Gold Fields Limited · JSE:GFI
Gold Fields — Investing in African Mining Indaba / Mining's SLO 2018
32 slides from Gold Fields's conference presentation, October 2018
Slide 1: Breaking the Resource Curse
Breaking the RESOURCE CURSE NICK HOLLAND CEO GOLD FIELDS
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 Mining's SLO
In CONSULTATION with Mining's SLO | Nick Holland | October 2018
Slide 4: Our operations and projects worldwide
Our operations and projects WORLDWIDE GHANA 2 mines, PERU 1JV mine 810 koz AUSTRALIA 1 mine 3 mines, 307 koz 1 JV project SOUTH AFRICA 935 koz 1 mine 281 koz CHILE 1 project Mining's SLO | Nick Holland | October 2018 Source: Gold Fields
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 Africa Australia Ghana Peru South Africa Australia GDP/CAPITA (US$/Y) GOVT EFFECTIVENESS INDEX² 60000 2 50000 1,5 40000 1 30000 20000 0,5 10
Slide 6: Socio-economic profile of Gold Fields' host communities
Socio-economic profile of Gold Fields’ HOST COMMUNITIES Gold Fields workforce: 19,000 Our host communities: 435,000 people (of which 195,000 are directly impacted) GHANA SOUTH AFRICA AUSTRALIA PERU • 84,000 people • 272,000 people • 37,000 people • 80,000 people in 20 host communities in 14 host com
Slide 7: Mining's contribution is better than perceived
Mining’s contribution is BETTER THAN PERCEIVED 1 2 3 4 Benefits available at The bulk of the The longer mining Mining has positive country-level and at spending stays persists – the more economic and human community-level in-country pronounced the impact development impacts Mining's SLO | Nick Holla
Slide 8: How mines make an impact on a host country
Gross Domestic Product 1 Mining companies Foreign Direct Investment make a significant Extent of economic and social impact contribution to Exports our HOST NATION ECONOMIES AND Infrastructure COMMUNITIES Government revenue Procurement Proximity to the mine How mines MAKE AN Employment IMPACT on a S
Slide 9: The majority of value created by gold mining stays in-country
2 The majority of value created by gold mining STAYS IN-COUNTRY How value from gold mining is distributed (WGC – 2013) US$bn 40 5 37 35 26 30 25 20 79%STAYS IN-COUNTRY 15 10 6 6 5 4 0,3 0 Community spend Employee payments In-country supplier spend Government payments Total in-country spend Profits f
Slide 10: The majority of value created by mining stays in-country
2 The majority of value created by mining STAYS IN-COUNTRY How value from the top forty global mining companies is distributed (PWC 2017) US$bn 600 54 524 500 366 80% 400 300 STAYS IN-COUNTRY 200 96 100 84 54 7 0 Community Spend Employee payments In-country supplier spend Government payments Total i
Slide 11: The contribution of mining takes effect over a generation
3 The contribution of mining to a country TAKES EFFECT OVER A GENERATION The starting point is CORE MINING OPERATIONS 1 – 10 YEARS 10 – 20 YEARS 20 – 30 YEARS ONGOING IN A GENERATION Capital investment in Leveraging mining activities, Secondary industries integrate with wider activity to create mini
Slide 12: Gold mining is a major driver of Ghana's economy
3 Gold mining is a major driver of GHANA’S ECONOMY US$ % 2 000 9,0% MINING IN 2017 CONTRIBUTED: 1 800 8,0% 1 600 7,0% 16% of government revenue 1 400 6,0% 1 200 5,0% US$ 1.23bn local procurement spend 1 000 4,0% 800 3,0% US$ 2.57bn of income staying in country 600 70% of mining revenue 2,0% 400 200
Slide 13: The potential and the time it takes are seen in our Ghana operations
3 The potential and the time it takes are seen in our COMMUNITY SPEND EMPLOYMENT IN COUNTRY GOVERNMENT INFRASTRUCTURE PROCUREMENT REVENUE Gold Fields’ Ghana Current workforce of 90% of supplier spend US$1.2bn in taxes paid Rehabilitated over Foundation started around 7,570 people stays in Ghana sinc
