure (US$m)
Net cash-flow3 (US$m)
Free cash-flow margin (%)
Net debt (US$m)
Net debt:adjusted EBITDA ratio4
Total dividend payment (R/share)
2,578
981
1,173
1,375
814
-132
16
1,612
1.45
0.40
¢
¢
¢
¢
¢
¢
¢
¢
¢
¢
¢
¢
¢
¢
¢
0.77
13.33
0.75
14.70
0.75
12.68
0.81
11.56
1,255
1,241
1,140
1,249
1,640
1,675
1,541
1,404
538,344
584,894
478,263
441,981
2,811
955
1,088
1,404
840
-2
16
2,750
980
1,006
1,388
650
294
17
2,545
1,007
1,026
1,456
634
123
8
2,869
1,053
1,087
1,678
609
235
13
1,303
1,166
1,380
1,453
1.03
0.90
0.95
1.10
1.38
0.25
1.30
0.40
1 All figures are for total operations (continued and discontinued)
2 Cost of sales before amortisation and depreciation
3 Net cash-flow = cash-flow from operating activities less net expenditure, environmental payments and finance lease payments
4 This measure is defined and reconciled in note 39 of the consolidated financial statements
¢ 2018 performance improvement on 2017 or achievement in line with strategy
¢ 2018 performance drop against 2017
¢ 2018 performance on par with 2017
STRATEGIC GOALS
1 Strong balance sheet maintained while investment in future
growth continued
RESULTS AND IMPACTS
Strategic
responses
– Financial
discipline
Key
initiatives
■■ Allocate capital in line with strategic priorities as per capital ranking
■■ Focus on cash-flow margins
■■ Technology strategies to improve safety, efficiencies and costs
■■ Gold and copper production and oil price hedging for various regions
■■ Cash generation to pay down debt
■■ Debt refinancing being considered
Related
risks
■■ A sustained and significantly lower gold price and currency exchange rate volatility
■■ High debt levels
SUSTAINABLE DEVELOPMENT GOALS
Decent Work and
Economic Growth
Industry, Innovation
and Infrastructure
KEY STAKEHOLDERS –
SHAREHOLDERS
AND INVESTORS
COPY TO BE SUPPLIED
The Gold Fields Integrated Annual Report 2018
85
We focus on growing
our margins and FCF
for every ounce of gold
produced to deliver sustainable
financial returns to our
investors and shareholders.
■■ Introduction
■■ Financial performance
■■ Summarised financials
p86
p87
p89
COPY TO BE SUPPLIEDPage heading continuedSecondary page heading continuedfor the year ended 31 December 2018Capital discipline
86
The Gold Fields Integrated Annual Report 2018
Financial performance
Introduction
The focus of Gold Fields’ business
strategy is to grow margin and free
cash-flow (FCF) for every ounce of
gold produced, and to sustain this
FCF in the long term. In this regard,
our target is to generate a FCF
margin of at least 15% per region at
a notional long-term planning gold
price of US$1,200/oz. However, to
ensure the sustainability of this
cash-flow, the Group had to reinvest
in the portfolio during 2017 and
2018, spending project capital of
US$502m over this period.
Importantly, Gold Fields spent this
capital on projects that will improve
the overall quality of its asset base
and enhance FCF generation in the
future.
After two years of elevated levels of
project capital, 2019 looks set to be
an inflection point for Gold Fields in
terms of FCF generation. During
2018, the Group spent US$64m at
Salares Norte and incurred project
capital of US$277m (US$125m at
Damang, US$134m at Gruyere,
and US$18m at South Deep),
underpinning a net cash-outflow
of US$132m (2017: US$2m).
Further project capital of US$143m
will be spent at Damang and Gruyere
in 2019, with the majority scheduled
for the first half of the year. The
project capital is then expected to
decrease significantly in H2 2019,
at which point an increase in FCF is
anticipated. Once the capital bill has
rolled off, Gold Fields does not
envisage spending material growth
capital in the short to medium term.
The objective is to reap the rewards
of the capital invested through an
increase in FCF, which will go
towards decreasing debt and,
potentially, increased dividends.
The Group’s FCF margin, which is
adjusted for share-based payments,
Salares Norte exploration expenditure
and Damang and Gruyere project
capital, remained steady at 16% in
2018 (2017: 16%). Encouragingly,
this is in line with our targeted 15%
FCF margin at a US$1,200/oz gold
price.
Despite the significant project capital incurred, our priorities for the cash we generated have remained unchanged
during the reinvestment period:
■■ Rewarding our shareholders with dividends
Our policy is to pay out between 25% and 35% of normalised earnings
■■ Funding growth projects, which will improve the quality of the Gold Fields portfolio. The bulk of the project
capital is being spent on Damang in Ghana and Gruyere in Western Australia. Once these two mines reach full
production, which is anticipated by 2020, they are set to significantly improve Group AIC and, subsequently,
cash generating ability
■■ Maintaining the strength of the balance sheet and limiting the increase in debt through the peak capital
expenditure years. Gold Fields ended 2018 on a net debt:adjusted EBITDA of 1.45x. Once we have incurred all
project capital expenditure on Damang and Gruyere, our target is to once again reduce our net debt:EBITDA
to 1.0x.
The Gold Fields Integrated Annual Report 2018
87
2018 financial performance
Gold Fields’ financial performance
was underpinned by the strong
operational performance of the
Ghanaian, Australian and Peruvian
assets in 2018, with South Deep
presenting a drag on Group results.
The outperformance of these
operations (relative to guidance),
coupled with a US Dollar gold price
received that was higher than our
business planning price, enabled the
Group to contain the cash-outflow,
limit the increase in net debt and
maintain a healthy balance sheet
during the year. Net debt increased
to US$1,612m during 2018 from
US$1,303m at end 2017, resulting in
a net debt:adjusted EBITDA of 1.45x
at 31 December 2018 (December
2017: 1.03x). A large portion of this
increase was due to the US$165m
upfront payment relating to the
Asanko Gold acquisition.
Net revenue declined by 7%
to US$2,578m in 2018 from
US$2,762m in 2017, driven by the
decrease in production coupled with
a slightly lower gold price received.
Cost of sales decreased by 3% to
US$2,043m in 2018 from
US$2,105m in 2017. The bulk of
Gold Fields’ costs in Australia and
South Africa are incurred in local
currencies. As such, the slight
strengthening of the Australian Dollar
and South African Rand had a
negative impact on costs in US Dollar
terms – and ultimately profits – in
these geographies during 2018.
The Group AISC of US$981/oz and
All-in Costs (AIC) of US$1,173/oz in
2018 compared with AISC of
US$955/oz and AIC of US$1,088/oz
in 2017. Encouragingly, costs came
in below guidance (AISC: US$990/oz
– US$1,010/oz; AIC: US$1,190/oz –
US$1,210/oz) for the sixth
consecutive year. The increase in AIC
was driven by an increase in Salares
Norte expenditure and project capital
incurred at Gruyere.
Other salient features during 2018
included:
■■ Royalty of US$63m in 2018
compared with US$62m in 2017
■■ Total capital expenditure of
US$814m in 2018 versus
US$834m in 2017
■■ A decrease in the normal taxation
charge to US$146m in 2018 (2017:
US$205m)
■■ Asset write-downs and
impairments of US$520m were
recognised in 2018 (2017:
US$200m), comprising mainly a
US$482m impairment of South
Deep
Taking into account all of the above,
the net loss attributable to Gold
Fields’ shareholders amounted to
US$348m in 2018, compared to
a net loss of US$19m in 2017.
Headline earnings were US$61m
in 2018 compared to US$210m in
2017.
A detailed analysis of our financial
performance is provided in the
management’s discussion and
analysis of the financial statements in
the 2018 Annual Financial Report on
p61 – 124.
The consolidated income statement,
statement of financial position and
cash flow statement – extracted from
the 2018 Annual Financial Report –
are provided on p150 – 154.
Free Cash-Flow
Gold Fields recorded a net cash-
outflow (see footnote 3 on p2) of
US$132m in 2018 compared with an
outflow of US$2m in 2017. Included
in the 2018 number is project capital
of US$125m (2017: US$115m) and
US$134m (2017: US$81m) for
Damang and Gruyere, respectively.
South Deep recorded a net cash-
outflow of US$141m compared with
an outflow of US$60m in 2017.
US$143m in project capital is
budgeted for 2019, with the majority
scheduled to be spent during H1
2019.
At a mine level, cash generation
remained strong in 2018. Excluding
project capital and off-site exploration
expenditure, mine cash-flow was
US$334m (US$195m in Australia,
US$114m in Peru, US$149m in
Ghana and a negative US$123m in
South Africa) versus US$441m in
2017. Our Australian, Ghanaian and
Peruvian mines collectively generated
a net cash-flow of US$457m (2017:
US$484m), demonstrating again the
quality of this portfolio of assets.
FCF margin, which is adjusted for
share-based payments, Salares
Norte exploration expenditure and
Damang and Gruyere project capital,
remained unchanged at 16% in 2018
compared to 2017.
Dividends
Gold Fields has a long and well-
established policy of rewarding
shareholders by paying out between
25% and 35% of normalised earnings
as dividends. This policy is viewed as
an important element of Gold Fields’
investment case, and we have
consistently honoured this
commitment with an average pay-out
of approximately 30% of earnings
every year over the past nine years.
Despite recording a net cash-outflow
in 2018, the Group maintained its
dividend policy and declared a final
dividend of R0.20/share for the year.
Together with the interim dividend of
R0.20 per share (for the six months
ending on 30 June 2018), this brings
the total dividend for 2018 to
R0.40/share. In 2017 we paid a total
dividend of R0.90 per share.
Reducing debt
A strategic objective of management
during the peak capital expenditure
years (2017 and 2018) has been to
maintain a healthy balance sheet and
minimise the increase in net debt
through limiting the cash-outflow.
Net debt increased by US$309m
during 2018 to end the year at
US$1,612m (end December 2017:
US$1,303m). This includes US$165m
related to the Asanko Gold
acquisition, which closed on 31 July
2018. The outperformance of the
international portfolio and a higher
gold price received than budgeted
enabled Gold Fields to end 2018
on a better than expected net
debt:adjusted EBITDA ratio of 1.45x
(2017: 1.03x).
CAPITAL DISCIPLINE 88
The Gold Fields Integrated Annual Report 2018
Financial performance continued
During 2018, the Group successfully
extended the maturity of its
US$380m term loan by 12 months to
6 June 2020 (from 6 June 2019). As
such, the first material debt maturity
is now due in June 2020. In addition,
having entered into an A$500m
revolving credit facility in June 2017,
Gold Fields’ balance sheet is in a
comfortable position with regards to
solvency and liquidity. At the end of
2018, the Group had committed and
uncommitted loan facilities totalling
US$2.5bn, A$500m and R4.2bn, of
which US$976m, A$50m and
R2.2bn,respectively, are unutilised.
Our debt is currently rated BB+ by
Standard & Poor’s and Baa3
(investment grade) by Moody’s, the
latter being an upgrade from 2017.
During the course of 2019, Gold
Fields will look to refinance and
extend the maturities of its
syndicated bank facilities (US$1.3bn)
and US$1bn bond (US$852m
outstanding).
Hedging
Given the high levels of project capital
expenditure incurred during the year,
together with the volatility in
commodity prices and exchange
rates, as well as our higher net debt
position, management continued with
the short-term, tactical hedging
programme that was implemented in
2017. These hedges were put in
place to protect cash-flows during
the investment phase, and Gold
Fields will look to continue the
hedging programme during the first
half of 2019, whilst the remainder of
capital is spent on Damang and
Gruyere. Hedges during 2018 and
those put in place in Q1 2019 are in
the table below. Net realised gains
from these hedge positions were
US$17m in 2018, compared with
US$13m in 2017.
Hedge
Country
Quantity hedged
Hedging instrument and price
2018
Gold
hedge
Australia
Australia
Ghana
South Africa
Copper
hedge
Oil
hedge
Peru
Ghana
453koz (51% of
production)
221koz (25% of
production)
489koz (69% of
production)
64koz (41% of
production)
29.4kt (92% of
production)
126 million litres
Australia
78 million litres
Zero-cost collars; Average (Ave) floor price of
A$1,703/oz, Ave cap price of A$1,767/oz
Swaps; Ave strike price of A$1,714/oz
Zero-cost collars; Ave floor price of US$1,300/oz,
Ave cap price of US$1,418/oz
Zero-cost collars; Ave floor price of R600,000/kg,
Ave cap price of R665,621/kg
Zero-cost collars; Ave floor price of US$6,600/t,
Ave cap price of US$7,431/t
Swaps; Equivalent Brent crude swap price
US$49.80/bbl
Swaps; Equivalent Brent crude swap price
US$49.92/bbl
2019
Hedge term
Apr 2018 –
Dec 2018
June 2018 –
Dec 2018
Jan 2018 –
Dec 2018
Jan 2018 –
Dec 2018
Jan 2018 –
Dec 2018
June 2017 –
Dec 2019
June 2017 –
Dec 2019
Hedge
Country
Quantity hedged
Hedging instrument and price
Hedge term
Gold
hedge
Australia
Australia
Australia
South Africa
283koz (31% of
guidance)
173koz (19% of
guidance)
456koz (51% of
guidance)
113koz (59% of
guidance)
Swaps; Ave strike price of A$1,751/oz
Zero-cost collars; Ave floor price of A$1,720/oz,
Ave cap price of A$1,789/oz
Zero-cost collars; Ave floor price of A$1,800/oz,
Ave cap price of A$1,869/oz
Forwards; Ave strike price of between
R615,103/kg and R620,000/kg
A$ Forex
hedge
Oil
hedge
Australia
US$366m
Ghana
126 million litres
Australia
78 million litres
Average strike price between
US$0.7075 – 0.7330/A$
Swaps; Equivalent Brent crude swap price
US$49.80/bbl
Swaps; Equivalent Brent crude swap price
US$49.92/bbl
Jan 2019 –
Dec 2019
Jan 2019 –
Dec 2019
Jan 2019 –
Dec 2019
Between
June 2019 –
Dec 2019
Jan 2019 –
Dec 2019
June 2017 –
Dec 2019
June 2017 –
Dec 2019
The Gold Fields Integrated Annual Report 2018
89
Consolidated income statement
for the year ended 31 December 2018
Figures in millions unless otherwise stated
CONTINUING OPERATIONS
Revenue
Cost of sales
Investment income
Finance expense
Gain on financial instruments
Foreign exchange gain/(loss)
Other costs, net
Share-based payments
Long-term incentive plan
Exploration expense
Share of results of equity accounted investees, net of taxation
Restructuring costs
Silicosis settlement costs
Gain on acquisition of Asanko
Impairment, net of reversal of impairment of investments and assets
Profit on disposal of investments
(Loss)/profit on disposal of assets
(Loss)/profit before royalties and taxation
Royalties
(Loss)/profit before taxation
Mining and income taxation
(Loss)/profit from continuing operations
DISCONTINUED OPERATIONS
Profit from discontinued operations, net of taxation
(Loss)/profit for the year
(Loss)/profit attributable to:
Owners of the parent
– Continuing operations
– Discontinued operations
Non-controlling interests
– Continuing operations
(Loss)/earnings per share attributable to owners of the parent:
Basic (loss)/earnings per share from continuing operations – cents
Basic earnings per share from discontinued operations – cents
Diluted basic (loss)/earnings per share from continuing operations – cents
Diluted basic earnings per share from discontinued operations – cents
United States Dollar
2018
2017
2016
2,577.8
(2,043.0)
7.8
(88.0)
21.0
6.4
(44.8)
(37.5)
(1.1)
(104.2)
(13.1)
(113.9)
4.5
51.8
(520.3)
–
(51.6)
(348.2)
(62.5)
(410.7)
65.9
(344.8)
–
(344.8)
(348.2)
(348.2)
–
3.4
3.4
(344.8)
(42)
–
(42)
–
2,761.8
(2,105.1)
5.6
(81.3)
34.4
(3.5)
(19.0)
(26.8)
(5.0)
(109.8)
(1.3)
(9.2)
(30.2)
–
(200.2)
–
4.0
214.4
(62.0)
152.4
(173.2)
(20.8)
13.1
(7.7)
(18.7)
(31.8)
13.1
11.0
11.0
(7.7)
(4)
2
(4)
2
2,666.4
(2,001.2)
8.3
(78.1)
14.4
(6.4)
(16.8)
(14.0)
(10.5)
(86.1)
(2.3)
(11.7)
–
–
(76.5)
2.3
48.0
435.8
(78.4)
357.4
(189.5)
167.9
1.2
169.1
158.2
157.0
1.2
10.9
10.9
169.1
19
–
19
–
CAPITAL DISCIPLINE 90
The Gold Fields Integrated Annual Report 2018
Financial performance continued
Statement of financial position
at 31 December 2018
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
Stated capital
Other reserves
Retained earnings
Non-controlling interests
Total equity
Non-current liabilities
Deferred taxation
Borrowings
Provisions
Finance lease liabilities
Long-term incentive plan
Current liabilities
Trade and other payables
Royalties payable
Taxation payable
Current portion of borrowings
Current portion of finance lease liabilities
Current portion of long-term incentive plan
Total liabilities
Total equity and liabilities
United States Dollar
2018
2017
5,183.2
4,259.2
–
133.3
225.1
235.3
60.8
269.5
921.1
368.2
153.2
399.7
–
6,104.3
2,586.1
3,622.5
(2,110.3)
1,073.9
120.8
2,706.9
2,781.9
454.9
1,925.3
319.5
80.1
2.1
615.5
503.0
12.5
5.2
86.3
8.5
–
3,397.4
6,104.3
5,505.7
4,892.9
76.6
132.8
171.3
104.6
55.5
72.0
1,114.4
393.5
201.9
479.0
40.0
6,620.1
3,275.8
3,622.5
(1,817.8)
1,471.1
127.2
3,403.0
2,363.1
453.9
1,587.9
321.3
–
–
854.0
548.5
16.3
77.5
193.6
–
18.1
3,217.1
6,620.1
Cash-flow statement
for the year ended 31 December 2018
Figures in millions unless otherwise stated
Cash flows from operating activities
Cash generated by operations
Interest received
Change in working capital
Cash generated by operating activities
Interest paid
Royalties paid
Taxation paid
Net cash from operations
Dividends paid/advanced
– Owners of the parent
– Non-controlling interest 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
Purchase of Gruyere Gold project assets
Purchase of Asanko Gold joint venture investment
Purchase of investments
Proceeds on disposal of investments
Proceeds on disposal of APP
Proceeds on disposal of Darlot
Contributions to environmental trust funds
Cash utilised in continuing operations
Cash utilised in discontinued operations
Cash flows from financing activities
Shares issued
Loans raised
Loans repaid
Payment of finance lease liabilities
Cash generated by continuing operations
Cash generated by discontinued operations
Net cash (utilised)/generated
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
The Gold Fields Integrated Annual Report 2018
91
United States Dollar
2017
2016
762.4
1,286.5
5.1
(69.4)
1,222.2
(90.4)
(66.0)
(239.5)
826.3
(70.7)
(62.8)
(6.4)
(1.5)
755.6
6.8
(908.6)
(833.6)
23.2
–
–
(80.1)
–
–
5.4
(16.7)
(901.8)
(6.8)
84.2
–
779.7
(695.5)
–
84.2
–
(62.0)
14.3
526.7
479.0
917.5
1,245.4
7.3
(2.3)
1,250.4
(81.7)
(76.4)
(155.6)
936.7
(40.7)
(39.2)
(0.2)
(1.3)
896.0
21.5
(867.9)
(628.5)
2.3
(197.1)
–
(12.7)
4.4
–
–
(14.8)
(846.4)
(21.5)
37.0
151.5
1,298.7
(1,413.2)
–
37.0
–
86.6
0.1
440.0
526.7
2018
557.8
998.0
6.8
(16.3)
988.5
(91.0)
(65.5)
(217.2)
614.8
(57.0)
(45.5)
(9.8)
(1.7)
557.8
–
(886.8)
(814.2)
78.9
–
(165.0)
(19.3)
0.5
40.0
–
(7.7)
(886.8)
–
257.3
–
691.7
(431.9)
(2.5)
257.3
–
(71.7)
(7.6)
479.0
399.7
CAPITAL DISCIPLINE 92
The Gold Fields Integrated Annual Report 2018
Total value distribution
US$2.7bn
KEY MEASUREMENTS – LICENCE AND REPUTATION
2018
Status
2017
2016
2015
2014
Total value distribution (US$m)
SED spending (US$m)
Workforce from host communities
(%)
In-country procurement (US$m)7
Host community procurement
(US$m)
Environmental incidents (Level 3 and
above)
Water recycled/reused (GL)
Water withdrawal (GL)1
Electricity purchased (TWh)1
Diesel (TJ)1
CO2 emissions (‘000 tonnes)2, 3
Mining waste (million tonnes)
Gross closure costs provisions
(US$m)
2,711
25,71
566
1,542
4415
¢
¢
¢
¢
¢
¢
2
¢
41.4
21.24 ¢
¢
1.28
¢
7,974
¢
1,852
¢
149
400
¢
2,850
17.40
40
1,626
2,505
16.20
484
1,360
2,425
13.70
59
1,270
2,650
17.40
57
1,440
774
558
514
600
2
42.3
33.0
1.37
6,765
1,959
212
3
44.3
30.3
1.40
6,608
294
196
5
43.1
35.2
1.32
6,960
1,753
167
4
42.4
30.2
1.34
6,066
1,694
139
381
381
353
391
1 The numbers disclosed only include our operations, as head offices are not considered material
2 The CO2 emission numbers include head offices and comprise Scope 1, 2 and 3 emissions
3 Scope 1 emissions are those arising directly from sources managed by the Company, Scope 2 emissions are indirect
emissions generated in the production of electricity used by the Company, Scope 3 emissions arise as a consequence
of the activities of the Company
4 Significant drop due to change of definition of water withdrawal to exclude diverted water
5 The decline is due to a change in the definition of host communities by our Australian operations to only include
communities in their area of influence (previously Perth was included in the definition due to the FIFO nature of our
mines)
6 South Deep’s host community definition was changed in 2018 to align with the 2016 municipal boundary change which
amalgamated the Westonaria and Randfontein municipalities. It now includes all individuals who reside in the Rand West
City Local Municipality. This number also excludes the Perth office and Gruyere project
7 Procurement spending by mines only, not projects
¢ 2018 performance improvement on 2017 or achievement in line with strategy
¢ 2018 performance drop against 2017
¢ 2018 performance on par with 2017
STRATEGIC GOALS
1 We continued to enhance our social licence to operate through ESG focused initiatives
RESULTS AND IMPACTS
Strategic
responses
– Licence
and
reputation
■■ Total value creation for stakeholders
■■ Enhance governance and compliance
■■ Enhance reputation through community investment
■■ Shared Value initiations
■■ Environment stewardship – improving water and climate management practices
Key
initiatives
Related
risks
■■ Strengthening engagement with key stakeholders
■■ Increased host community employment and host community procurement
■■ Working directly and through industry associations to engage on resource nationalism
■■ Growth opportunities in stable mining destinations
■■ Increased investment in low-carbon and renewable energy sources
■■ Comprehensive climate change risk assessment conducted at all mines with
remedial action plans being implemented
■■ Align to ICMM water and tailings management standards
■■ Maintain Top 5 position in Dow Jones Sustainability Index
■■ Resource nationalism and political uncertainty
■■ Water pollution, supply and cost
■■ Impact on social licence to operate
■■ Cost of energy and security of power supply
■■ Failure to implement climate adaption measures
KEY STAKEHOLDERS –
COMMUNITIES
SHAREHOLDERS
GOVERNMENTS
AND REGULATORS
COPY TO BE SUPPLIED The Gold Fields Integrated Annual Report 2018
93
Through environmental stewardship we protect and
enhance relationships between our operations and
the communities in close proximity to it. These
relationships are built on a commitment to good
corporate governance, corporate citizenship, and
sharing wealth with our stakeholders. It is critical that
we nurture our relationships with a number of key
external stakeholders that determine both our regulatory
and social licences to operate, as well as the reputation
we have with these stakeholders. As such, protecting
our reputation and our licence to operate therefore
remains a key pillar of our scorecard.
