Slide 1: Breaking the resource curse
Breaking the resource curse NICK HOLLAND CEO Gold Fields The African Mining Network– Johannesburg October 2018
Slide 2: Forward looking statement
Forward looking statement Certain statements in this document constitute “forward looking statements” within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934. In particular, the forward looking statements in this document include a
Slide 3: In consultation with
In consultation with Mining's SLO | Nick Holland | October 2018 3
Slide 4: Our operations and projects worldwide
Our operations and projects worldwide 2 mines, 1JV Ghana mine 810 koz 1 mine Peru 307 koz 1 mine 3 mines, 1 JV 1 South Africa 281 Australia project Chile koz project 935 koz Source: Gold Fields Mining's SLO | Nick Holland | October 2018 4
Slide 5: Gold Fields' operations are in emerging markets and Australia
Gold Fields’ operations are in emerging markets and Australia Rural population % Human Development Index¹ 50 1 40 0,8 30 0,6 20 0,4 10 0,2 0 0 Ghana Peru South Australia Ghana Peru South Australia Africa Africa GDP/capita (US$/y) Govt Effectiveness Index² 60000 2 50000 1,5 40000 1 30000 0,5 20000 0
Slide 6: Socio-economic profile of Gold Fields' host communities
Socio-economic profile of Gold Fields’ host communities • Is in the vicinity of a mine operation A host community is • Has been directly affected by exploration, construction or operations a group residing in a • Has a reasonable expectation regarding the duties and obligations of the village or tow
Slide 7: Mining's contribution is better than perceived
Mining’s contribution is better than perceived 1 Benefits available at country-level and at community-level 2 The bulk of the spending stays in-country 3 The longer mining persists – the more pronounced the impact 4 Mining has positive economic and human development impacts Mining's SLO | Nick Holla
Slide 8: Mining companies make a significant contribution to our host nation economies and communities
Mining companies make a significant contribution to our host nation economies and communities How mines make an impact on a host country Gross Domestic Product Extent of economic and social Foreign Direct Investment impact Exports Proximity to the mine Infrastructure Government revenue Proximity to
Slide 9: The majority of value created by gold mining value stays in-country
The majority of value created by gold mining value stays in-country How value from gold mining is distributed (WGC – 2013) US$bn 40 5 37 35 79% stays in- 26 country 30 25 20 15 10 6 6 5 4 0,3 0 Community spend Employee payments In-country supplier Governemnt Total in-country Profits for Out-of-count
Slide 10: The majority of value from global mining stays in-country
The majority of value from global mining stays in-country How value from the top forty global mining companies is distributed (PWC 2017) US$bn 600 54 524 Approximately 500 366 80% stays in- country 400 300 200 96 100 84 54 7 0 Community Spend Employee payments In-country supplier Government Total in
Slide 11: The contribution of mining to a country takes effect over a generation
The contribution of mining to a country takes effect over a generation Capital investment in Leveraging mining Secondary industries integrate with wider activity mining drives liquidity, activities, skills and to create diverse, robust economies and maximum job creation and skills income develops so
Slide 12: Gold mining is a major driver of Ghana's economy
Gold mining is a major driver of Ghana’s economy GDP per capita % of US$/year GDP 2 000 9,0% Mining in 2017 contributed: 1 800 8,0% • 16.3% of government revenue 1 600 7,0% • US%1.23bn annual local spend on 1 400 6,0% suppliers and manufacturers 1 200 • US$2.57bn of income that stays in Gold Fields
Slide 13: The potential and the time it takes are seen in our 25-years in Ghana
The potential and the time it takes are seen in our 25-years in Ghana In country Government Community spend Employment procurement revenue Infrastructure - Gold Fields’ - Current - 90% of supplier - US$1.2bn in taxes - Rehabilitated over Ghana workforce of spend stays in paid since 1998 100km of pub
Slide 14: Mining's contribution to welfare and development in resource rich countries
Mining’s contribution to welfare and development in resource rich countries (1990 – 2015) Australia Chile Peru South Africa Africa Ghana The Americas Middle income Asia Breaking out Europe DRC Mozambique CAR Very poor countries Source: Gap Minder Mining's SLO | Nick Holland | October 2018 14
Slide 15: Countries with mining activity are developing better than those without
Countries with mining activity (MDCs) are developing better than those without Percentage of UN Sustainable Development Goal measures that have improved (1995 – 2015) +7% Mining dependent countries (MDCs) Non-Resource dependent developing countries (Mining rent’s contribution to GDP >10%, (Mining re
Slide 16: If this is all so great, why do we still have a problem?
If this is all so great, why do we still have a problem? 1 Mining still has a negative perception 2 Conflict is increasing 3 Weak governance in host countries offsets our positive effects Mining's SLO | Nick Holland | October 2018 16
Slide 17: Mining continues to have a negative perception
Mining continues to have a negative perception Public perceptions of mining 1 Ignoring community Destabilising Environmentally polluting needs communities Leaving clean-up to Enabling corruption Fuelling conflict others Mining's SLO | Nick Holland | October 2018 17
Slide 18: Mining related conflicts are rising
Mining related conflicts are rising Mining-related conflict incidents worldwide and global political risk 1 Mining conflicts Total conflicts 120 35 000 30 000 100 25 000 80 20 000 60 Political risk 15 000 40 10 000 20 5 000 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20
Slide 19: Conflicts negatively affect miners, governments and communities
Conflicts negatively affect miners, governments and communities 1 Esquel Project, Argentina Conga, Peru Bougainville, PNG1 Yamana Gold 2002 - 2006 Newmont 2010 - 2016 Rio Tinto 1989 - 2016 US$379m asset write down US$1.5bn capex lost US$24bn in projected reserves US$1.33bn in projected US$6.5bn proj
Slide 20: Even as we work to reduce conflict, mining operations can make them worse
Even as we work to reduce conflict, mining operations can make them worse 2 The things responsible miners do to Mining related factors driving conflicts mitigate conflicts Illegal mining revenue used to fund conflicts Community Expectation setting engagement Mining companies working outside the spir
Slide 21: Weak governance in many resource-rich countries
Weak governance in many resource-rich countries Resource governance index results for mining resource dependent countries (2016) 3 More able to look after their populations Less able to look after their populations Papua New Guinea South Africa Kazakhstan Mauritania Botswana Australia Zambia Guinea
Slide 22: Our host countries' governance varies greatly across levels of government
Our host countries’ governance varies greatly across levels of government 3 Peru Ghana South Africa Australia Good Rising High Central capability, capacity, but aspiration, Highly government gaps in mixed mixed functional execution transparency capacity Weak, co- Moderately Regional Highly under- or
Slide 23: How can we change this?
How can we change this? 1 Engage with central governments over the mining lifecycle 2 Build governance capacity in central governments 3 Collaborate with local governments and communities 4 Create community value Source: Gold Fields Mining's SLO | Nick Holland | October 2018 23
Slide 24: We match our engagement to the level of development and governance
We match our engagement to the level of development and governance Early resource Established resource Diversified dependence economy economy Stage of development • Lower capability • Capability rising • Formal engagements • Suspicious, zero sum • More sophisticated • Advanced incentives Central gov
Slide 25: Host governments can create an enabling environment matched to the mining life cycle
Host governments can create an enabling environment matched to the mining life cycle Mining activity Government revenues Commodity price cycle Progressive rehabilitation Tax and royalty Reduced Government Further payments payments – Controlling long- exploration incentives and matched to the convers
Slide 26: Central government engagement is a story of capability and partnership
Central government engagement is a story of capability and partnership Government capacity needs to be built Partnerships are possible in certain areas Companies need: In areas outside conflicts of interest: • A reliable negotiating and contracting partner • Wider national development priorities – h
Slide 27: Our license to operate rests on combined central and local support
Our license to operate rests on combined central and local support Central government Sets the operating But is remote: framework: • Far from the affected people • With reasonable • With far wider interests and capability priorities • Political support • Has acute national The community • A developm
Slide 28: The EITI is starting to enable more transparent revenue flows to host communities
The EITI is starting to enable more transparent revenue flows to host communities Revenue flow from the centre to Levers to enable good royalty flows regions is mixed Regions, cities have poor track Matching Systems to Systems to Consistent record of distribution government ensure ensure tax, royalt
Slide 29: Focus on value creation in host communities
Focus on value creation in host communities Host community • Support areas where community suppliers can participate procurement • Identify community suppliers with ability to supply the creates mine community jobs • Provide skills development to close capability gaps and supply opportunities Procur
Slide 30: Gold Fields' host community value creation at South Deep mine
Gold Fields’ host community value creation at South Deep mine • 14 host communities with 272,000 people of which 112,000 directly impacted • Workforce of 5,800 people • HDSA employees 71% • HDSA employees in senior management 57% • R587m spent on facilitating home ownership and improving living cond
Slide 31: Gold Fields' commitment to generate value in our host communities
Gold Fields’ commitment to generate value in our host communities Gold Fields’ Total Value Creation (H1 2018 annualised) US$m Host community spend 3000 158 2806 In country spend 214 2434 2500 338 Out of country spend 1578 2 2000 Total 1500 1000 US$546m The value we create in 340 3 28% host communiti
Slide 32: Summary takeaways
Summary takeaways Mining companies are already enabling development in our host countries and host communities. More needs to be done Breaking out of the resource trap to create diversified economies depends on good, sound governance at all government levels Managing our tax, royalty revenues from c
Slide 33: Breaking the resource curse Thank you
Breaking the resource curse Thank you QUESTIONS AND ANSWERS