■■ Overview
■■ Environmental stewardship
■■ Stakeholder relations
p94
p95
p106
SUSTAINABLE DEVELOPMENT GOALS
Good Health
and Wellbeing
Clean Water
and
Sanitation
Affordable
and Clean
Energy
Decent Work
and Economic
Growth
Sustainable
Cities and
Communities
Responsible
Consumption
and Production
Climate
Action
Life on
Land
Partnerships
for the Goals
COPY TO BE SUPPLIEDPage heading continuedSecondary page heading continuedfor the year ended 31 December 2018Licence and reputation
94
The Gold Fields Integrated Annual Report 2018
Overview
Sustainable gold mining is imperative
for Gold Fields’ longevity and key to
being the company of choice for all
our stakeholders – our workforce,
government, businesses, capital
providers and our communities. This
means developing mines across the
world, operating responsibly and
profitably over lives-of-mine and
creating shared value for
stakeholders.
Through environmental stewardship,
we protect and enhance relationships
between our operations and the
communities in close proximity. By
minimising the impact of our
operations on these communities,
ensuring ongoing meaningful
engagement with stakeholders, and
implementing sustainable
development policies, we create
Shared Value and deliver clear
economic, social and environmental
benefits to them.
The ability to fulfil our commitment to
stakeholders requires that we operate
sustainably and profitably. Above all,
we require the highest levels of
corporate governance and
compliance. This is essential given
the long-term, capital-intensive nature
of our mining projects, as well as the,
at times, challenging social and
political contexts in which we
operate.
In this section we deal with our
licence and reputation, a pillar of our
balanced scorecard. The section is
divided into two parts, environmental
stewardship and stakeholder
relations.
Regulatory licences are issued by all
levels of governments of the
countries we operate in, and requires,
first and foremost, good corporate
citizenship from Gold Fields in terms
of adherence to all relevant
legislation. This includes the payment
of taxes and other levies, as well as a
robust governance and compliance
approach. By building strong
relationships with our stakeholders,
we ensure that we operate beyond
pure compliance.
During 2018, Gold Fields’ total value
distribution to our stakeholders was
US$2.71bn (2017: US$2.85bn), in
the form of payments to
governments, capital providers,
communities, businesses and our
workforce. Over 90% of the value
created remains in the countries of
operation and increasingly in the
communities that host our mines
and projects.
The five key elements of our sustainable development strategy are:
Our objectives
Priorities
Energy and climate change
■■ Maintain security of supply
■■ Stabilise energy costs
■■ Drive renewables and a lower carbon energy mix
■■ Start managing climate change adaptation risks
Social acceptance
■■ Build strong community and government relationships
■■ Drive impact through Shared Value
■■ Enhance stakeholder engagement and communications
More info
p70 – 73
p97 – 99
p106 – 124
Water stewardship
■■ Set and achieve water withdrawal and recycling/reuse targets
■■ Achieve water security through catchment approach
p100 – 102
Integrated mine closure
and progressive
rehabilitation
■■ Business-wide integrated approach
■■ Liabilities optimised through progressive closure and rehabilitation
■■ Address social transition at closure
p105
Integrated approach
■■ Achieve collaboration across disciplines
■■ Regional leadership
■■ Integrated planning
p29 – 39
Environmental stewardship
The Gold Fields Integrated Annual Report 2018
95
Introduction
Gold Fields seeks to enhance the
environments in which it operates
and limit the impact that mining can
cause on the surrounding areas. To
manage this, we remain committed
to responsible environmental
stewardship.
Gold Fields has three Group
environment-related policy
statements, on environmental
stewardship, climate change and
materials stewardship, and five
environmental guidelines, on energy
and carbon management, water
management, tailings management,
mine closure and biodiversity.
Furthermore, all regions are aligning
processes to our critical control
management approach (p63).
Our approach to environmental
stewardship is guided and informed
by several external standards as well
as local legislation, supported by risk
management, internal policies and
priorities. Additional local priorities
are identified through stakeholder
consultation.
All our mines are certified according
to the International Cyanide
Management Code (ICMC), which
prescribes how to manage, treat,
transport, store and dispose of
cyanide. Our operations work to
prepare for recertification audits every
three years by helping to identify and
address potential gaps in advance.
South Deep, Damang and Tarkwa
were successfully recertified during
2018 and Q1 2019. Gruyere was
recommended for pre-operational
certification. However, we are still
awaiting confirmation by the
International Cyanide Management
Institute. Gold Fields does not use
mercury for the beneficiation of gold
or in any of its processes.
In 2018, we completed the process
of recertifying our operations in
terms of the new ISO 14001 (2015)
environmental management
standard. During the year, Agnew,
St Ives, Damang, Tarkwa,
Cerro Corona and South Deep
secured recertification, while an audit
will be conducted at Gruyere in 2019.
Other than Gruyere, no operation is
due for recertification in 2019.
During 2018, risk assessments were
completed in all regions on the
transport of hazardous materials.
No material risks were identified.
Opportunities for improvement were
found, the most important of which
was the construction of a pipeline to
deliver gas to our Ghana operations
instead of by road (p73).
For details of our environmental
management approach, policies and
guidelines go to www.goldfields.com/
sustainability.php.
Environmental incidents
A scale of Level 1 (most minor) is
used to 5 (most severe) to report
environmental incidents. We have
not experienced any Level 4 or 5
environmental incidents over the past
ten years.
During 2018, we experienced two
Level 3 environmental incidents
(2017: two):
■■ During the commissioning of
Damang’s Far East tailings storage
facility (FETSF) in April, supernatant
water leaked into the external
environment. Permeable waste
rock overburden, originally believed
to represent natural ground during
construction, led to the transfer of
the liquid to underlying waste rock
fill, which had not been identified
and from there to an adjacent
water body. Deposition was
immediately returned into the East
TSF (ETSF) and downstream
monitoring initiated. The incident
was communicated to relevant
regulatory bodies and communities
adjacent to affected water courses.
Drinking water was provided to
these communities, though
monitoring showed that their water
supplies were safe to drink. No
lasting environmental impacts were
identified, and, after the permeable
rock burden was removed, the area
was rehabilitated to the original
design with a final clay tie-in.
The storage facility was
recommissioned.
■■ On 16 December, over a period of
three hours, approximately 180m³
of water containing tailings from the
Cerro Corona TSF flowed through
an authorised diversion pipe into a
creek leading to the Tingo river.
A nearby fish farm on the bank of
the river was affected. The incident
did not compromise the dam’s
integrity or physical stability. Gold
Fields immediately communicated
the incident, and subsequently sent
a full report, to the environmental
authorities. An emergency
response team was activated and
corrective measures were taken
immediately to stop the discharge;
within 24 hours the environmental
parameters in the river had
returned to normal. Rehabilitation
of the affected area also started
immediately and was completed
within 20 days. No fines nor
sanctions have as yet been
formalised.
Group environmental incidents
Year
2014
2015
2016
2017
2018
Level 2
incidents
Level 3
incidents
54
67
131
83
68
4
5
3
2
2
LICENCE AND REPUTATION 96
The Gold Fields Integrated Annual Report 2018
Environmental stewardship continued
Supporting biodiversity
Our Biodiversity Conservation
Practice guideline ensures that we
integrate biodiversity conservation
into all aspects of mine life, from
pre-feasibility to closure. We aim to
contribute to the conservation of
biodiversity where opportunities arise.
Furthermore, we subscribe to the
International Council on Mining &
Metals (ICMM) Position Statement on
Mining and Protected Areas, which
includes a commitment to respect
protected areas and an undertaking
not to explore or mine in World
Heritage listed sites. Biodiversity
considerations are incorporated into
our integrated mine closure and
progressive rehabilitation processes.
Two examples indicating our
commitment to biodiversity are:
■■ During 2018 we invested around
US$2.2m in environmental
programmes at our Salares Norte
project in the Atacama Desert of
northern Chile, including
US$700,000 on initiatives to
protect the endangered Short-
tailed Chinchilla found in the area.
During 2018, with the help of
environmental experts, we
continued improving our the
baseline information on the
Chinchilla and worked on a detailed
plan and protocol to relocate them
if the EIA is approved.
■■ The St Ives operations in Western
Australia extend over a large
salt-lake system known as Lake
Lefroy. In recent years, the riparian
(bank) zones of such salt lake
systems have been recognised as
areas of sensitive biodiversity. The
current mining disturbance of the
Lake Lefroy riparian zone by St Ives
and other mining companies is
limited to 90ha or 2.5% of the
riparian habitat. St Ives has
undertaken numerous ecological
studies and monitoring
programmes in the area. The
studies indicate that, outside of the
physical disturbance of a small
portion of the riparian zone, mining
and related activities have no
discernible impact on the area’s
biodiversity. Nonetheless, as part of
the Beyond 2018 project at St Ives,
regulatory approval of which is still
awaited, we have included
protection measures for Lake
Lefroy’s fauna.
Exploration
drilling at
Lake Lefroy
Climate change
Gold Fields’ climate change
programme focuses on the
assessment and mitigation of climate
change-related risks, including the
development and implementation of
action plans and energy management
programmes to reduce emissions
(p70 – 73), while at the same time
ensuring water security (p100 – 102).
Gold Fields’ objectives are to
minimise the Company’s contribution
to climate change and to build
resilience to impacts of climate-
related risks on our operations and
host communities. It is increasingly
clear that the negative physical
impacts of climate change are real
and immediate, due to:
■■ The long-term risks posed by
climate change to the Group’s
operations and surrounding
communities
■■ Increasing efforts to regulate
carbon emissions in most of our
jurisdictions
■■ Taxes increasingly imposed by
governments on non-renewable
energy consumption
Climate change-related regulations,
comprising carbon emission and
renewable energy targets, continue
to evolve across our regions, and we
consistently assess and investigate
how these changes will affect our
operations. These are detailed in the
regional reports on p98 – 99.
For details of our climate change
management approach, policies and
guidelines go to www.goldfields.com/
sustainability.php
Task Force on Climate-
related Financial
Disclosures (TCFD)
Business impact on the climate, and
companies’ ability to withstand
climate change, are issues of
increasing global importance, and
vital to our stakeholders. In 2018,
Gold Fields became the second
Johannesburg Stock Exchange
Limited (JSE)-listed company in
South Africa (and the first mining
company) to publicly back the
United Nations (UN)-endorsed
recommendations of the TCFD.
The recommendations have been
adopted by many national financial
regulators.
By following the TCFD, we will
be reporting our climate-related
performance in a more targeted and
The Gold Fields Integrated Annual Report 2018
97
practical way than before, linking it to
financial risks and opportunities. In
2019, we will release our first TCFD
report, which will replace our annual
submission in terms of the CDP,
formerly the Carbon Disclosure
Project. The report details aspects of
governance and climate-related risks,
as well as our risk management
framework, our strategic approach in
adapting to and mitigating impacts of
climate change, and presents trends
in our key climate change-related
metrics.
Gold Fields has been disclosing
emissions, risks and opportunities for
more than 10 years through the CDP.
Key energy and carbon emissions
data are assured externally. Gold
Fields maintained its A- score for its
2018 CDP performance, ranking it
among the leaders in the mining
sector for both our disclosures and
management practices.
Group performance and
strategies
The 2018 Group risk register includes
the impact of climate change among
the top 20 Group risks. Furthermore,
the Board’s Safety, Health and
Sustainable Development (SHSD)
Committee reviews the performance
of energy and climate change
programmes on a quarterly basis.
Every five years we review our
vulnerability to climate change and
develop Group-wide strategies and
programmes in response to these.
During 2017 our Ghanaian
operations’ piloted use of an ICMM
climate-data viewer tool, which
provides insight into physical changes
in precipitation, temperature, wind
and water stress levels. These
outcomes were used in developing
adaptation plans, such as reviewing
design flood lines and inclusion of
climate change impacts in our project
standards. The ICMM tool is in the
process of being rolled out to our
other operations.
Our carbon emission performance
mirrors the energy usage trends at
our operations. These are detailed on
p70 – 73. Gold Fields’ disclosures
cover all three carbon emission
scopes, Scope 1 – 3, both in
absolute figures and intensities. Total
Scope 1 – 3 CO2-e emissions during
2018 amounted to 1.85Mt, a
significant drop from 1.96Mt in 2017,
reflecting the decrease in total energy
usage to 11.62TJ in 2018 from
12.18TJ in 2017. Emission intensity
was unchanged from the 0.66t
CO2-e/oz in 2017, due to a decline
in Group gold production. Our
aspirational target is to reduce
cumulative carbon emissions by
800kt CO2-e between 2017 and
2020. Cumulative carbon emission
reductions from 2017 – 2018 totalled
265kt CO2-e.
Our commitment to low-carbon and
renewable energy is a significant
contributor to our efforts in reducing
carbon emissions. All our operations,
other than South Deep, are largely
powered by LP gas, a low carbon
energy source. In Q1 2019, Granny
Smith and Agnew announced
significant renewable energy projects
to be operational later in 2019 or
early 2020 (p72). South Deep, Tarkwa
and Damang are also investigating
developing renewable energy assets
in the near future.
Given the water security impact of
climate change to our operations, we
also closely monitor our water usage
and spending and invest in water
security and efficiency initiatives.
Gold Fields Scope 1 – 3 CO2 emissions
Million tonne CO2-e
2.0
1.5
1.0
0.5
0.0
8
6
1
.
6
4
.
0
9
7
.
0
4
4
.
0
5
7
.
1
3
5
.
0
9
7
.
0
3
4
.
0
2014
■ Scope 1
■ Scope 2
2015
■ Scope 3
6
9
1
.
4
5
0
.
7
9
.
0
5
4
.
0
2016
6
9
.
1
9
5
.
0
8
8
.
0
9
4
.
0
5
8
.
1
8
5
.
0
8
7
.
0
8
4
.
0
2017
2018
LICENCE AND REPUTATION
98
The Gold Fields Integrated Annual Report 2018
Climate change continued
Americas
Australia
Regional performance
KEY RISKS
■■ Water shortages during
drier months
■■ Ability to deliver
concentrate for shipping
during severe weather
events
STRATEGIC
RESPONSES
■■ Seek approval for water
abstraction in regular
Environmental Impact
Assessment (EIA)
updates
■■ Ensure that an alternate
route to the port is ready
for use
■■ Dynamic and predictive
water balances
■■ Increase storage capacity
at the port and Cerro
Corona
KEY RISKS
■■ Adequacy of flood
management measures
■■ Declining water
availability
■■ Tailings dam stability
■■ Increased cooling costs
■■ Legislative changes
STRATEGIC
RESPONSES
■■ Flood management plans
and critical hazard
standards
■■ Trialling site-based
weather modelling at
Gruyere
■■ Maintenance of water
balances
■■ Implemented energy
management plans, with
a savings target of up to
10%
■■ Conversion to renewable
energies at Agnew, and
the assessment thereof
at Granny Smith
■■ Dynamic and predictive
water balances
2018 KEY DEVELOPMENTS
In April, Peru released a Climate Change Framework law, seeking
collaboration between government and the private sector on the
government’s commitments to:
■■ Reduce emissions by 20% to 30% below business-as-usual
by 2030
■■ Meet 20% of carbon reduction goals through the energy,
industry, transport, resources and waste sectors
The mine is looking at ways in which it can contribute to the
achievement of these targets.
As part of Cerro Corona’s climate resilience plan, the mine:
■■ Commencing the permitting process for withdrawing additional
water from the Tingo river in preparation for a low rainfall year
■■ Evaluated the key risks of route disruptions as a result of
flooding or landslides for transporting ore concentrates to
the Salaverry port
■■ Constructed an additional storage building for ore concentrate
at the Salaverry warehouse.
2018 KEY DEVELOPMENTS
Australia’s government is reviewing the safeguard mechanism
(SGM) introduced in 2016, which applies to facilities emitting
more than 100,000 tonnes CO2-e emissions each year. We
expect Gruyere, once operational, to also be governed by the
SGM with the baseline determined by its production plan.
Penalties are applied for exceeding emission baselines, or
domestic carbon offsets must be purchased to make up the
difference. Our Agnew and Granny Smith mines have not
exceeded their baseline, but St Ives did so in 2017; emission
credits from the Granny Smith gas power were used to offset the
penalties. The main impact of the SGM review, which is expected
to be implemented by mid-2019, will be the transition from
historic to calculated baselines, which will better reflect our
operations’ current production profiles.
We continue to manage the lack of certainty regarding the
government’s climate change policy through efforts to improve
energy efficiencies, as well as taking advantage of the
government’s carbon abatement initiatives. During 2018, this
initiative at Granny Smith generated 21,032 Australian Carbon
Credits Units (ACCUs), with a positive balance of 13,450 ACCUs
for use against future liabilities or trading in the open market.
The Gold Fields Integrated Annual Report 2018
99
West
Africa
South
Africa
2018 KEY DEVELOPMENTS
Ghana experienced abnormally heavy rainfalls, which impacted
both Tarkwa and Damang, and resulted in production delays,
the Tarkwa pits being flooded, and additional diesel usage for
dewatering. In response, we modified our pumping, storage
and pit dewatering strategies.
In 2018, we implemented recommendations of the climate
change risk and vulnerability assessment conducted in 2017,
including increasing pumping capacity for pit dewatering,
reduced reliance on the national power grid, which is reliant on
hydro power, and engaging communities on climate change
impacts. We also started a new water treatment facility at
Damang, which includes adding chemicals to reduce nitrate
levels to approved standards, while improving water treatment
costs and effectiveness.
To meet the requirements of the Renewable Energy Act of 2011,
proposals for renewable power, amounting to 6MW for Damang
and Tarkwa, are currently being investigated.
2018 KEY DEVELOPMENTS
South Deep continues to work with an independent power
producer (IPP) to finalise the construction of a solar photovoltaic
(PV) plant at the mine, though the approach may be more
incremental than originally envisaged, taking cognisance of more
recent financial and regulatory requirements. In terms of the plan,
the IPP will raise funding for the plant in return for a long-term
purchase power agreement with South Deep. Funding issues are
currently being finalised. The IPP is consulting with the
Department of Energy on regulatory clarity around the licensing,
technical and other requirements of the plant.
Legislation to levy taxes on companies’ Scope 1 CO2 emissions
will come into effect on 1 June 2019. South Deep’s exposure to
the tax is minimal as its Scope 1 emissions, largely related to
diesel usage, were only 5,504t CO2-e in 2018. A carbon tax levy
of R0.10/l was announced by the Finance Minister in early 2019,
which amounts to an exposure of around R197,000 (US$15,000)
for South Deep. However, should Eskom, the state utility, be
allowed to pass on the cost of the tax on diesel usage to
customers, their electricity tariffs could rise significantly.
KEY RISKS
■■ Increased operational
costs linked to road
maintenance,
replacement of tyres
and dewatering
■■ Increased volumes of
contaminated water
requiring treatment
■■ Short-term impacts to
mining during intense
rainfall events
STRATEGIC
RESPONSES
■■ Staggering of pit floors
to aid drainage and
dewatering
■■ Review catchment
mapping
■■ Implement a control
process for maintaining
road quality for long
haulage routes
■■ Dynamic and predictive
water balances
■■ Provision made for rain
delays in operational plan
KEY RISKS
■■ Variability in rainfall
intensity increasing costs
of alternative water
sources
■■ Temperature increases
affect surface cooling
plant efficiency and
causes heat stress for
surface employees
■■ Climate change-related
regulatory uncertainty
STRATEGIC
RESPONSES
■■ Dynamic and predictive
water balances
■■ Reduce freshwater
withdrawals
■■ Reduce potential Scope1
and Scope2 and
emissions through
improved diesel
efficiencies and
renewable energy
LICENCE AND REPUTATION 100 The Gold Fields Integrated Annual Report 2018
Water management
Access to clean water is a
fundamental human right and a vital
resource for Gold Fields’ mining and
ore processing activities. We are
committed to responsible water
stewardship as it enables security of
supply to our own operations.
Managing our impact on and access
to water is also essential to
maintaining our licence to operate, as
water is a critical resource for many
of our host communities.
We have adopted an integrated
approach to water management,
including alignment to the ICMM
Water Position Statement, baseline
water assessments at the operations,
and the adoption of a catchment
approach to water management
based on risk and opportunity
analyses. Through careful
management, we are able to reduce
our environmental impact through
responsible use, storage and release
of water, while also reducing our
costs. Furthermore, we aim to
develop our water management
policy by Q2 2019.
The ICMM Position Statement on
water stewardship commitments
was adopted by Gold Fields in 2017.
Gaps in terms of our alignment with
the ICMM statement were assessed
and closed-out by each of our
operations in 2018. During this year,
we also engaged an external
company to conduct a third-party
review to verify this alignment to the
position statement. This company
confirmed our overall alignment rating
and found a strong commitment to
water stewardship at both corporate
and operational levels, with
transparent communication and
disclosure of our water performance
statistics both internally and
externally. They also found a need
for greater alignment of Gold Fields’
operations’ water balances within the
context of the water requirements of
the wider catchment area, particularly
adjacent communities.
For details of our water management
approach, policies and guidelines, as
well as our adoption of the ICMM Water
Stewardship Position Statement, go to
www.goldfields.com/sustainability.php
Group performance
All our operations have predictive and
dynamic water balances in place.
During 2018, Gold Fields spent a
total of US$32m on water
management and projects (2017:
US$29m). Our operations are
investing heavily in improving water
management practices, including
pollution prevention, recycling and
water conservation initiatives.
Water withdrawal1 across the Group
decreased to 21.2Gl (2017: 32.9Gl),
including a total of 14.5Gl relating to
freshwater usage. The main reason
is a change in the definition of water
withdrawal to align with the ICMM
Water Reporting Guideline.
Dewatered and diverted water4 was
previously reported as withdrawn
water by our Australian operations,
but has been reclassified as water
diverted in alignment with the ICMM
definitions as it is not used in the
mine processes. Water withdrawal
per tonne processed declined to
0.64Kl (2017: 0.96Kl) and per ounce
produced to 10.3Kl in 2018 (2017:
14.8Kl), in line with the significant
drop in water withdrawal.
Water recycled2 or reused3 amounted
to 41.4Gl (2017: 43.3Gl). The ICMM
has recommended a recycling/reuse
target of 65% for mining operations,
which we adopted in 2018 and we
achieved 66% (2017: 57%).
We benchmark our water usage
by participating in the CDP water
disclosure programme. The CDP’s
water score is an indicator of a
company’s commitment to
transparency around its water risks,
and the sufficiency of its response
to them. During 2018, Gold Fields
achieved a B score, down from the
A- score in its 2017 CDP water
assessment. This is a notch below
the top mining performers and
reflects broader assessment criteria
for the mining sector, many of which
are not relevant to Gold Fields.
Total water used in processes5
43%
2017
76.3 Mℓ
25%
32%
37%
34%
2018
62.6 Mℓ
Water withdrawal per ounce of gold
produced
■ Water withdrawal
(Mℓ)
■ Water recycled
■ Water reused
29%
Water withdrawal per tonne processed
Kl
1.2
0.9
0.6
0.3
0
7
0
.
1
1
9
.
0
6
9
.
0
9
8
.
0
4
6
.
0
2014
2015
2016
2017
2018
Water recycled/reused as percentage
of total
%
70
66
62
58
54
50
6
6
ICMM target
of 60%
9
5
7
5
8
5
5
5
2014
2015
2016
2017
2018
1 Water withdrawal – The the sum of all water drawn into Gold Fields’ operations from all sources (including surface water, ground water, rain water,
water from another organisation or state/municipal provider) for any use at the mine
2 Recycled water – water/waste water that is treated before being recycled and reused
3 Reused water – water/waste water that is re-used without treatment at the same operation
4 Diverted water – water pumped from our underground operations or pits that is discharged into the environment with regulated limits so as to
ensure continued and safe mining
5 Total water used in process = water withdrawal + water recycled/reused
Americas
Regional performance
KEY RISKS
■■ Poorly developed public water
infrastructure
– Cerro Corona being blamed for
ongoing or perceived water quality
pollution by neighbouring mines
– Leakage of polluted water from our
mine into neighbouring rivers
– Water-related activism at local and
regional levels
STRATEGIC RESPONSES
Cerro Corona has a water management
strategy in place that includes:
■■ Permits for water use
■■ Water balance to control the volume
of run-off water stored in the TSF
■■ Rainwater storage and recycling
■■ Community water supply programmes
■■ Water monitoring and quality controls
at discharge points
■■ Proactive engagements with community
organisations and local government
■■ Diversion channels for clean water
■■ Water permits for the mine, plant and
tailings dam
Australia
KEY RISKS
■■ The limited availability of fresh water
■■ Impacts of flooding from extreme events
STRATEGIC RESPONSES
■■ Water management strategies are in
place, including the development and
maintenance of appropriate water
balances, linked to operating strategies
and post-closure water management
plans
■■ The operations have a long history of
using saline to hypersaline water
■■ Nano-filtration water treatment
technologies are being evaluated at
St Ives to remove magnesium from the
water, improving the quality of recycled
water
The Gold Fields Integrated Annual Report 2018
101
2018 KEY DEVELOPMENTS
Cerro Corona remains committed to providing
local communities with potable water and
implements projects focusing on water provision
and improvement of municipal water systems.
The Health Authority approved the registration of
Cerro Corona’s water systems used for human
consumption.
On 16 December 2018, approximately 180m³ of
water containing tailings from the Cerro Corona
TSF in Peru, flowed through a creek and reached
the nearby Tingo river. This has since been
rectified (p95).
We continued negotiations to purchase land for
a water treatment plant for the Haulgayoc
drinking water system, improving the availability
of drinking water for about 4,000 beneficiaries.
Two water efficiency projects, which will reduce
the consumption of drinking water in the
accommodation camp and reduce the
evaporation from water ponds, are planned for
2019/2020.
2018 KEY DEVELOPMENTS
Granny Smith implemented an initiative to
improve surface water through harvesting rain
and surface water and reinjecting this water into
an aquifer, improving recharge rates and yield.
This reduces the reliance on the Mt Weld
borefield and supplements the water required
for the process plant and Wallaby underground
mine.
St Ives has two water agreements in place: the
first with the Water Corporation, terminating in
2050, which provides for the majority of the
potable water, as well as an agreement with a
neighbouring mine, which provides for declining
entitlements until 2021 when it will be replaced in
full by provisions from the Water Corporation.
Agnew receives water from a number of sources,
including a range of pits filled with rainwater.
At the Gruyere project, two borefields will supply
the mine and the Gruyere village. The Yeo
borefield will serve as the main water source for
Gruyere’s processing plant. To date, 21
boreholes have been drilled and installation of a
95km water pipeline to the processing plant has
commenced.
LICENCE AND REPUTATION 102 The Gold Fields Integrated Annual Report 2018
Water management continued
West
Africa
South
Africa
KEY RISKS
■■ Intense periods of precipitation during
Ghana’s rainy seasons
■■ Water pollution affecting communities
adjacent to both operations
■■ Providing potable water in the event of
possible water pollution
■■ The impact of illegal mining on water
sources
■■ Mining landforms affecting natural surface
water flow
STRATEGIC RESPONSES
Water management strategies include:
■■ Water storage and reuse
■■ Water volume and quality monitoring
■■ Controlled water releases to external
water bodies
■■ Landform reviews to ensure adequate
surface water drainage
■■ Expanded cut-off trenches
■■ Enhanced pit dewatering strategies
An inaugural Regional Water Working Group was
held in Q4 2018, seeking to identify and further
incorporate water management opportunities at
our Ghanaian operations.
Brine recirculation from the Tarkwa northern
heap leach pads continued in 2018. Tarkwa is
also examining contracting external companies
to provide more advanced treatment options for
brine and increase treatment capacity. Damang
implemented the treatment of nitrate-laden water
from the open pits. The mine also established a
water monitoring team, comprising members of
the local community, to enhance transparency
and communication of water results.
Both operations now have fully functioning
water balance software, with teams trained in
developing water management models.
KEY RISKS
■■ Growing concerns around water scarcity
in South Africa
■■ Seepage plumes at South Deep’s
Doornpoort TSF
STRATEGIC RESPONSES
Usage of a number of water sources,
including recycling and conservation
initiatives, water treatment plants, boreholes
and access to the public water system
■■ Ongoing water monitoring, containment
in storage facilities, water treatment and
purification, to ensure water security and
mitigate water pollution. Undertaking
studies of the mine’s impact on the wider
catchment area, including a post-closure
water management plan and the
Leeuspruit legacy study
■■ Participation in the existing catchment
forum
■■ Environmental educational lectures and
tours for local communities
2018 KEY DEVELOPMENTS
The Department of Water and Sanitation (DWS)
issued South Deep’s water licence in December
2018.
South Deep and Sibanye-Stillwater jointly
undertook a study of the impact of historical
mining pollution in the Leeuspruit stream, which
flows through the operational area of both
companies. The Leeuspruit Legacy Project
report was presented to the DWS and an
environmental NGO, the Federation for a
Sustainable Environment. Both parties supported
the study and recommended that further work
be undertaken. A risk assessment and
development of a remediation and closure
plan with costs are under way.
Seepage plumes have previously been identified
at South Deep’s Doornpoort TSF. As part of the
project to contain and reduce these plumes,
13 boreholes and two seepage sumps were
equipped with a pumping and monitoring
system, which is monitored on an ongoing basis.
Waste and tailings
The Gold Fields Integrated Annual Report 2018
103
The most significant waste materials
produced by our operations are
tailings, waste rock, chemical waste
and hydrocarbon waste. By
managing these wastes responsibly,
we minimise the environmental and
potential social impact, so as to
maintain our licence to operate.
All of our operations have tailings
management plans in place,
including closure and post-closure
management plans. In total, as at
end-2018, our ten operations
(including three JV sites) contained
33 tailings dams, of which 14 were
active and one under construction.
With regards to active TSFs, Gold
Fields currently has two in-pit tailings
dams operating at Agnew and St
Ives, five downstreams/centreline
tailings dams and seven upstream
tailings dams.
Gold Fields operations with active
downstreams/centreline tailings dams
are Cerro Corona, Damang and
Tarkwa.
The new Gruyere TSF, currently in
construction, is also a downstream
TSF. Gold Fields has only three
operations where upstream tailings
are being used, being South Deep,
Tarkwa and Granny Smith.
As two of our sites, South Deep and
Granny Smith, are located in relatively
dry regions, limited amounts of water
need to be stored on the facilities,
significantly reducing the risk of
saturation on the dams. Tarkwa’s
upstream tailings dams in Ghana
have been constructed from imported
fill materials, and are designed
assuming worst-case scenario
conditions, to ensure the
embankments remain stable
throughout both the wet and dry
seasons, and also for the life of the
facility.
METHODS OF TAILINGS CONSTRUCTION
Upstream
Supernatant pond
Downstream
Supernatant pond
Embankment consisting
mostly of tailings
material
Tailings material
Starter dyke
Impervious layer
Embankment consisting
mostly of fill material,
such as rock
and waste
Tailings material
Starter dyke
Source: Jon Engels www.tailings.info/disposal/conventional.htm
The two most common designs for a raised tailings embankments are upstream
and downstream TSFs. A downstream tailings facility is one where the new
embankment raise is constructed and supported beyond the downstream slope.
Downstream TSFs may have supernatant water ponded against the embankment,
as shown in the diagram, or they may have a tailings beach.
In upstream tailings dams, each new embankment raise is constructed partially on
the embankment immediately below and partially on the consolidated tailings
beach adjacent to the embankment.
TSF management
The mining industry’s TSFs are in the
spotlight following the catastrophic
tailings failure at Vale’s Feijão iron
ore mine in Brumadinho, Brazil, in
January 2019, which resulted in
over 300 deaths. This follows the
19 fatalities during the Samarco TSF
failure in 2015, and significant
environmental damage after the
Mt Polley tailings dam collapse
in 2014.
After the Samarco accident, the
ICMM members developed a Tailings
Position Statement in 2016 and
approved a tailings aspirational goals
roadmap in late 2018. Gold Fields’
Group Tailings Management
Guidelines are aligned to the ICMM
Tailings Position Statement. The
guidelines were strengthened during
2017 with the inclusion of additional
performance guidance and minimum
assessment criteria. Subsequent to
the Brumadinho tragedy, the ICMM
agreed to establish an independent
panel of experts to develop an
international standard for tailings
facilities for its member companies.
All Gold Fields’ TSFs, as well as
associated pipeline and pumping
infrastructure, are subject to an
independent, external audit every
three years – or more frequently
where required by local
circumstances or regulations – as
well as regular inspections and formal
annual Engineer of Record reviews.
A number of improvement areas
were recommended, including:
■■ Seismicity design considerations
■■ Appointment of an Engineer of
Record for each TSF
■■ Dam break assessments
■■ Update of emergency response
plans
■■ TSF seepage management and
control
In addition to closing out these
identified gaps during 2018, Gold
Fields also embarked on a
programme to further improve
operational safety of its TSFs,
including moving away from the
construction of upstream facilities
LICENCE AND REPUTATION 104 The Gold Fields Integrated Annual Report 2018
Waste and tailings continued
Gold Fields is also working with Lepanto Mining, its majority partner in the Far
Southeast project in the Philippines, on enhancing risk mitigating measures for
the TSF used by Lepanto for tailings disposal from its nearby gold mine. Gold
Fields and Lepanto have commissioned external consultants to undertake
detailed hydrological, seismic and geotechnical reviews and make
recommendations on strengthening the TSF. The TSF is located in a region with
high seismic activity and frequent typhoons.
Our technical teams are also working with Asanko Gold to further strengthen risk
assessment and governance of the lined and upstream-designed TSF at the
Asanko gold mine (AGM) JV in Ghana.
During 2018, two new TSFs were commissioned at our West African operations:
the FETSF at the Damang mine and TSF 5 at Tarkwa.
Waste management
Group mining waste
Million tonnes
2018
2017
2016
2015
2014
0
50
100
150
200
■ Waste rock
■ Tailings
Total Group waste rock volumes mined decreased to 149Mt in 2018 from 171Mt
in 2017, due to lower volumes moved at our Tarkwa and St Ives mines. Tailings
depositions were at 41Mt in 2018, unchanged from 2017 and despite a sharp
fall in depositions at South Deep, due to lower production.
Gold Fields has set a target to maintain the general landfill waste mass (non-
hazardous waste other than tailings and waste rock) at 2015 levels of 11.2Mt,
by ensuring a reduction in the waste that reaches landfill through greater use of
on-site waste separation and recycling. During 2018 the Group reduced landfill
waste by 19% to 9Mt as a result of lower waste volumes at Damang, Cerro
Corona and St Ives.
to centre-line or downstream
designs, consideration of filtered and
dry stacked tailings, as well as in-pit
tailings disposal.
These are in line with the main areas
of work under the ICMM’s aspirational
goals: improving critical controls and
reducing tailings water content.
The following actions have been
implemented or are currently in
process at our operations:
■■ The use of a new downstream
TSF for the Damang Reinvestment
project
■■ The use of filtered and dry stacked
tailings for the planned Salares
Norte mine
■■ The increased use of in-pit tailings
disposal in Australia (Agnew and
St Ives)
■■ Increased use of tailings for
underground backfill at the Granny
Smith and St Ives Invincible mines
■■ Improved governance over
seepage control at TSFs through
the installation of liners. All new
TSFs recently constructed at
Tarkwa, Damang and Gruyere
are lined
In February 2019, the Gold Fields
Board also requested strengthened
governance of the Group’s TSFs
through among others, quarterly
TSF update reports, continuous
environmental monitoring, including
satellite monitoring scans, and
increased external and independent
verification. These are currently being
investigated by management with a
view to rapid implementation.
The Far East
Tailings Storage
Facility (TSF) at
our Damang
mine in Ghana
The Gold Fields Integrated Annual Report 2018
105
supporting the Gold Fields focus on
social transitioning.
All mining operations have closure
plans and closure cost estimates in
place, which are reviewed and
updated annually. Noteworthy was
that the Western Australian
Department of Mines, Industry
Regulation and Safety informed the
St Ives mine in 2018 that its closure
plan had been approved for
implementation and would be used
as a benchmark for other Western
Australian mines. The mine closure
plan has established a platform for
the site’s progressive rehabilitation
and has realised an 11% reduction of
the closure liability of A$14m
(US$10.5m) through improved
closure planning and practices.
All operations updated their 2018
closure cost estimates, which were
externally assured. The funding
methods used in each region to
make provision for the mine closure
cost estimates are:
■■ Peru – bank guarantees
■■ Australia – existing cash and
resources1
■■ Ghana – reclamation security
agreements and bonds
underwritten by banks along with
restricted cash
■■ South Africa – contributions into
environmental trust funds and
guarantees
The total gross mine closure liability
for Gold Fields rose by 5% to
US$400m in 2018. A breakdown
is provided in the table below.
Group closure estimates 2018 (US$m)
Australia region1
West Africa region
Americas region
South Africa region
Group total
2018
2017
1782
100
79
42
400
179
98
62
42
381
1 Due to legislative changes introduced in Western Australia, there is no longer a legal obligation
to have unconditional performance bonds in place for mine closure liabilities. Such liabilities for
continuing operations are now self-funding. In addition, companies are now required to pay a
levy to the state based on the total mine closure liability. This levy is 1% of the total liability per
mine, paid annually. This levy goes into a state administered fund known as the Mine
Rehabilitation Fund. Capital and interest from the fund will be used to rehabilitate legacy sites
or sites that have prematurely closed or been abandoned
2 Includes 50% of the total Gruyere closure cost estimate
Mine closure
Sustainable and integrated mine
closure remains one of Gold Fields’
five key sustainability focus areas.
We aim to reduce our environmental,
community and social impacts,
optimise our closure liabilities and,
where possible, enhance asset
values. Integrated mine closure
planning and progressive
rehabilitation are a crucial part of
our mine closure management
programme.
The Group’s focus on progressive
rehabilitation during mining
operations was advanced in 2018.
Progressive rehabilitation presents
many opportunities for mining
operations, including building
credibility with regulators and
stakeholders, reducing closure
liabilities and achieving cost savings
through:
■■ Utilising available equipment
■■ Eliminating the need for contractor
mobilisation costs
■■ Utilising current resources such as
the environmental management
team
■■ Potential tax savings
■■ Improving the rehabilitation
knowledge base
Progressive rehabilitation
opportunities, as identified in mine
closure plans, have been embedded
in our mines’ 2019 business plans.
Our operations have identified
practical progressive rehabilitation
activities and costs that are aligned to
regulatory requirements and which
can be implemented in 2019. The
2020 objective is to identify
integrated mine closure opportunities
to reduce the Group’s long-term
closure liabilities. This means
planning for post-closure and
long-term sustainability in
consultation with our communities
and other stakeholders. Ongoing
participation in the ICMM Mine
Closure Working Group and Social
Guidance for Closure Taskforce is
LICENCE AND REPUTATION 106 The Gold Fields Integrated Annual Report 2018
Stakeholder relations
The quality of our relationships with
our stakeholders, those individuals
and organisations who have a
substantial influence on our ability to
create value, are integral to our
licence to operate. We consistently
balance the needs and expectations
of our stakeholders with the best
interests of Gold Fields, and therefore
cultivate relationships that are open,
transparent and constructive. Gold
Fields has well established
stakeholder engagement practices,
and we actively engage our key
stakeholders continuously on material
issues and publicise these
engagements. We consider the
following to be our key stakeholders:
shareholders and other investors,
employees and contractors,
communities, governments and
business partners (suppliers).
Our Stakeholder Relationship and
Engagement Policy, approved by the
Board in February 2018, was rolled
out during the year as part of the
alignment with King IV “to adopt a
stakeholder-inclusive approach that
balances the needs, interests and
expectations of material stakeholders
in the best interests of the company”.
We further developed an internal
portal to register material
engagements with our key
stakeholders. Our management
teams have been incentivised to
enhance the number and quality
of their engagements with these
stakeholders during 2019.
We create and distribute value for
all stakeholders in the countries in
which we operate. Our total value
distribution, graphically depicted on
p6, highlights the economic value we
created at Group level during 2018,
as well as value created in our
individual regions. Gold Fields’ total
value distribution during 2018
amounted to US$2.71bn (2017:
US$2.85bn), in the form of payments
to governments, business partners,
our workforce, host communities
and capital providers.
For details of our stakeholder
relationship and engagement
management approach, policies and
guidelines go to www.goldfields.com/
sustainability.php.
Investor relations
Gold Fields has positioned itself as
a globally diversified gold mining
company with a portfolio that is
characterised by mechanised
underground and open-pit mining.
Central to our vision of leadership
in sustainable gold mining, is the
objective of positioning the Group
as a focused, lean and globally
diversified gold mining company that
generates significant free cash-flow,
and provides investors with leverage
to the price of gold.
Mining is a long-term game. As
a business, we need to balance
investing for future growth of our
portfolio whilst generating cash today.
Through our investment projects and
strategic decisions, we aim to
sustainably extend the life of Gold
Fields’ overall portfolio at lower costs
than today. We believe that this is
also a prerequisite for improving the
confidence with which long-term
investors as well as buy-side and
sell-side market participants view
Gold Fields.
For a full analysis of our stakeholder
relationship with investors, see the
Capital Discipline section on p84 – 90
and the Portfolio Management
section on p40 – 55.
Summaries of the stakeholder
engagements held by corporate and
each region in 2018 are available at
www.goldfields.com/societal-
stakeholders.php.
Employee relations
Our workforce is critical to safe
operational delivery. We remain
focused on ensuring we have the
necessary skills, culture and
workforce profile required to meet our
objectives and that our workforce is
structured to support the delivery of
immediate and long-term strategic
objectives.
During 2018, the two most significant
people-related developments were
the restructuring exercise and related
strike action at South Deep, as well
as the transition from owner to
contractor mining at Tarkwa. The key
people-related balanced scorecard
objectives were driving diversity and
inclusion, managing the talent
pipeline and ensuring succession
planning for critical roles, and
strengthening a values-based
culture that drives delivery.
For a full analysis of our stakeholder
relationship with our workforce see
p76 – 78.
Government relations
As the issuers of mining licences,
developers of policy and
implementers of regulations, host
governments are among Gold Fields’
most important stakeholders. This
requires first and foremost good
corporate citizenship from Gold Fields
in terms of adherence to all relevant
legislation, including the payment
of taxes and other levies. We are
committed to working with
governments at national, regional and
local level in establishing sound and
transparent working relationships that
benefit the countries and 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 in accordance with the
Company’s Code of Conduct. No
political donations were made in
2018.
Gold Fields’ tax strategy is to proactively
manage our tax obligations in a
transparent, responsible and sustainable
manner, acknowledging the differing
interests of all our stakeholders. Our full
tax strategy and policy can be found at
www.goldfields.com/integrated-annual-
reports.com
A worrying development over the
past few years has been a strong
resurgence of resource nationalism
in many leading mining jurisdictions.
During 2018, these have been
particularly pertinent in our South
Africa and West Africa regions.
The Gold Fields Integrated Annual Report 2018
107
Americas
region
Our engagement in Peru is focused
at local, regional and national
government levels to address
operational, social and sustainability
matters. A business-friendly national
government is in power in Lima and
our engagement with the relevant
departments is largely carried out via
the National Chamber of Mines, Oil
and Energy, especially on regulatory
matters. Gold Fields Peru’s legal
stability agreement, signed with the
Peruvian government in 1997 to
facilitate the build-up of our Cerro
Corona mine, expired during 2017
and Gold Fields is now subject to the
South Africa
region
From a regulatory perspective, Gold
Fields’ South Deep mine is guided
primarily by the Mineral and
Petroleum Resources Development
Act (MPRDA) of 2002. In 2014,
critical amendments to the MPRDA
were tabled by the government in the
MPRDA Amendment Bill, but the bill
has still not been signed into law
amid opposition to some of the
proposed changes. Among other
things, the proposed MPRDA grants
the Minister of Mineral Resources
discretionary powers which we
believe go beyond the original intent
of the Act and are unconstitutional,
such as the ability to unilaterally set
the terms of the Mining Charter at
his/her discretion.
One of the key requirements of the
MPRDA, which Gold Fields supports,
is to facilitate meaningful and
substantial participation of Historically
Disadvantaged South Africans
(HDSAs) in the mining industry. To
provide guidance on this open-ended
requirement, the Mining Charter, as
same taxation regime as the rest of
the mining sector.
members but also with regional and
local authorities.
Traditionally, regional and local level
officials in the Cajamarca province,
which is home to Cerro Corona, have
adopted anti-mining strategies and
policies, reflecting wider public
sentiment among communities.
During 2018 there were a number of
socio-economic conflicts related to
mining in the Cajamarca province,
but a more business-friendly
government was elected which has
stressed the need to build trust
between mines and communities.
This will make it easier for our social
and environmental policies as well as
our extensive engagement with all
stakeholders, to gain further traction
and support not only from community
revised in 2010, was published by
the DMR, providing for a range of
empowerment actions and a corollary
time frame. In terms of the Mining
Charter, all mining rights holders
are required to submit an annual
compliance assessment to the DMR
on progress made against meeting
the annual targets in the Charter.
Gold Fields continues to comply
with this process.
The DMR published Mining Charter 3
in September 2018 after consultation
with the industry through the Minerals
Council South Africa (MCSA, formerly
the Chamber of Mines). The MCSA
considers most aspects of the
Charter a framework within which the
industry can live. There are, however,
critical areas over which Gold Fields
and the industry has very deep
concerns, namely that the Charter
does not fully recognise the black
economic empowerment (BEE)
ownership credentials of previous
BEE transactions. This is the
case in respect of mining right
renewals and transfers of these
rights. Such a requirement has a
severely dampening effect of the
attractiveness of South African mining
in the eyes of investors and appears
Our engagement activities will be
intensified during 2019 following
our tailings leak in December 2018
which, while having a negligible
environmental impact, received wide
publicity in Cajamarca province and
led to protest action at the mine
(p116). The extension of Cerro
Corona’s life-of-mine to 2030
will also require more long-term
community investment programmes
and strategies.
also a breach of a Court declaratory
order – handed down in April 2018
– which supported the so-called
“once empowered, always
empowered” principle. The MCSA
continues to engage with the Minister
and the DMR in an effort to resolve
these concerns, and may also follow
due process in this regard.
Gold Fields supports achieving a
solution that is viable to support
economic growth and economic
transformation while at the same time
fostering a sustainable mining
industry in South Africa in which
investment is encouraged and
rewarded.
While the renewal of South Deep’s
mining licence is only due in 2040,
we are concerned by the prospect
of having to renegotiate our licence
under completely different
circumstances to those that prevailed
when our licence was awarded in
2010. We believe that our current
BEE ownership level of 35% meets
the principles and spirit of the original
Mining Charter, and has created
the framework for the ongoing
transformation of South Deep.
LICENCE AND REPUTATION 108 The Gold Fields Integrated Annual Report 2018
Stakeholder relations continued
Mining Charter Scorecard
All mining rights holders in South
Africa (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 Mining Charter.
Gold Fields has reviewed its 2018
performance against the 2014 Mining
Charter. South Deep’s 2018
scorecard is shown on this page and
illustrates Gold Fields achievements
against the provisions of an online
scorecard created by the DMR
in 2015. In aligning with Mining
Charter 3, South Deep has
conducted a gap analysis against
the Mining Charter 3 scorecard
guidelines released by the DMR in
December 2018, though there are
still some areas of uncertainty and
ongoing consultations between the
DMR and the MCSA.
As part of its obligations under its
mining licence, South Deep also
submits a five-year Social and Labour
Plan (SLP). The SLP includes projects
benefiting communities that are
impacted by mining, both in host
communities and labour-sending
areas. An SLP requires the mining
industry to develop and implement
comprehensive local economic
development, skills and human
resource programmes (including
employment equity plans and
facilitated home ownership) and
mine community development.
Under its 2013 to 2017 SLP, South
Deep spent approximately R750m
(US$53m) in terms of its various SLP
commitments. A draft SLP for the
period 2018 to 2022 was submitted
to the DMR in December 2017 – and
resubmitted in August 2018 – for
approval. The draft SLP outlines
future financial commitments of over
R283m (US$20m), with the bulk of
this – R258m (US$18m) – being
dedicated to human resource
development programmes, including
learnerships, bursaries and skills
development.
Element
Description
Reporting
Ownership
Housing and
living conditions
Procurement
and enterprise
development
Report on the level of compliance with the Revised Charter for the calendar year
Minimum target for effective HDSA ownership
Conversion and upgrading hostels to attain the occupancy rate of one person
per room
Conversion and upgrading hostels into family units
Procurement spent on BEE entity
Multinational suppliers' contribution to the social fund
Annual spend on procurement from
0.5% of procurement value
Employment
equity
Diversification of the workplace to reflect the country's demographics to attain
competitiveness
Human
resources
development
Mine community
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
Conduct ethnographic community consultative and collaborative processes
to delineate community needs analysis
Human resources development expenditure
as a percentage of total annual payroll
(excluding mandatory skills development levy)
7.7% (R123m)
Implement approved community projects
Up-to-date project
implementation
Measure
2018 Mining Charter
compliance target
Progress against targets as at
31 December 2018
Documentary proof of receipt from the DMR
Annually
South Deep annual submission
Meaningful economic participation
26%
Percentage reduction of occupancy rate
towards 2014 target
Occupancy rate of one
person per room
Percentage conversion of hostels into family
Family units established
100%
0.49 person per room ratio
units
Capital goods
Services
Consumable goods
multinational suppliers
Top management (Board)
Senior management¹
Middle management
Junior management
Core and critical skills²
40%
70%
50%
40%
40%
40%
40%
40%
5%
35%
75%
81%
91%
1.2%
50%
50%
45%
52%
70%
Sustainable
development
and growth
Improvement of the industry's environmental management
Implementation of approved environmental
100%
management programmes (EMPs)
Improvement of the industry's mine health and safety performance
Implementation of tripartite action plan on
100%
health and safety
Beneficiation
Utilisation of South Africa-based research facilities for analysis of samples
across the mining value chain
Contribution towards beneficiation
Percentage of samples in South African
100%
facilities
Added production volume contribution to local
Section 26 of MPRDA (% of
value addition beyond the baseline
above baseline)
1 Includes members of the SA Regional Executive Committee and the South Deep mine
Executive Committee
2 Core skills include A, B and C graded employees in the miner and artisan categories as well as
officials with core skills for mining and/or working in a core mining area(s)
The two remaining 2013 – 2017 SLP projects, brought forward from
2017 – a poultry farm and a bakery – were fully implemented during
2018 with total spend of R4.8m. Regarding the 2018 – 2022 SLP,
effective 1 January 2018, for which DMR approval is still pending –
project implementation commenced with a focus on project plans
and Memorandums of Understanding with project partners. Actual
implementation as at 31 December 2018 was therefore at 0%. This
will accelerate once DMR approval has been received.
R44.1m was spent on SED (including community trusts), with 0.05%
spent on training 14 small medium and micro-sized enterprises
(SMMEs).
100%
96%
100%
An EMP performance assessment was undertaken in Q1 2018. The
assessment was conducted by ECO Partners Consulting in terms of
NEMA Regulation. The results of the assessment were submitted to
the DMR in April 2018.
South Deep is also ISO 14001:2015 certified, which assists tracking
the implementation of the EMP commitments. In addition, the mine
commissions annual reviews of the mine closure cost estimates,
using independent experts.
The implementation of the two remaining programmes of the five
culture transformation pillars (elimination of discrimination and risk
management) is still in progress.
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).
Element
Description
Reporting
Ownership
Report on the level of compliance with the Revised Charter for the calendar year
Minimum target for effective HDSA ownership
Housing and
living conditions
per room
Conversion and upgrading hostels to attain the occupancy rate of one person
Conversion and upgrading hostels into family units
Procurement
and enterprise
development
Procurement spent on BEE entity
Multinational suppliers' contribution to the social fund
Employment
equity
competitiveness
Diversification of the workplace to reflect the country's demographics to attain
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
Mine community
Conduct ethnographic community consultative and collaborative processes
development
to delineate community needs analysis
The Gold Fields Integrated Annual Report 2018
109
Measure
Documentary proof of receipt from the DMR
Meaningful economic participation
Percentage reduction of occupancy rate
towards 2014 target
Percentage conversion of hostels into family
units
Capital goods
Services
Consumable goods
Annual spend on procurement from
multinational suppliers
Top management (Board)
Senior management¹
Middle management
Junior management
Core and critical skills²
Human resources development expenditure
as a percentage of total annual payroll
(excluding mandatory skills development levy)
2018 Mining Charter
compliance target
Progress against targets as at
31 December 2018
Annually
26%
Occupancy rate of one
person per room
Family units established
40%
70%
50%
0.5% of procurement value
40%
40%
40%
40%
40%
5%
South Deep annual submission
35%
0.49 person per room ratio
100%
75%
81%
91%
1.2%
50%
50%
45%
52%
70%
7.7% (R123m)
Implement approved community projects
Up-to-date project
implementation
Sustainable
development
and growth
Improvement of the industry's environmental management
Implementation of approved environmental
management programmes (EMPs)
100%
Improvement of the industry's mine health and safety performance
Implementation of tripartite action plan on
health and safety
100%
Utilisation of South Africa-based research facilities for analysis of samples
across the mining value chain
Beneficiation
Contribution towards beneficiation
Percentage of samples in South African
facilities
Added production volume contribution to local
value addition beyond the baseline
100%
Section 26 of MPRDA (% of
above baseline)
1 Includes members of the SA Regional Executive Committee and the South Deep mine
Executive Committee
2 Core skills include A, B and C graded employees in the miner and artisan categories as well as
officials with core skills for mining and/or working in a core mining area(s)
The two remaining 2013 – 2017 SLP projects, brought forward from
2017 – a poultry farm and a bakery – were fully implemented during
2018 with total spend of R4.8m. Regarding the 2018 – 2022 SLP,
effective 1 January 2018, for which DMR approval is still pending –
project implementation commenced with a focus on project plans
and Memorandums of Understanding with project partners. Actual
implementation as at 31 December 2018 was therefore at 0%. This
will accelerate once DMR approval has been received.
R44.1m was spent on SED (including community trusts), with 0.05%
spent on training 14 small medium and micro-sized enterprises
(SMMEs).
100%
An EMP performance assessment was undertaken in Q1 2018. The
assessment was conducted by ECO Partners Consulting in terms of
NEMA Regulation. The results of the assessment were submitted to
the DMR in April 2018.
South Deep is also ISO 14001:2015 certified, which assists tracking
the implementation of the EMP commitments. In addition, the mine
commissions annual reviews of the mine closure cost estimates,
using independent experts.
96%
The implementation of the two remaining programmes of the five
culture transformation pillars (elimination of discrimination and risk
management) is still in progress.
100%
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).
LICENCE AND REPUTATION 110 The Gold Fields Integrated Annual Report 2018
Stakeholder relations continued
West Africa
region
In March 2016, Gold Fields Ghana
entered into a Development
Agreement (DA) with the government
of Ghana for both the Tarkwa and
Damang mines. The highlights of the
agreement include a reduction in
the corporate tax rate from 35% to
32.5% and a sliding scale royalty
tax based on the gold price. The
US$1,251/oz average gold price our
mines received during 2018 attracted
a royalty of 3%, the lowest in terms
of the formula.
The DA applies if Gold Fields spends
US$500m at each of the two mines
for an 11-year period for Tarkwa and
a nine-year period for Damang. The
DA can be extended by a further five
years should additional investments
of US$300m each be made.
Australia
region
During 2017, the gold industry twice
managed to halt attempts by the
Western Australian government to
increase the gold royalty tax from
2.5% to 3.75%. Political pressures to
boost state revenues from the sector
remain. To garner ongoing public and
political support for the industry Gold
Fields, together with West Australian
industry peers in the Gold Industry
Group, will continue to highlight
the positive social and economic
contributions the sector makes and
how this can be further enhanced
through growth in gold mining rather
than through higher taxes and
royalties.
The commencement of the Native
Title Act 1993 significantly changed
The DA was a critical consideration
for Gold Fields Ghana to commence
with the US$341m capital
reinvestment programme at Damang
during 2017. This investment has
significant socio-economic benefits
for communities around Damang.
The DA will also lead to cost and
cash-flow benefits for the Tarkwa
mine. The mine has accelerated its
near-mine exploration activities,
which, if successful, will enable it
to invest in future expansion when
required.
Another DA commitment by Gold
Fields was funding the construction
of the 33km road between Tarkwa
and Damang at an estimated cost
of US$26m. This project is set to be
completed in early 2019. The DA
does not apply to the Asanko gold
mine, in which we acquired a
45% stake during 2018, but our
investment illustrates the confidence
the regulatory framework in Australia
with respect to industry engagement
with Indigenous People. Until
recently, there has not been a legal
requirement for Gold Fields to engage
with Native Title groups, as our mines
are located on mining tenements
that were granted prior to the
commencement of this legislation.
This position has shifted significantly
in the last few years, as Native Title
claims have been lodged and
determined over many areas in which
Gold Fields operates. In addition, the
entry into a joint venture with Gold
Road Resources for development of
the Gruyere project, has handed
Gold Fields its first comprehensive
agreement with a Native Title group
for the development of a mine.
In response, Gold Fields has
significantly stepped up engagements
with Native Title groups in recent
years and, during 2018, developed a
we have in Ghana’s fiscal and
regulatory framework.
The DA has cemented our status as
one of the largest contributors to the
country’s fiscus. In 2018, Gold Fields
paid US$90m in direct taxes, royalties
and dividends to the government
of Ghana (2017: US$105m). The
government holds a 10% interest
in the legal entities controlling our
Tarkwa and Damang mines.
During 2018 the Ghanaian
government issued a letter to the
mining sector requiring all gold
companies, including Gold Fields,
to sell 30% of their gold production
to the government with a view to
refining it and adding value to the
metal locally. The Chamber of Mines
is continuing to engage with the
government through a joint
committee which is looking at
mutually beneficial strategies to add
value to the country’s gold resources.
comprehensive Indigenous Peoples
strategy. The strategy, as well as our
engagements, are discussed on
p114 – 115.
In November 2018, the Modern
Slavery Bill 2018 was passed by the
country’s House of Representatives.
Companies with a turnover of
A$100m a year will be required to
report annually on their actions to
ensure transparency in their supply
chains, including the steps they are
taking against modern slavery. A
preliminary assessment of Gold Fields
Australia’s key human rights risks and
the effectiveness of its control
framework, including supply chain
risks, has been undertaken. Gaps
identified will now to be addressed.
The Gold Fields Integrated Annual Report 2018
111
Community relations
We recognise the importance of solid
relations with our host communities
to our social licence to operate. Host
communities are identified by each
of our operations for the purpose of
securing our mining licences – both
legal and social. These communities
reside in the vicinity of our operations,
have been directly affected by
exploration, construction or
operations, and have a reasonable
expectation regarding the duties and
obligations of the mining operator.
We aim to avoid and minimise
negative impacts of our operations
on our host communities while
maximising the positive benefits.
In 2018, all operations prepared
community relations and stakeholder
engagement strategies and three
year plans focused on maintaining
the social licence to operate in their
host communities. The regions are
progressing with implementation of
their plans. Progress on highlights for
all of our mines is outlined in the
infographics on p114 – 121.
We remain focused on social
investment that results in a
meaningful and sustainable impact
on our host communities, and
therefore strive to create Shared
Value through host community
employment and procurement.
An infographic detailing how we create
value for our communities is on p7.
For details of our community relations
and stakeholder engagement approach,
policies and guidelines go to www.
goldfields.com/sustainability.php.
Community investment drives
integrated development. We focus on
socio-economic development (SED)
initiatives and Shared Value
programmes to create and share
value with our host communities.
These projects create positive
socio-economic impacts for host
communities by targeting their priority
needs, which we have identified as:
■■ Employment, particularly for youth
■■ Skills and enterprise development
■■ Environmental rehabilitation
■■ Access to water
SED spending
We have invested US$25.7m (2017:
US$17.5m) in SED projects in our
host communities during 2018,
mainly in the following areas:
■■ Infrastructure development
■■ Education and training
■■ Economic diversification
These investments are detailed for
each region on p114 – 120.
Group and regional SED spend
US$m
30
25
20
15
10
5
0
7
.
5
2
2
.
6
1
5
.
7
1
6
.
3
1
2015
2016
2017
2018
Grievance mechanism
We are committed to addressing
community issues and concerns
timeously and effectively. Therefore,
we rely on a grievances system to
maintain confidence and transparent
communication with our
stakeholders. Our grievance
mechanism enables and encourages
community members to freely put
forward their complaints, while
obligating our mines to address the
grievances within an agreed period.
Not managing a complaint can lead
to further conflict and discontent
within our host community. In certain
instances we engage members from
our local communities to act as
mediator should our teams not be
able to resolve the grievance. During
2018, our operations dealt with
127 economic, social, and
environmental grievances lodged
by our host communities (2017: 76).
88 of these grievances were resolved
and 39 are still being dealt with.
Measuring our impact and
relationships
We conduct independent
assessments to gauge the strength
of our relationships with our host
communities. In South Africa and
Ghana, we use the ICMM
Understanding Company Community
Relations (UCCR) tool, while in Peru
we have used the IPSOS research
tool to assess our mine-community
relationships.
Reflecting a positive upward trend
in company community relationship
at our operations, the headline
findings of these assessments are
reflected below:
Region
Description
■ Gold Fields
South Africa
Peru
Ghana
Community support rose from 33% in 2015 to 52% in 2017
Community acceptance improved from 5% in 2012, to 7% in 2014, to 32% in 2016
Strong community support with a relationship index of 73% at Damang and 78% at
Tarkwa in 2015
We plan to commission independent
assessments of our community
support again in 2019. Beyond the
relationship assessment, Gold Fields
has also instituted socio-economic
impact assessments and piloted a
social return on investment study of
South Deep’s community investment
projects. These assessments focused
on:
■■ The South Deep host community
socio-economic baseline study,
using available secondary
economic and social data to
measure quality of life and
contribution indicators for South
Deep host communities in 2011
and 2016
LICENCE AND REPUTATION
112 The Gold Fields Integrated Annual Report 2018
Stakeholder relations continued
■■ A social impact measurement and
valuation study that provides
measurable indicators of the
effectiveness, impact of and Social
Return On Investment (SROI) of
South Deep’s 15 most critical
community investment projects.
The assessment showed that 10
projects had a SROI greater than
the money spent
A presentation on the South Deep
measures can be found at www.
goldfields.com/presentations.php.
An SROI guide has been developed
and we plan to roll it out at our other
operations.
Shared Value programmes
Shared Value is created when we
take a proactive role in simultaneously
addressing business and social
needs, and benefit both communities
and our mines. To achieve synergies
of sustainable development with the
communities, understanding Shared
Value as an opportunity for mutual
development is the generator of
positive opinion for our work with the
communities surrounding our
operations, as well as the generator
of solid ties of coexistence with our
neighbouring communities.
Gold Fields continues to focus on
maximising in-country and host
community economic impact
wherever it operates. In order to
obtain this, we increase the
proportion of sustainable host
community procurement and
employment to drive Shared Value.
Group guidance on host community
procurement spend and job creation,
which are our most critical Shared
Value projects, was developed during
the year and was implemented in
all our regions.
suppliers to also employ from the
community. Job creation is further
promoted through our SED initiatives.
Both the communities and Gold
Fields benefit from host community
employment and procurement
programmes.
Benefits to the community
■■ Build the capacity of local
companies to take advantage
of mining industry spend
■■ Provide employment and enhance
the livelihoods of host communities
through increased incomes
■■ Enhance the development of small
and medium-scale business nodes
in host communities
■■ Improve skills of the youth in host
communities to meet the current
and future skills needs of our mines
Benefits to Gold Fields
■■ Increase supply base and reduce
risks related to supply of critical
inputs
■■ Reduce inventory and, as such,
the locking up of capital
■■ Reduce cost and lead time in
procuring inputs
■■ Develop a pipeline of skilled
personnel in host communities
■■ Secure and enhance social licence
to operate
Host community employment
We consistently strive to maximise
local opportunities and employ host
community members at our
operations. We build a skills base in
our communities through investments
in education and skills development.
We make our community a priority
when employment opportunities arise
and encourage our contractors and
A multi-disciplinary team at Cerro
Corona works to increase host
community employment by using
host community employees for
seasonal labour requirements.
Australia has a strategy to increase
employment of Indigenous Peoples
through growing a pipeline of
work-ready persons, developing a
culturally-inclusive workplace and
creating broader opportunities for
service provisions to the mines.
Both Tarkwa and Damang have
community employment committees
in place, comprising representatives
from the community, to increase host
community workforce employment
– with a specific focus on youth
employment. At Tarkwa, the
community employment committee
co-ordinated job vacancies with the
mine contractors, who then recruited
130 youth from our host communities
in 2018.
At South Deep, employment declined
due to the restructuring process
at the mine. Local economic
development projects enabled
258 jobs.
In the table below we set out the
number of host community members
– including both employees and
contractors – working at each of
Gold Fields’ regions in relation to our
total workforce.
HOST COMMUNITY WORKFORCE1 EMPLOYED FROM TOTAL WORKFORCE
Region
Peru
Ghana
Australia2
South Deep3
Group
Host
community
workforce
number –
2018
633
5,411
647
2,568
9,259
2018
27%
73%
29%
55%
56%
2017
28%
68%
29%
16%
40%
2016
23%
72%
95%
13%
48%
2015
29%
67%
90%
14%
59%
2014
24%
66%
94%
12%
57%
1 Workforce comprises total employees and contractors
2 Australia’s 2017 and 2018 performances are based on its new host community definition which is aligned with the Group’s host community
definition where communities are those living within an operations’ direct area of influence. These numbers exclude the Perth head-office and the
Gruyere project. Previous years’ numbers have not been restated
3 South Deep’s 2018 performance is based on its revised host community definition which is aligned with needs of the regulator, local government
and community stakeholders as well as wit the Group’s guidance. Previous years’ numbers have not been restated
The Gold Fields Integrated Annual Report 2018
113
In 2018, our operations set targets
to increase their host community
workforce employment. At the end
of 2018, 56% of our workforce, or
9,259 people, were employed from
our host communities. The sharp
increase reflects the prioritisation of
host community employment by
our Ghanaian operations and the
expansion of our South Deep host
community to reflect the 2016
municipal boundary change. It now
includes all individuals who reside
in the Rand West City Local
Municipality. The previous definition
required individuals to own property
in or have been born in the area. We
seek to maintain the current levels of
host community employment during
2019. Our management teams at the
mines are incentivised to achieve
long-term host community job
creation targets.
Host community procurement
We focus on host community
procurement to create sustainable
community jobs and supply
opportunities. We achieve this by
supporting areas where community
suppliers can participate, identify
community suppliers with the ability
to supply the mine and providing
skills development to close capability
gaps. It is key that we procure goods
and services from the countries and
host communities, where feasible,
given the remote locations of several
of our mines.
The Group has made good progress
on preferential host community
procurement with all regions
exceeding their 2018 targets. We
spent a total of US$441m on host
community procurement, which was
27% of our total spend.
Of our total procurement spend
of US$1.81bn for 2018, 85%, or
US$1.54bn, was spent by our mines
on businesses based in countries
where Gold Fields has operations
(2017: US$1.62bn/88%). US$441m,
or 27%, was spent on suppliers and
contractors from the mines’ host
communities (2017: US$774m/45%).
In 2019 we seek to sustain 2018 host
community procurement spending
levels.
LOCAL AND HOST COMMUNITY PROCUREMENT
Local (in-country) spend
Host community spend
Region
Peru
Ghana
Australia4
South Deep5
Group
2018
2017
2016
2015
2014
2018
2017
2016
2015
2014
96%
86%
99%
100%
93%
90%
85%
99%
100%
94%
89%
79%
99%
100%
92%
87%
64%
97%
100%
85%
88%
72%
99%
100%
91%
16%
32%
24%
29%
27%
7%
13%
79%
18%
45%
8%
7%
71%
14%
38%
7%
9%
66%
10%
35%
5%
6%
69%
9%
39%
4 Australia’s 2018 performance is based on its new host community definition which is aligned with the Group’s host community definition where
communities are those living within an operation’s direct area of influence. Previous years’ numbers have not been restated
5 South Deep’s 2018 performance is based on its revised host community definition which is aligned with needs of the regulator, local government
and community stakeholders as well as with the Group’s guidance. Previous years’ numbers have not been restated
In the regions
West Africa
Both Tarkwa and Damang
significantly exceeded their host
community procurement targets of
15% by achieving 40% and 27% of
total procurement spend respectively
in line with the redefinition of host
community procurement. The two
mines spend a combined US$229m
on procuring from host community
suppliers. Following the transition to
contractor mining at Tarkwa, the two
mining contractors committed to the
established procurement model,
including procuring from established
host community suppliers.
Americas
In Peru, host community procurement
spend for 2018 was US$24m, 16%
of total procurement spend, against
a target of 9%. A steering committee
was established to align host
community procurement with Group
guidance, deliver on spend targets
and identify work opportunities to
shift purchasing from non-host
community companies to those
enterprises within our host
community, and to focus on host
community employment by non-host
community businesses.
Australia
In 2018, Australia invested a total
of US$147m in host community
procurement, 24% of total
procurement spend, against a target
of 18%, for the year. This region is
implementing seven strategic
initiatives for procurement processes
to enable host community and
Indigenous People participation in the
value chain. We initiated a process of
implementing the Host Community
Vendor Programme, which is based
on a three-phase approach aimed at
identifying, engaging and mobilising
local vendors.
South Africa
The definition of host community has
been reworked in 2018 to include the
Rand West City Local Municipality
and all those that reside in it, and the
2018 host community procurement
spend has been restated in line with
the revised definition. South Deep’s
host community procurement spend
for 2018 was R518m (US$39m), 29%
of total spend and ahead of its 20%
target for the year. In 2017 the spend
was R448m (US$34m), 18% of total
spend.
Beyond the relationship assessment,
Gold Fields has also instituted
socio-economic impact assessments
and piloted a social return on
investment study of South Deep’s
community investment projects.
These assessments focused on:
■■ The South Deep host community
socio-economic baseline study,
using available secondary
economic and social data to
measure quality of life and
contribution indicators for South
Deep host communities in 2011
and 2016
■■ A social impact measurement and
valuation study that provides
measurable indicators of the
effectiveness, impact of and Social
Return On Investment (SROI) of
South Deep’s 15 most critical
community investment projects.
The assessment showed that
10 projects had a SROI greater
than the money spent
We plan to roll out similar studies
at our other operations.
LICENCE AND REPUTATION 114 The Gold Fields Integrated Annual Report 2018
Community relations in Australia
Context
■■ Our operations in Australia are
situated in remote regions of
Western Australia. Our host
community definition covers
communities within the Eastern
Goldfields region, with a primary
postal address that is located
within a determined perimeter
of the mine. Previously, given
the Fly-in, Fly-out nature of most
of our mines, we extended that
definition to include Perth
■■ Our host communities are home
to an estimated 37,000 people
in the Shires of Laverton,
Menzies, Kalgoorlie, Coolgardie
and Leonora. The majority of
the people reside in the city of
Kalgoorlie, near our St Ives
mine, with an estimated
population of over 29,000. The
Indigenous population makes
up only about 9% of this total,
with a greater representation
in isolated locations
■■ Indigenous People are a key
part of our host communities,
and important stakeholders for
our operations in Western
Australia. This includes those
Indigenous People who hold, or
claim to hold, Native Title rights
and interests over the area on
which our sites are located
■■ The combined area of registered
and determined Native Title
claims over Western Australia
is approximately 90% of the
state’s land mass. All Gold
Fields’ operations in Australia
are covered by Native Title
determinations or claims
■■ Many of our sustainability
projects have been funded
by the Gold Fields Australia
Foundation. For more details
on the Foundation go to www.
goldfields.com/societal-
stakeholders.php
Build relationships and trust
Indigenous People strategy
Because of their traditional rights and important connection to land, Indigenous
People are key stakeholders whose support is critical in achieving social
acceptance. The relationship with our indigenous stakeholders has been
focused in recent years on management of cultural heritage in our areas of
operation. The current status of our relationships are:
■■ At Gruyere, we have built our relationship with the Yilka People (who are the
determined Native Title holders for the area, together with the Sullivan
Edwards family) through a formal Native Title agreement. Through regular
engagement we have been able to pursue opportunities for employment and
contracting, as well as manage environmental and cultural heritage issues
throughout the construction phase
■■ At St Ives, we engage with the Ngadju People, the determined native holders
for the area, with a focus on the conduct of heritage surveys. We also
participate in community activities in the nearby town of Kambalda and
the city of Kalgoorlie
■■ At Agnew, we have relationships with the Tjiwarl People (determined Native
Title holders for part of the land) and the Wutha People (Native Title claimants
over the remaining part of the Agnew property). We regularly engage with
both groups in relation to the conduct of heritage surveys, and have been
exploring opportunities to formalise these arrangements with both groups
■■ At Granny Smith, our key relationship is with the local community at Laverton.
We continue to build on our relationship with Indigenous People in the area
through the conduct of heritage surveys and cultural awareness programmes
During 2018, we launched Gold Fields’ Aboriginal Participation Strategy, based
on three pillars – societal staging, employment attraction and retention, and
value chain participation – and identified actions to be completed under each
pillar. Many of these had a focus on the employment of and procurement
from Indigenous People (refer to “Create and share value”) with some early
successes. We identified a need to bring our existing initiatives and planned
programmes together under a consolidated strategy. This strategy was
launched in Q1 2019 and seeks to ensure that Gold Fields’ Australian region
has a strategy that is aligned with key internal Group policies, as well as
external guidelines.
The key steps under this strategy are to:
■■ Engage to build trusted relationships and resolve conflict
■■ Deliver benefits that have real impact
■■ Demonstrate respect
Manage risks and impacts
MATERIAL UNWANTED EVENTS AT OUR SITES
Material unwanted events (MUEs) at our sites can affect our social licence to operate.
This is how we addressed them:
■■ Completed a bow-tie analysis for 15 safety-related, and 13 consolidated,
health, environment and community MUEs
■■ Developed audit tools to address the 15 health, environment and community
MUEs
■■ Aligned our sites to the critical control management methodologies
■■ Developed a regional heritage management standard
The Gold Fields Integrated Annual Report 2018
115
Create and share value
HOST COMMUNITY PROCUREMENT
■■ During 2018, our supply chain department commenced development of a
host community vendor programme to generate greater opportunities for
local businesses to supply to our operations. This was achieved by investing
A$198m (US$147m) – 24% of total spend – in host community
procurement, exceeding our 2018 target of 18%, through 279 host
community suppliers
■■ Pursuing procurement initiatives to enable host community and Indigenous
people to participate in the value chain
■■ The engagement of Indigenous People in the conduct of heritage surveys
and cultural awareness training of our workforce
■■ Supporting our mining contractor, Downer EDI Mining, to identify and
develop opportunities for Indigenous contracting opportunities at Gruyere
HOST COMMUNITY EMPLOYMENT
Our Australian operations have a strategy in place to increase employment
of Indigenous People by growing a pipeline of people who are work-ready,
developing a culturally inclusive workplace and creating broader opportunities
for service provisions to the mines. During 2018, we achieved the following:
■■ We exceeded our target for employment of Indigenous People through
additional job opportunities
■■ We continued discussions with key contractors at Gruyere to increase
the jobs for and employment of Indigenous People
■■ We engaged with training companies to assist with the identification of
potential traineeship programmes for members or our host communities
Measure actions
and impacts
Australia SED spend
US$m
1.0
0.5
0
9
4
.
0
9
2
.
0
3
3
.
0
9
1
.
0
15
16
17
18
Australia SED by type 2018
4% 3%
44%
Total spend
in 2018:
US$50,000
49%
■ Economic diversification
■ Infrastructure
■ Health and wellbeing
■ Conservation and environment
■ Education and training
For more details of our host community programmes see p7 and p112 – 113.
Engagement with communities
OTHER MATERIAL VALUE CREATION PROJECTS
The following projects were funded by the Gold Fields Australia Foundation:
■■ Our St Ives operation provides a three-year, A$150,000 (US$112,000) grant
to the East Kalgoorlie Primary School to support around 150 Aboriginal
students and their families
■■ Annual funding of A$30,000 (US$22,000) provided to Teach, Learn Grow,
a programme that addresses educational inequality at schools in our host
communities
■■ We contributed A$50,000 (US$37,000) to the Lions Outback Vision
programme, which will allow eye specialists to perform diabetic retina
screening in the Goldfields region, particularly for Aboriginal people
Gold Fields Australia funds Football West, the governing body for fast-growing
soccer in Western Australia, through an annual sponsorship of A$100,000
(US$75,000) for three years. Football West has a strong commitment to the
region, inclusiveness and cultural and gender diversity.
2017
10
2018
87
Grievances
One grievance was carried over
from 2017, which was lodged on
behalf of the Sullivan Edwards
Native Title group and related to the
Gruyere project. While not formally
closed, Gold Fields has received no
further communication regarding the
issue. The Sullivan Edwards families
were found to hold Native Title by
the Federal Court of Australia in
2016, together with the Yilka
People. However, prior to this
determination, the Sullivan Edwards
Native Title claim was being run as
a separate and unregistered claim,
which meant that they did not have
the same procedural rights as the
Yilka People, whose Native Title
claim was registered. The Yilka
People and the Sullivan Edwards
families are currently engaged
in a process to appoint a single
corporation to represent them. We
continue to engage with the Yilka
and Sullivan Edwards families
together, wherever possible.
Beyond this grievance, in 2018 we
had one further community-related
grievance, which was resolved.
LICENCE AND REPUTATION
116 The Gold Fields Integrated Annual Report 2018
Community relations in Americas
Build relationships and trust
■■ Cerro Corona hosts a monthly Dialogue Roundtable, in which progress on
several development projects is provided and future work discussed with the
Hualgayoc district local government and community organisations. We also
meet regulatory with representatives from our villages, local business
organisations and worker representatives
■■ We regularly engage with and support events hosted by our communities
near Cerro Corona. Among others, we sponsored the Cajamarca Book Fair,
the El Tingo Agricultural and Livestock Fair and supported the Patronage
Festival in Honour of Our Lady of Carmen in Hualgayoc, one of the most
important religious festivals in the province
■■ We host regular school and community visits to our mine, as well as visits
from other interested organisations and institutions
■■ We trained 29 journalists from community media on investigative journalism
to build a better understanding of responsible mining
Manage risk and impact
POTENTIAL PROTESTS AS A RESULT OF ALLEGED IMPACTS OF
BLASTING ON HOST COMMUNITIES
Risk: Possible social protests set off by the collapse of houses with structural
damage in Hualgayoc, as well as houses allegedly affected by in-pit blasting in
the Pilancones hamlet.
Action
■■ Engagement with the Pilancones community to address housing claims and joint
monitoring of vibrations and noise
■■ We submit weekly blasting schedules to the local municipal authorities and place
notices announcing blasting times at the Gold Fields office in Hualgayoc
■■ Close coordination with communities for temporary evacuation of families and their
cattle before blasting
■■ An assessment carried out during 2016 and 2017 identified 22 houses to be rebuilt
in Hualgayoc because of a high risk of collapse. So far ten houses have been
rebuilt and the demolition and reconstruction of six others is currently ongoing
■■ A reconstruction committee has been set up in Hualgayoc, comprising community
representatives, the municipality and other authorities
2018 spend: US$471,000
COMMUNITY ACTION AGAINST TAILINGS SPILLAGE
Risk: Community action against Cerro Corona in protest of the 16 December
2018 tailings discharge into the Tingo river (p95).
Action
■■ Regulator, local authorities and communities notified and activated immediately
on news of the leakage and environmental parameters returned to normal within
24 hours
■■ Rehabilitation of the affected area started immediately and was completed within
20 days – community members were used in clean-up operation
■■ Compensation of US$36,000 paid to a nearby trout farmer
■■ About US$132,000 paid in restoration activities
■■ Engagement with regional environmental activists through government mediation
Context
■■ Cerro Corona is located in the
district of Hualgayoc in Peru’s
northern Cajamarca province,
where agriculture and cattle
raising are the main economic
activities. The mine’s direct area
of influence, which has around
5,100 inhabitants, includes the
city of Hualgayoc and five rural
villages – El Tingo, Pilancones,
Coymolache Alto, Coymolache
and La Cuadratura (2014)
■■ Poverty among the Cajamarca
region’s 1.3m residents is high
and education levels low by
national standards. While 90%
of the district’s population now
has access to electricity, only
53% have access to potable
drinking water in their homes
■■ Cerro Corona’s latest perception
study (2016) indicates that the
main needs of our local
communities are access to
drinking water, employment
and support for their economic
activities
■■ MesÌas Guevara, a candidate
with a neutral stance towards
mining, was elected as
Cajamarca regional governor
during 2018. Previous
governors have been strongly
anti-mining and the province
has seen anti-mining protests
by communities
■■ During 2018, we changed our
main mining contractor from
San Miguel to MUR-WY. While
there were initially some
protests against this decision by
affected workers, MUR-WY
prioritised the hiring of host
community personnel
■■ In 2017, Cerro Corona
announced an extension of
its life-of-mine by six years to
2030. Our community
engagement strategies have
been adjusted to the new
timescales
■■ The majority of our community
projects are funded by our Gold
Fields Peru Foundation APPD
The Gold Fields Integrated Annual Report 2018
117
Create and share value
HOST COMMUNITY EMPLOYMENT AND PROCUREMENT
■■ By end-2018, we achieved a 27% host community employment representation –
above our target of 25% – meaning that 633 members of our host community now
work at Cerro Corona. The mine is working to increase host community
employment by using host community employees for seasonal labour requirements.
The new mining contractor, MUR-WY, has also focused on employing community
members in line with our policies
■■ In 2018, we successfully focused on increasing the proportion of sustainable host
community procurement spend. This totalled US$24m, 16% of our total
procurement spend, against a target of 9% from 233 host community suppliers
■■ A steering committee was established to deliver targets, as well as align with new
guidance, and to identify work opportunities to shift purchasing from non-host
community companies to host community enterprises
For more details of our host community programmes see p7 and p112 – 113.
WATER SUPPLY
During 2018, we renewed our goal of bringing permanent, high-quality water to our
host community for domestic and agricultural purposes. The following projects were
completed or are in development under this strategy:
■■ Construction of the water systems for the Kiwillas and Lipiag hamlets was
completed in early 2018. The construction involved 19km of distribution piping,
134 house connections, three water reservoirs and three water catchments. An
additional 15 pylons were added to the project
■■ The Cuadratura water project commenced in 2017 and was set to be completed
in mid-2018. However, the project has been delayed as negotiations continue with
a private landowner. Alternatives are being identified.
Benefits to the community: The water systems for the Kiwillas and Lipiag hamlets
have provided 1,494 families access to water at a low cost.
Benefits to Gold Fields: These projects further solidify our social licence to operate
and reputation in a region where many mining companies have experienced
water-related conflicts with their host communities.
2018 spend: US$370,000
Measure actions
and impacts
Peru SED spend
US$m
10
8
6
4
2
0
1
0
.
8
9
4
.
6
9
3
.
6
3
5
.
8
15
16
17
18
Peru SED by type 2018
17%
19%
Total spend
in 2018:
US$6.39m
10%
14%
40%
■ Economic diversification
■ Infrastructure
■ Health and wellbeing
■ Conservation and environment
■ Education and training
Engagement with communities
2016
123
2017
172
2018
325
LIVESTOCK DEVELOPMENT PROGRAMME
Grievances
■■ In Cerro Corona’s direct area of influence this programme benefits 599 cattle
breeders. During 2018, agricultural experts made 550 visits to farmers during which
cattle were given medical treatment and 160 artificial inseminations completed
■■ 260ha of pasture were improved or installed in the Pilancones and Alto
Coymolache hamlets
■■ Within the wider district, we funded 329 inseminations as part of our genetic
improvement project for local cattle. Almost 400 new cows were provided to local
farmers
■■ Milk production improvement programmes were rolled out to more than 750
families in the wider district
■■ Sheds for guinea pigs and hens were donated to 67 families
Benefit to the community: Our livestock development programmes have improved
the income and economic welfare of over 1,000 families in our communities over the
years.
Benefit to Gold Fields: With this programme, which supports the most critical
economic activity of our communities, Gold Fields further solidifies relationships with
the farmers in the area, contributing to strengthening our social licence to operate.
2018 spend: US$1.3m
OTHER MATERIAL VALUE CREATION PROJECTS
■■ We completed the 4km access road to the Cuadratura hamlet at a cost of
US$200,000, giving its 1,000 residents easier access to the surrounding area
■■ We built and equipped a modern community centre for the El Tingo hamlet at a
cost of US$310,000
■■ We spent US$45,000 on constructing a Kindergarten and upgrading a children’s
shelter in two of our host communities
There was a marked increase in
grievances at Cerro Corona in 2018.
However, this is an anticipated
outcome of the awareness raising
about the grievance mechanism
in the communities. A total of 69
grievances (2017: 12) were recorded
during the year, of which 21 were
employment- and procurement-
related grievances, 29 were
environmental issues caused by
perceptions of water contamination
and dust,14 related to social
impacts/damage due to blasting at
Cerro Corona, three grievances
related to claims for property limits
and two related to concerns with the
results of the livestock development
project. 33 of these grievances were
resolved in 2018, 36 grievances are
in the process of being addressed.
LICENCE AND REPUTATION
118 The Gold Fields Integrated Annual Report 2018
Community relations in Ghana
Build relationships and trust
■■ In 2018, we further solidified relationships with our host communities by
engaging regularly with local government, community organisations and
residents, as well as dealing transparently with grievances submitted
■■ During 2018, 130 community youth gained employment in Tarkwa with the
mining contractors through the host community employment committee,
comprising Gold Fields, the contractors and community leadership.
A similar committee oversees host community employment at Damang
■■ The Tarkwa mine collaborates with local government to implement
community projects and programmes
■■ Gold Fields celebrated 25 years in Ghana during 2018. The communications
campaign included the launch of the Gold Fields Ghana Facebook page to
communicate with employees and community members. Details can be
found at www.goldfields.com/gold-fields-in-ghana.php
Manage risk and impact
DAMANG – SEEPAGE AND FLOODING
Risk: The Damang mine experienced a Level 3 environmental incident during the
commissioning of the its new tailings storage dam (p95). A farming community, Togbe
Junction, raised concerns when they found dead fish in the river. This could
potentially impact the mine’s social licence to operate.
Action
■■ Intensive engagements with leaders and members of the community
■■ Provided the community with potable water even though there was no
contamination of any of the water sources used by the community
■■ Implemented three-year livelihood enhancement projects that were agreed
with members of the community
■■ Ensured that surrounding communities were not impacted
Spend to date: US$80,200
TARKWA – VALUATION OF CROPS AND STRUCTURES
Risk: During 2016, a group of farmers near the Tarkwa mine’s Kottraverchy waste
dump area disputed previously paid compensation and petitioned the Environmental
Protection Agency (EPA) to mediate. The farmers argued that their crops and
structures were not accurately assessed and valued. Various proposals by the mine
and the EPA have been rejected by the farmers.
Action
■■ Independent valuation to re-evaluate the crops and structures carried out in 2017
■■ Meetings between Gold Fields and the Land Valuation Board (LVB) to determine
the appropriate compensation to be paid
■■ Submission of relevant documents to the LVB
■■ Investigation by the Ministry of Lands and Natural Resources ongoing
TARKWA – BRAHABOBOM COMMUNITY DISPUTE
Risk: A group of residents within the Brahabobom host community, whose structures
are close to the Tarkwa mine’s Atuabo-Mantraim pits, petitioned the Commission on
Human Rights and Administrative Justice (CHRAJ), alleging infractions by the mine,
and demanding resettlement. After its investigation, CHRAJ recommended the
following:
■■ Resettlement of those in the Brahabobom community who are located within 500m
of the pits
■■ The adoption of sound blasting practices
■■ Operate within the provision of minerals and mining regulations
Action
Measures that have been taken by the mine to reduce blast impacts include:
■■ Introduction of electronic blasting
■■ Reduction in the number of blast holes
■■ Creation of noise barriers
■■ Planting of vegetation between the pits and the community
■■ Engagement of an independent body to monitor blasts
■■ Suspension of mining in the area closest to the Brahabobom community
Following CHRAJ’s recommendations, the Minerals Commission subsequently
granted approval for blasting activities within 400m of the community, subject to
the implementation of blast controls and blasting protocols. This has been officially
communicated to CHRAJ. Tarkwa continues to engage on a final and amicable
resolution.
Context
■■Tarkwa and Damang are located
in the western region of Ghana,
which is also home to other gold
mines
■■ The Tarkwa mine is located in
the Tarkwa/Nsuaem municipality,
which has a total population of
90,477 (2010 census), though
the mine’s host communities
only have a population of
47,861. The working population
are mainly engaged in
agriculture, the informal sector,
industry and services provision
■■ Damang is in the Prestea/Huni
valley district, which has a total
population of 159,304 (2010
census). Damang’s nine host
communities have a population
of 36,231 people. Over half of
the working population in the
district are engaged in crop
farming and almost 30% in
livestock rearing
■■ During 2018, Gold Fields
acquired 45% in the Asanko
gold mine, about 100km north
of our existing mines. However,
Asanko Gold remains the
manager and has responsibility
for community relations (p49)
■■ Illegal miners continue to
encroach on the Tarkwa and
Damang mining concessions.
Encroachers are usually arrested
by the patrol team (comprising
the mines’ protection services
team and the local police) and
arraigned before court for
prosecution. The patrol teams
have been trained in applying
the Voluntary Principles on
Safety and Human Rights in
handling encroachers
■■ The Tarkwa mine changed its
business operating model from
owner mining to contractor
mining, necessitating the
retrenchment of over
2,500 employees. The majority
of the retrenched employees
were absorbed by the mining
contractors. Qualified
community residents were given
preferential job opportunities
during the transition to contract
mining
■■ Gold Fields Ghana’s community
investments are managed by the
Gold Fields Ghana Foundation,
which receives 1.5% of our
mines’ pre-tax profits and US$1
for every ounce of gold sold by
them. During 2018, the
Foundation invested US$15.3m
in community development
(2017: US$6.5m). For more
details on the foundation go to
www.goldfields.com/societal-
stakeholders.php
The Gold Fields Integrated Annual Report 2018
119
Create and share value
We set and monitor quarterly and yearly host community procurement and
employment targets. At both Tarkwa and Damang, we exceeded our 2018 host
community employment targets of 70%. This is attributed to focused efforts to hire
or retain host community members during the transition to contractor mining at
Tarkwa and during the retrenchments at Damang. Furthermore, our host community
procurement spend at Tarkwa increased from 12% in 2017 to 27% in 2018 and,
at Damang, increased from 14% to 40% in 2018, exceeding our targets of 15%.
For more details of our host community programmes see p7 and p112 – 113.
REHABILITATION OF THE 33KM ROAD BETWEEN TARKWA AND DAMANG
During 2016, Gold Fields began a comprehensive rehabilitation of the 33km public
road that links the Tarkwa and Damang mines, and serves several communities
along the corridor. Due for completion in Q1 2019, the road will have an asphalt
finish, with safety features to prevent speeding and accidents. The total cost is
US$26m.
Benefits to the community: The road is being constructed by local contracting
companies who were asked to source workers mostly from our host communities.
The improved road will reduce travel time, increase access to social amenities and
markets, reduce the cost of transportation, and increase economic activities along
the route. Dust pollution will be eliminated, and safety will improve.
Benefits to Gold Fields: A reduction in the cost of transportation and maintenance,
improvement in safety, and reduction in travel time and fatigue, which will positively
impact productivity. Many Damang employees live in and around Tarkwa, and
commute by this road on a daily basis.
YOUTH EMPLOYMENT IN AGRICULTURE
In 2016, we started the Youth in Horticulture Production (YouHoP) programme in
collaboration with the German government aid agency GIZ, which is aimed at
creating employment opportunities and improving incomes for youth in our host
community.
The second phase of the YouHoP programme started in 2018. During phase 2,
323 farmers were selected, bringing the total number of farmers engaged by the
programme to 498. Other allied community employment created through YouHoP
includes credit officers (12 youth), off-takers (18) and extension officers (9). During
the year, farmers were training in disease and pest identification, green label
certification, proper harvesting of produce, and off-take agreements.
Benefits to the community: The YouHoP programme reduces youth
unemployment in our host communities and improves agricultural production in the
area, which leads to increased income that can be reinvested in the community.
Benefits to Gold Fields: The YouHoP programme successfully reduces tension
between the mines and the communities, maintains our social licence to operate and
improves our reputation within the community.
Spend to date: US$584,000
OTHER MATERIAL VALUE CREATION PROJECTS
■■ During 2018 we awarded 110 new scholarships and bursaries to tertiary students
from our host communities, valued at US$271,000
■■ Following practical assessments carried out for applicants of the apprenticeship
programme at Tarkwa, 50 young men and women were selected in October
for training on how to operate dump trucks and excavators. Furthermore,
55 applicants received training in associated professions
■■ A medical outreach programme was held in Tarkwa and Sekondi-Takoradi. Over
1,000 residents from nearby communities received free health screening and
medication
■■ A cocoa support programme, aimed at assisting at least 100 cocoa farmers each
year, was introduced and piloted during 2018
Measure actions
and impacts
West Africa SED spend
US$m
20
16
12
8
4
0
1
3
.
5
1
7
4
.
2 6
4
.
3
8
6
.
1
15
16
17
18
West Africa SED by type 2018
1% 3%
6%
Total spend
in 2018:
US$15.31m
90%
■ Economic diversification
■ Infrastructure
■ Health and wellbeing
■ Conservation and environment
■ Education and training
Engagement with communities
2016
153
2017
220
2018
152
Grievances
There was a decrease in grievances
submitted during 2018. 49
grievances were received by both
mines through their formal
mechanisms during 2018 (2017:
54), relating to social issues (7),
compensation (6), and
environmental issues (36). All
49 grievances received in the year,
and eight unresolved ones from
2017, were resolved. The 2016
grievance relating to disputed
compensation by a group of
farmers near Tarkwa’s Kottraverchy
waste dump remains under
mediation. We will migrate our
grievance mechanism to an
electronic system in 2019.
LICENCE AND REPUTATION
120 The Gold Fields Integrated Annual Report 2018
Community relations in South Africa
Context
■■ The South African region
comprises one mine, South
Deep, situated about 45km
from Johannesburg in the Rand
West City Local Municipality of
Gauteng. South Deep operates
alongside mines, many of whom
have gone through restructure
and retrenchment processes in
recent years
■■ South Deep embarked on a
section 189 process in 2018,
and approximately 1,084
employees and 420 contractors
were retrenched by the end of
the year (p46)
■■ South Deep has re-evaluated its
definition of host communities
and recognises all communities
within the expanded Rand West
City Local Municipality as host
communities
■■ The local municipality has
around 272,000 residents, and
struggles with high levels of
unemployment, poverty, food
insecurity and crime
■■ The mine has delivered on its
last Social and Labour Plan
(SLP) projects, which ended in
2017, and has started on a new
SLP cycle for 2018 – 2022
(p108)
■■ South Deep embarked on a
new communication strategy,
including launching a Gold
Fields South Deep Facebook
page to engage with employees
and community members
■■ During 2017, South Deep
conducted a Westonaria
socio-economic baseline study
as well as a SROI study of the
impact of South Deep’s 15 most
critical community investment
projects. These influenced the
choice of 2018 – 2022 SLP
projects
Build relationships and trust
■■ South Deep hosted environmental visits to the mine, facilitated by the
Federation for a Sustainable Environment, a local NGO, as well as open days
for communities and schools aimed at increasing awareness of environmental
rights and the impacts of gold mining
■■ South Deep collaborated with the DMR on the Learners Focus Week,
which targeted 300 Grade 9-12 learners from previously disadvantaged
communities to address the shortage of skills in the mining industry
■■ The development round table established in 2016 conducted three sessions
in 2018, with representatives from the mining companies (Gold Fields and
Sibanye-Stillwater), the local and district municipalities and the West Rand
community stakeholder forum. A formal Memorandum of Agreement governs
the round table
■■ South Deep extensively engages the Department of Mineral Resources on
issues relating to community investments, particularly around the Mining
Charter and SLP
Manage risks and impact
COMMUNITY SAFETY
South Deep’s commitment to safety extends further than the borders of its operation,
and the mine therefore works closely with the South African Police Service (SAPS) in
Westonaria, Bekkersdal and Randfontein, as well as the Community Policing Forums
(CPFs), to improve the safety of its host communities.
In 2018, there were three community incidents which resulted in the deaths of nine
community members, most of them in the Thusanang informal settlement on the
boundary of the mine. South Deep undertook a community risk assessment with
SAPS, a number of government departments and Thusanang stakeholder groups.
The risk assessment focused on empowering local stakeholders to identify risks to
community safety and formulate mitigation measures.
The community safety project focuses on crime prevention through increasing visible
policing, training, information sourcing and improved crime reporting. Our investments
in the CPFs, which were done in conjunction with an NGO, Qhubeka, included a
donation of bicycles and winter jackets to patrollers who work as volunteers in their
communities. The CPFs have increased its crime prevention awareness campaigns,
and are reporting an improved impact of their campaigns since the donation.
Investment in the safety of our host communities solidifies and fosters relationships
between South Deep and community members.
Spend to date: R251,000 (US$18,000), including spending by the South Deep
Community Trust
Partnerships with South Deep
trusts
South Deep Community Trust
Spend 2018: R3.4m (2017: R3.1m)
South Deep Education Trust
Spend 2018: R19.1m (2017: R15.0m)
Spend to date (2010 – 2018): R21.9m
Spend to date (2010 – 2018): R112.8m
Key projects during 2018:
■■ Community safety
■■ Enterprise development
■■ SMME development
Key projects during 2018
■■ Westonaria TVET College (using funds
from the now-disbanded Westonaria
Community Trust)
■■ 25 scholarships (2017: 71) for high school
students
■■ 58 bursaries (2017: 37) for tertiary
education students
■■ School food garden projects
For more details on the South Deep Trusts see
www.sdtrusts.org.za.
The Gold Fields Integrated Annual Report 2018
121
Create and share value
South Deep can make a tremendous impact on the employment rate and local
economy through its work in host community employment and host community
procurement. The host community definition now includes all individuals who reside in
the Rand West City Local Municipality. As a result the host community workforce rose
to 55% of our total workforce during 2018, though the overall number of host
community employees and contractors came down as a result of the retrenchments
during Q4 2018.
At the end of 2018, our host community procurement spend was 29% of total spend,
or R517m (US$39m). This exceeded the target of 20% and the minimum spend of
R500m a year. Host community jobs from mine employment, procurement and
community projects totalled 2,569 at the end of 2018.
Measure actions
and impacts
South Africa SED spend
US$m
5
4
3
2
1
0
6
6
.
3
0
9
.
3
9
4
.
3
3
3
.
4
15
16
17
18
For more details of our host community programmes see p7 and p112 – 113.
South Africa SED by type 2018
FOOD SECURITY
Food security at household levels is a challenge in our host communities. We
therefore initiated food security projects by planting vegetable gardens in four high
schools in Westonaria. The infrastructure includes a tunnel, irrigation system, water
tank and gardening equipment.
Benefit to the community:
■■ The planned food gardens in four high schools in Bekkersdal, Simunye and
Poortjie will feed about 5,000 children
■■ South Deep employed a local enterprise for the clean-up of school grounds
and preparation of soil for the food gardens
■■ Eight school gardeners have were appointed and receive mentoring
17%
Total spend
in 2018:
R46.1m
(US$3.49m)
4%
2%
2%
75%
■ Economic diversification
■ Infrastructure
■ Health and wellbeing
■ Conservation and environment
■ Education and training
Benefit to Gold Fields: Investment in the food security of our host communities will
lead to increased school attendance and decreased drop-out rates.
Spend to date: R645,000 (US$45,000), including spending by the South Deep
Education Trust
Engagement with communities
2016
137
2017
169
2018
471
OTHER MATERIAL VALUE CREATION PROJECTS
Grievances
■■ South Deep entered into a new partnership with Sibanye-Stillwater to close out
legacy projects from the former Gold Alliance partnership, and to align social
investment projects for optimal benefit to our host communities
■■ South Deep continues to work with the Rand West City Local Municipality, the
Gauteng Department of Agriculture and Rural Development, and Sibanye-Stillwater
to employ 35 people collectively as business owners of small agriculture
enterprises
■■ We continue to support two small enterprises – a bakery and poultry project –
until these have developed into sustainable businesses. The bakery has an outlet
in Westonaria, supplying the local market, and also has a contract with the mine.
The poultry project has successfully sold live chickens and continues to grow its
profit margin
■■ South Deep has advanced the planning of the construction of the Simunye
Secondary School, which will be completed during 2019 and will benefit more
than 1,200 learners who are currently being taught in a prefabricated structure
■■ South Deep, in partnership with the Department of Agriculture and Rural
Development, supported 65 households in the Bekkersdal and Westonaria host
communities with the implementation of homestead gardens, by supplying
seedlings, agricultural equipment, manure, compost and basic agricultural training
During 2018, seven grievances
were logged, of which four were
employment and procurement-
related and three were of a social
nature. Four grievances have been
resolved, one resurfaced from 2017
grievances, one is outstanding and
one is ongoing.
LICENCE AND REPUTATION
122 The Gold Fields Integrated Annual Report 2018
Human Rights
Introduction
Gold Fields’ activities from exploration
through to mine closure have the
potential to impact the human rights
of our workforce and communities,
which in turn could negatively affect
our ability to create value for our
shareholders. Respect for human
rights is a baseline expectation for all
our operations and fundamental to
sustainable development and
responsible mining.
Gold Fields’ commitment to respect
the rights and dignity of its
stakeholders is described in our
Human Rights Policy Statement. The
policy statement, which is embedded
in our Code of Conduct, is aligned to
the ICMM Principles on Human
Rights and guided by the UN Guiding
Principles on Business and Human
Rights as well as the conventions of
the International Labour Organisation.
The policy statement also supports
the United Nations Universal
Declaration of Human Rights and the
Voluntary Principles on Security and
Human Rights. The policy statement
and the Code of Conduct can be
found on our website at www.
goldfields.com/policies.php and
www.goldfields.com/code-of-
conduct.php respectively. Our
engagement and relationships with
our key stakeholders - our workforce,
our communities, governments and
shareholders are discussed on
p106-121.
Under the policy statement, Gold
Fields commits to, among others:
■■ Not interfering with or curtailing
others’ enjoyment of their human
rights
■■ Defending, where possible,
employees and external Gold
Fields stakeholders, such as
community members, against
human rights abuses by third
parties
■■ Taking positive action to facilitate
the entrenchment and enable the
enjoyment of human rights
The Code of Conduct, which is fully
endorsed by the Gold Fields Board of
Directors, guides our business ethics
and values. The human rights policy
statement applies to all directors,
employees and third parties
(including, among others, suppliers
and contractors) and regular training
and awareness are offered to all
stakeholders.
Given the nature of Gold Fields’
footprint and activities, our human
rights activities are currently managed
through the following functions: legal
and compliance, sustainable
development, human resources,
procurement, community relations,
risk and security. A steering
committee oversees the work by the
various disciplines and regions on
human rights and regular feedback is
provided to the Board’s Social Ethics
and Transformation Committee.
Salient Human Rights issues
We are consistently looking at ways
to improve our business and this
includes evolving human rights
through the identification of salient
human rights issues in the Group.
Salient human rights issues as
defined by the UN Guiding Principles
are those human rights that have the
most severe negative impacts as a
result of the company’s activities or
business relationships.
During 2018 we considered the
stakeholder groups impacted by the
key activities in the business and in
our supply chain and prioritised the
human rights impacts by determining
their severity.
The eight salient issues identified
were:
1. Health & Safety: Occupational
incident or exposure leading to
physical and/or psychological
harm and/or Illness
2. Human Resources: The impact of
our working environment, policies
and procedures on employees
and contractors
3. Water: The loss of containment
and the subsequent impact on
water quality released into the
environment
4. Public and private security: Abuse
of power by public or private
security
5. Transportation: Transport
incidents involving hazardous
substances and/or people
6. Mine Closure: The ineffective,
incomplete or failed
implementation of mine closure
plans
7. Resettlement: Land acquisition,
economic compensation and
community resettlement
8. Breaches by suppliers/
contractors: Breaches of human
rights by suppliers, contractors
and other business partners in
our supply chain
Following the identification process
we conducted detailed bow-tie
analyses of these issues. The analysis
included: listing the causes of each
salient issue, their consequences,
and preventative controls, mitigatory
controls in place. It also listed future
mitigation actions to be considered.
The bow-tie analysis for our most
important salient issue - health &
safety of our workforce - is displayed
on this page. The other seven
bow-tie analyses can be found on
our website at www.goldfields.com/
integrated-annual-reports.com
While the failure of a tailings facility is
identified under the water salient
issue, TSFs are in the spotlight
following the catastrophic tailings
failure at the Córrego do Feijão iron
ore mine in Brumadinho, Brazil, in
January 2019, which resulted in over
300 deaths. In the wake of the
tragedy, Gold Fields is undertaking
technical reviews and strengthening
governance of our TSFs as an active
participant in the ICMM-led process
described on p103. We are working
to improve our emergency
preparedness and response and
community engagement around this
issue, in addition to ensuring that our
management and technical oversight
remain vigilant.
During 2019 we plan to appoint a
pilot site among our eight mines to
repeat the Group process and identify
its key salient human rights issues.
We also plan to start the process of
closing out mitigation actions
identified during the Group’s salient
issue process.
The Gold Fields Integrated Annual Report 2018
123
Salient issues – health and safety:
Occupational incident or exposure leading to physical and/or psychological harm and/or Illness
Causes
■■ Negligence
■■ Poor understanding of link between
mining and community health and safety
■■ Natural events
■■ Failure of infrastructure
■■ Poor occupational assessment (physical
■■ Catastrophic infrastructure failure
■■ Exposure to harmful environment
■■ Inadequate safety standards and
implementation/enforcement
■■ Poor safety culture
■■ Non-compliance with legislation,
policies, standards and/or procedures
and mental)
■■ Organisational culture
■■ Poor leadership
■■ Occupational and personal stress
■■ Fatigue
■■ Pollution
■■ Inadequate resources to control risks
Leading up to the event
Preventative controls
■■ Policies and procedures – up to date,
■■ Support to public health institutions
communicated and understood
■■ Targeted health education and
awareness campaigns
■■ Compliance to regulatory framework
■■ Health and safety management system
■■ Organisational culture interventions
■■ OHSAS certifications
■■ Disciplinary and grievance procedure
■■ Behaviour based safety programmes
■■ Occupational health assessments
■■ Proper design, certified where applicable
■■ Health and safety training on relevant
risks
in host communities
■■ Infrastructure maintenance policy
■■ Zero Harm commitments
■■ Employee assistance programmes
■■ Board and management oversight
■■ Industry networking and collaboration
■■ Employee support and life skills
programme
■■ Risk management
■■ Community grievance mechanism
■■ Recognition and incentive programme
Consequences
■ Injury, disability, loss of life
■ Loss of government support
■ Illness and incapacitation
■ Legal liability (civil and/or criminal)
■ Psychological effects
■ Increased anti-mining sentiment in communities
■ Business interruption
■ Low morale
■ Fines and sanctions
■ Reputational damage
■ Scrutiny from regulators
■ Difficulty in attracting skills
Once the event has occurred
Mitigation and damage control
■ Accident investigation and close out of corrective
actions
■ Provide access to medical care to indigent community
members
■ Family compensation
■ Health care
■ Rehabilitation
■ Address community concerns/complaints
■ Compensation and insurance
Physical and
psychological
harm and illness
Considerations
for further mitigation
■ Focus on psychological harm (e.g. risks arising from Fly-In, Fly-Out work arrangements)
■
Consideration of shared value opportunities, such as safety and wellness training
Our due diligence actions
Gold Fields has in place numerous
policies and strategies to deal with
the salient human rights issues at our
mines and projects listed earlier.
These cover interactions and
engagements with governments, our
workforce, communities, suppliers
and security personnel, as well as
mechanisms for dealing with
stakeholders’ grievances.
Workforce Rights
The Gold Fields policy statement
notes our commitment to uphold the
highest standards of human rights
within our workforce, including:
freedom from child labour; freedom
from forced or compulsory labour;
freedom from discrimination (while
recognising the need to affirm
previously disadvantaged groups);
and freedom of association and
collective bargaining. All induction
training (including that provided by
the Gold Fields Internal Protection
Services team) includes key human
rights elements, and the Company’s
internal grievance mechanisms
ensure employees and contractors
can raise human rights concerns.
All grievances are handled by the
Gold Fields Human Resources
function, in consultation with legal
teams for human rights concerns,
which uses a defined process to
record, evaluate and address
legitimate complaints. Employees can
also raise concerns via independent
counsellors, as part of the Gold Fields
Employee Assistance Programme,
and make use of Gold Fields’
confidential, third-party
whistleblowing hotline.
All new employees are required to
sign the Code of Conduct and
receive awareness training during
induction. Code of Conduct
eLearning, which was launched in
2017, is mandatory for all employees.
Gold Fields runs a human rights
campaign on Human Rights Day to
raise awareness of these issues.
Performance in 2018:
■■ We received 61 grievances from
employees, of which 14 related to
harassment or discrimination. Of
these, 60 were resolved, with
seven cases leading to the
dismissal of the accused employee
or contractor. Two cases are still
being addressed
■■ By end-2018, 66% of Gold Fields
employees had completed the
Code of Conduct eLearning
course, which was launched in
2017 and will be completed during
2019
Community Rights
In our engagement with communities,
we ensure that the following key
human rights, amongst others, are
respected: Indigenous People’s
rights, minimisation of involuntary
resettlement (subject to fair
LICENCE AND REPUTATION 124 The Gold Fields Integrated Annual Report 2018
Human Rights continued
compensation where unavoidable),
treatment of artisanal and small-scale
miners as well as respectful security
enforcement.
Human Rights Policy Statement.
Compliance with the Gold Fields
Supplier Code of Conduct is also
required in the agreements.
Environmental and social impact
assessments, which assess the
actual or potential impacts of our
operations and projects on local
communities and other stakeholders,
have been undertaken by all
operations. The assessments include
human rights aspects. Risk
assessments are undertaken on an
ongoing basis and grievance
mechanisms are in place at the
operations to record, address and
respond to social, environmental and
human rights grievances.
Performance in 2018:
■■ We recorded two Level 3
environmental incidents - at our
Damang mine in Ghana and at
Cerro Corona in Peru. Both
incidents were successfully
mitigated. Details on p95
■■ A group of community residents
near our Tarkwa mine in Ghana
have petitioned a government
agency for resettlement, alleging
infractions by the mine. Details on
p118
Suppliers
Gold Fields’ business relies on
multiple, large-scale suppliers and
contractors to carry out mining,
development, construction and other
forms of work at its operations. All
suppliers and contractors are
included in Gold Fields’ own health
and safety management systems to
ensure that contractors benefit from
safe and healthy working conditions.
All internal and external stakeholders
wishing to report human rights
violations are able to make use of
Gold Fields’ confidential, third-party
whistleblowing hotline. Where such
complaints are made, the relevant
Gold Fields department follows up on
the matter, establishing its
authenticity and, if proved accurate,
institutes the appropriate corrective
measures.
From a contractual point of view, all
our Third Party agreements contain a
standard provision requiring
compliance with the Gold Fields
The Group has developed an external
Third Party screening solution to
screen new and existing suppliers
and contractors for an array of
pre-defined risk categories, including
human rights and related violations
and/or transgressions. Risk profiles
for active external suppliers and
contractors with post-screen alerts
are then established and risk
mitigated. The screening solution
screens all suppliers and contractors
on a monthly basis for adverse media
exposure alerts, involving regulators,
governments, recorded
discrimination, workers’ right issues
and human rights transgressions in
the workplace.
Performance in 2018:
■■ We developed a Supplier Code of
Conduct which translates the
requirements of the Gold Fields
Code of Conduct into terms
appropriate to our suppliers
Security
Gold Fields’ protection services
teams work with both private and
public security providers - for the
effective and responsible protection
of workers and assets. All private
security contractors receive human
rights training during induction, and
at least annually thereafter, including
on the Voluntary Principles on
Security and Human Rights (VPSHR).
A study was carried out during 2017
to assess the gaps between our
current systems and the VPSHR - no
substantive gaps were identified.
Work was carried out in 2018 to
close the gaps. Where we work with
public law enforcement personnel,
such as in Ghana in dealing with
illegal mining, we ensure that the
personnel operate responsibly,
guided by the VPSHR.
Gold Fields is committed to
responsible materials stewardship. In
this context, we support global efforts
to prevent the use of newly mined
gold to finance conflict. We have
voluntarily adopted the Conflict-Free
Gold Standard of the World Gold
Council (WGC). The standard is
applied at all relevant locations
through assurance audits. Although
we withdrew our WGC membership
in 2014, we have and will continue to
apply both the Standard and its
guidelines. Further information is
available at www. goldfields.com/
sustainability-reporting.php.
Performance in 2018:
■■ We reviewed private sector security
providers’ contracts to ensure they
are aligned to the VPSHR
■■ We updated out Human Rights
Policy Statement to reference our
support for the VPSHR
■■ Cerro Corona used an independent
contractor to carry out a detailed
assessment of its human rights
risks and implementation
requirements, with particular
reference to the VPSHR. This had
the additional benefit of improving
human rights awareness of senior
staff
Grievance Mechanisms
We are committed to addressing
community issues and concerns
timeously and effectively. Therefore
we rely on a grievance reporting
system to maintain confidence and
transparent communication with our
stakeholders. Our grievance
mechanism enables and encourages
community members to freely put
forward their complaints, while
obligating our mines to address the
grievances within an agreed period.
Not managing a complaint can lead
to further conflict and discontent
within our host community. In certain
instances we engage members from
our local communities to act as
mediator should our teams not be
able to resolve the grievance.
Performance in 2018:
Our operations dealt with 127
economic, social, and environmental
grievances lodged by our host
communities (2017: 76) during the
year. 88 of these grievances were
resolved and 39 are still being dealt
with. Details of the grievances raised
against our mines can be found in
the community relations section on
p114 - 124.
The Gold Fields Integrated Annual Report 2018
125
Safety briefing
before a shift at
South Deep
126 The Gold Fields Integrated Annual Report 2018
The Gold Fields Integrated Annual Report 2018
127
Internal and external assurance is
provided over selected sustainability
data contained in the Integrated
Annual Report
■■ First party: Internal audit statement
■■ Independent assurance statement to the
Board of Directors and stakeholders of
Gold Fields
■■ Key sustainability performance data
■■ Administration and corporate information
p128
p129
p131
IBC
Assurance 128 The Gold Fields Integrated Annual Report 2018
First Party: Internal Audit Statement
Gold Fields Internal Audit (GFIA) is an independent assurance provider to the Gold Fields Audit Committee on the
effectiveness of the governance, risk management and control processes within Gold Fields.
The internal audit activities performed during the year were identified through a combination of the Gold Fields risk
management and combined assurance framework, as well as the risk-based methodology adopted by the Gold Fields
Internal Audit function. Internal audit complies with the Institute of Internal Auditors’ International Standards for the
Professional Practice of Internal Auditing, in the execution of its assurance function. Furthermore, GFIA operates a quality
assurance programme that involves performing detailed quality review assessments.
Annually, the risk-based annual audit plan is approved by the Audit Committee. The internal audit activities are executed by a
team of appropriately 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 has a functional reporting line to the Audit Committee and
provides quarterly feedback to the Audit Committee.
Based on the work performed by GFIA during the year, the Vice-President and Group Head of Internal Audit has presented
the Audit Committee with an assessment on the effectiveness of the Company’s governance, risk management and system
of internal control. It is GFIA’s opinion that the governance, risk management and internal control environment are effective
within the Gold Field business and provide reasonable assurance that the objectives of Gold Fields will be achieved. This
GFIA assessment forms one of the basis for the Audit Committee’s recommendation in this regard to the Board.
Shyam Jagwanth
Vice-President and Group Head of Internal Audit
Johannesburg, South Africa
25 March 2019
Independent Assurance Statement to the Board of
Directors and Stakeholders of Gold Fields Limited
The Gold Fields Integrated Annual Report 2018
129
ERM Southern Africa (Pty) Ltd (ERM) was engaged by Gold Fields to provide assurance in relation to selected sustainability
information set out below and presented in Gold Fields’ 2018 Integrated Annual Report for the year ended 31 December
2018 (‘the Report’).
Engagement summary
Engagement
scope (subject
matters):
1. Whether the 2018 data, for the period 1 January 2018 to 31 December 2018, for the selected
performance indicators listed in Tables 1 and 2 overleaf, are fairly presented, in all material
respects.
2. Whether the Directors’ statement in the About this Report section of the Report that Gold Fields
has complied with the ICMM Sustainable Development Framework, Principles, Position
Statements and reporting requirements is, in all material respects, fairly stated.
For environmental, health and safety and social KPIs:
■■ GRI Standards (‘Core’ in-accordance option) and the GRI’s Mining and Metals Sector Disclosure
(2013)
■■ Gold Fields GRI Standards Sustainability Reporting Guideline, V16 (September 2018)
■■ International Council on Mining and Metals (ICMM) Sustainable Development Framework reporting
Reporting
Criteria:
requirements (2015)
For Mining Charter related KPIs:
■■ Broad-Based Socio-Economic Empowerment Charter for the South African Mining and Minerals
Industry (BBSEEC) (2002) and related Scorecard (2004)
■■ Amendment to the BBSEEC (2010) and related scorecard (2010) for the South African Mining and
Minerals Industry
Standard Used:
ERM CVS’ assurance methodology based on the International Standard on Assurance
Engagements ISAE 3000 (Revised) and ISAE 3410 (for GHG Statements).
Assurance
Level:
Respective
responsibilities:
Reasonable assurance for all Subject Matters
Gold Fields is responsible for preparing the Report, including the collection and presentation of the
selected sustainability information within it, in accordance with the reporting criteria, the design,
implementation and maintenance of related internal controls, and for the integrity of its website.
ERM’s responsibility is to provide an opinion on the selected information based on the evidence we
have obtained and exercising our professional judgement.
Our assurance activities
We planned and performed our work to obtain all the information and explanations that we believe were necessary to reduce
the risk of material misstatement to low and therefore provide a basis for our assurance opinion. Using the ICMM Sustainable
Development Framework: Assurance Procedure (2008) as a guide, a multi-disciplinary team of sustainability and assurance
specialists performed the following assurance activities, including:
■■ Reviewing external media reporting relating to Gold Fields, peer company annual reports and industry standards to identify
relevant sustainability issues in the reporting period.
■■ Interviews with relevant corporate level staff to understand Gold Fields’ sustainability strategy, policies and management
systems, including stakeholder engagement and materiality assessment.
■■ Interviews with a selection of staff and management, including senior executives, to gain an understanding of:
– The status of implementation of the ICMM Sustainable Development Principles in Gold Fields’ strategy and policies;
– Gold Fields’ identification and management of sustainable development risks and opportunities as determined through
its review of the business and the views and expectations of its stakeholders;
– Observation of an external stakeholder engagement meeting on material issues facing the business.
■■ Reviewing policies and procedures and assessing alignment with ICMM’s 10 Sustainable Development Principles and
other mandatory requirements set out in the ICMM’s Position Statements in effect as at 31 December 2018.
■■ Testing the processes and systems, including internal controls, used to generate, consolidate and report the selected
sustainability information.
■■ Reviewing the suitability of the internal reporting guidelines, including conversion factors used.
■■ Physical visits to interview responsible staff and verify source data and other evidence at the following sites:
– South Deep, South Africa
– Tarkwa, Ghana
– Damang, Ghana
– Granny Smith, Australia
■■ Virtual reviews to verify source data for the following sites:
– Agnew, Australia
– St Ives, Australia
– Cerro Corona, Peru
ASSURANCE 130 The Gold Fields Integrated Annual Report 2018
Independent Assurance Statement to the Board of
Directors and Stakeholders of Gold Fields Limited continued
■■ An analytical review of the year-end data submitted by the sites listed above, and testing of the accuracy and
completeness of the consolidated 2018 Group data for the selected KPIs.
■■ Reviewing the presentation of information relevant to the scope of our work in the Report to ensure consistency with our
findings.
Our assurance opinion
In our opinion:
■■ The selected sustainability performance information set out in Tables 1 and 2 for the year ended 31 December 2018 is
prepared, in all material respects, in accordance with the Gold Fields reporting criteria; and
■■ The Directors’ statement in the About this Report section of the Report that Gold Fields has complied with the ICMM
Sustainable Development Framework, Principles, Position Statements and reporting requirements is, in all material
respects, fairly stated.
The limitations of our engagement
The reliability of the assured data is subject to inherent uncertainties given the methods for determining, calculating or
estimating the underlying information. It is important to understand our assurance opinions in this context. Our independent
assurance statement provides no assurance on the maintenance and integrity of the Gold Fields’ website, including controls
used to achieve this integrity, and in particular, whether any changes may have occurred to the information since it was first
published.
Our observations
We have provided Gold Fields with a separate detailed management report. Without affecting the opinions presented above,
we have the following observations:
■■ Following ERM’s recommendation made in last year’s statement for South Deep and Tarkwa mines to address deficiencies
in documentation relating to safety performance information, ERM did indeed observe improvements in documentation.
ERM also noted several efforts initiated by Gold Fields during 2018 to mitigate employee health and safety risks and
improve safety performance. We strongly encourage Gold Fields to continue its programme of strengthening its safety
culture through these efforts.
■■ We observed considerable efforts to reduce energy consumption through energy savings initiatives implemented across
the Group, notably in the Australia and West Africa regions. In addition, in response to the Task Force on Climate-related
Financial Disclosures (TCFD) Recommendations, Gold Fields has begun to evaluate the financial risks and opportunities for
its business. We encourage Gold Fields to continue its efforts in this regard and in reducing the carbon intensity of its
operations.
■■ Regarding socio-economic development spend information, consistent with last year’s observations; an opportunity for
improvement exists in the Australia region in structuring and formalising a process for consolidating and reporting its social
performance data.
Donald Gibson
Partner
25 March 2019
Jennifer Iansen-Rogers
Partner, ERM CVS, London
25 March 2019
ERM Southern Africa (Pty) Ltd, Johannesburg, South Africa
www.erm.com
Email: donald.gibson@erm.com
ERM Southern Africa (Pty) Ltd and ERM Certification and Verification Services (CVS) are members of the ERM Group. Our
work complies with the requirements of ERM’s Global Code of Business Conduct and Ethics (available at https://erm.com/
global-code). Further, ERM CVS is accredited by the United Kingdom Accreditation Service and our operating system is
designed to comply with ISO 17021:2011. Our processes are also designed and implemented to ensure that the work we
undertake with clients is free from bias and conflict of interest (refer to both the abovementioned Code of Business Conduct
and Ethics, and the ERM CVS Independence and Impartiality Policy available at http://www.ermcvs.com/our-services/
policies/independence/). The ERM and ERM CVS staff that have undertaken work on this assurance engagement provide no
consultancy related services to Gold Fields in any respect related to the subject matter assured.
Key sustainability performance data
The Gold Fields Integrated Annual Report 2018
131
Table 1. Data for selected sustainability performance indicators for the 2018 reporting year presented for reasonable
assurance in accordance with Subject Matter 4 of the International Council on Mining and Metals’ (ICMM) Sustainable
Development Framework: Assurance Procedure, and prepared in accordance with the Gold Fields Assurance KPI Definitions
(available on Gold Fields’ Website) and the GRI Sustainability Reporting Standards.
Parameter
Environment
Total CO2 equivalent emissions, Scope 1-3
Electricity purchased
Diesel
Unit
Tonnes
MWh
Kl
Total energy consumed/total tonnes mined
GJ/total tonnes mined
Total energy consumed/ounces of gold produced
GJ/ounces of gold
produced
Reported 2018 data
1,852,190
1,283,940
183,520
0.06
(11,628,058 GJ /
184,345,022 tonnes)
5.64
(11,628,058 GJ /
2,063,202 ounces)
21,179
41,382
Total water withdrawal
Total water recycled/re-used per annum
Water intensity
Number of environmental incidents -
Level 2
Level 3 and above
Health
Number of cases of Silicosis reported
Number of cases of Noise Induced Hearing Loss
reported
Cardio Respiratory (Tuberculosis)
Number of cases of Malaria tested positive per annum
Ml
Ml
Kl withdrawn/ ounces of
gold produced
10.3
(21,178,512 Kl /
2,063,202 ounces)
Number of incidents
68
2
10
13
16
237
Number of cases
Number of cases
Number new cases
reported
Number of positive
cases
Number of South African and West African employees in
the HAART programme (cumulative)
Number of employees
336
Percentage of South African workforce on the voluntary
counselling and testing (VCT) programme
Percentage (%) of
workforce
Percentage of West African workforce on the voluntary
counselling and testing (VCT) programme
Percentage (%) of
workforce
17
60
Safety
Total Recordable Injury Frequency Rate (TRIFR) -
Employees, Contractors, Total
Number of TRIs/
manhours
Employees: 1.94
(43 TRIs / 22,151,709 manhours)
Contractors: 1.75
(56 TRIs / 32,047,611 manhours)
Total: 1.83
(99 TRIs / 54,199,320 manhours)
Number of fatalities
Social
Total socio-economic development (SED) spend
Percentage of host community workforce employment
Percentage of host community procurement spend
Total value created and distributed
Number
1
%
US$
%
%
US$
25,711,891
56
27
2,711,000,000
ASSURANCE 132 The Gold Fields Integrated Annual Report 2018
Key sustainability performance data continued
Table 2. Selected sustainability performance indicators for the 2018 reporting year presented for reasonable assurance in
accordance with Subject Matter 4 of the ICMM’s Sustainable Development Framework: Assurance Procedure, and prepared
in accordance with the Broad-Based Socio-Economic Empowerment Charter for the South African Mining and Minerals
Industry (BBSEEC) (2002) and related Scorecard (2004); the Amendment to the BBSEEC (2010) and related scorecard
(2010) for the South African Mining and Minerals Industry.
Unit
Reported 2018 data
Parameter
Mining Charter
Housing and living conditions
Occupancy rate of one person per room
Ratio (employee : hostel
room)
Percentage conversion of hostels into family units
Percentage (%)
Procurement & Enterprise Development
Procurement spend from BEE1 entity
Annual spend on procurement from multinational suppliers:
Contribution set aside / allocated by the mining right holders
Employment equity
HDSAs2 in management
Capital goods (%)
Services (%)
Consumable Goods (%)
Percentage (%)
Top (Board) (%)
Senior (Exco) (%)
Middle (%)
Junior (%)
Core skills (%)
Human Resource Development (HRD)
HRD expenditure as a percentage of total annual payroll
(excluding mandatory skills development levy)
Percentage (%)
0.49
100
75
81
91
1.21
50
50
45
52
70
7.7
Mine Community Development
Total LED3 spend for the year and LED spend per SLP4 project
in the current year
Total LED spend (R)
4,842,948
Total SED5 spend for the year, including community trusts
Total SED spend (R)
44,108,690
Up-to-date implementation of approved community projects
Percentage (%) overall
implementation and of each
project
0
Sustainable Development & Growth
Approved EMP6 implementation
Percentage (%)
Tripartite action plan on health and safety implementation
Percentage (%)
Percentage of samples in South African facilities
Percentage (%)
100
95.8
100
1Black Economic Empowerment
2 Historically Disadvantage South African
3 Local Economic Development
4 Social and Labour Plan
5 Social Economic Development
6 Environmental Management Programme
Administration and corporate information
The Gold Fields Integrated Annual Report 2018
COMPANY SECRETARY
Lucy Mokoka
Tel: +27 11 562 9719
Fax: +27 11 562 9829
e-mail: lucy.mokoka@goldfields.com
REGISTERED OFFICE
Johannesburg
Gold Fields Limited
150 Helen Road
Sandown
Sandton
2196
Postnet Suite 252
Private Bag X30500
Houghton
2041
Tel: +27 11 562 9700
Fax: +27 11 562 9829
OFFICE OF THE UNITED KINGDOM
SECRETARIES
London
St James’s Corporate Services Limited
Suite 31, Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Tel: +44 20 7796 8644
Fax: +44 20 7796 8645
e-mail: general@corpserv.co.uk
AMERICAN DEPOSITORY RECEIPTS
TRANSFER AGENT
Shareholder correspondence should be mailed to:
BNY Mellon Shareowner Services
PO Box 30170
College Station, TX 77842-3170
Overnight correspondence should be sent to:
BNY Mellon Shareowner Services
211 Quality Circle, Suite 210
College Station, TX 77845
e-mail: shrrelations@cpushareownerservices.com
Phone numbers
Tel: 888 269 2377 Domestic
Tel: 201 680 6825 Foreign
SPONSOR
J.P. Morgan Equities South Africa Proprietary Limited
Gold Fields Limited
Incorporated in the Republic of South Africa
Registration number 1968/004880/06
Share code: GFI
Issuer code: GOGOF
ISIN – ZAE 000018123
INVESTOR ENQUIRIES
Avishkar Nagaser
Tel: +27 11 562 9775
Mobile: +27 82 312 8692
e-mail: avishkar.nagaser@goldfields.com
Thomas Mengel
Tel: +27 11 562 9849
Mobile: +27 72 493 5170
e-mail: thomas.mengel@goldfields.com
MEDIA ENQUIRIES
Sven Lunsche
Tel: +27 11 562 9763
Mobile: +27 83 260 9279
e-mail: sven.lunsche@goldfields.com
TRANSFER SECRETARIES
South Africa
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Biermann Avenue
Rosebank
Johannesburg
2196
PO Box 61051
Marshalltown
2107
Tel: +27 11 370 5000
Fax: +27 11 688 5248
United Kingdom
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
England
Tel: 0871 664 0300
Calls cost 12p per minute plus your phone company’s
access charge.
If you are outside the United Kingdom,
please call +44 371 664 0300.
Calls outside the United Kingdom will be charged at the
applicable international rate.
The helpline is open between 9:00am – 5:30pm. Monday
to Friday excluding public holidays in England and Wales.
e-mail: enquires@linkgroup.co.uk
Website
WWW.GOLDFIELDS.COM
Listings
JSE / NYSE / GFI
SIX: GOLI
CA Carolus° (Chair) RP Menell° (Deputy Chair) NJ Holland*• (Chief Executive Officer) PA Schmidt• (Chief Financial Officer)
A Andani#° PJ Bacchus° TP Goodlace° C Lettonˆ° P Mahanyele-Dabengwa* SP Reidˆ° YGH Suleman°
ˆ Australian * British # Ghanaian
° Independent Director • Non-independent Director
G
o
l
d
F
i
e
l
d
s
I
n
t
e
g
r
a
t
e
d
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
8
www.goldfields.com