Slide 14: Mining's contribution to welfare and development in resource rich countries
Mining’s contribution to 4 WELFARE AND DEVELOPMENT in resource rich countries HDI 0.9 Australia Chile 0.8 Peru 0.7 South Africa Ghana 0.6 MIDDLE INCOME 0.5 BREAKING OUT 0.4 DRC Mozambique 0.3 CAR VERY POOR COUNTRIES 0.2 GDP/ 500 1000 2000 4000 8000 16k 32k 64k 128k capita Mining's SLO | Nick Holland
Slide 15: Countries with mining activity are developing better than those without
Countries with mining activity (MDCs) are developing 4 BETTER THAN THOSE WITHOUT Percentage of UN Sustainable Development Goal measures that have improved (1995 – 2015) Mining dependent countries (MDCs) Non-Resource dependent developing countries 100% (Mining rent’s contribution to GDP >10%, (Mining
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 2 3 Mining still has a Conflict is Weak governance in negative perception increasing host countries offsets our positive effects Mining's SLO | Nick Holland | October 2018
Slide 17: Mining continues to have a negative perception
ENVIRONMENTALLY POLLUTING IGNORING COMMUNITY NEEDS DESTABILISING COMMUNITIES 1 Mining continues to have a NEGATIVE PERCEPTION ENABLING CORRUPTION FUELLING CONFLICT LEAVING CLEAN-UP TO OTHERS Mining's SLO | Nick Holland | October 2018
Slide 18: Mining related conflicts are rising
2 Mining related conflicts are RISING Mining-related conflict incidents worldwide and global political risk MINING CONFLICTS TOTAL CONFLICTS 120 35 000 100 30 000 80 25 000 20 000 60 15 000 40 10 000 20 5 000 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 MINING-RELAT
Slide 19: Conflicts negatively affect miners, governments and communities
2 CONFLICTS NEGATIVELY AFFECT miners, governments and communities 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 reserves US$6
Slide 20: Even as we work to reduce conflict, mining operations can make them worse
2 Even as we work to reduce conflict, MINING OPERATIONS CAN MAKE THEM WORSE Illegal mining revenue used to fund conflicts Community engagement Expectation setting Mining companies working outside Development the spirit of the law Community employment investment Environmental damage and Humanitarian
Slide 21: Weak governance is seen in many resource-rich countries
3 WEAK GOVERNANCE is seen in many resource-rich countries Resource governance index results for mining resource dependent countries (2016) MORE ABLE TO LOOK AFTER LESS ABLE TO LOOK AFTER THEIR POPULATIONS THEIR POPULATIONS 81 71 62 61 57 56 56 54 54 50 47 39 38 29 South Peru Ghana Kazakhstan Papua N
Slide 22: Our host countries' governance varies greatly across levels of government
3 Our host countries’ GOVERNANCE VARIES GREATLY ACROSS LEVELS OF GOVERNMENT Peru Ghana South Africa Australia Central Good capability, Rising capacity, but High aspiration, government Highly functional gaps in execution mixed transparency mixed capacity Weak, co- Moderately Regional Highly under- go
Slide 23: How can we change this?
How can we CHANGE THIS? 1 2 3 4 Engage with central Build governance Collaborate with local Create governments over the capacity in central governments and community value mining lifecycle governments communities Mining's SLO | Nick Holland | October 2018 Source: Gold Fields
Slide 24: We match our engagement to the level of development and governance
1 2 WE MATCH OUR ENGAGEMENT to the level of development and governance Early resource dependence Established resource economy Diversified economy Central • Lower capability • Capability rising • Formal engagements • Suspicious, zero sum negotiations • More sophisticated tactics and • Advanced incent
Slide 25: Host governments can create an enabling environment matched to the mining life cycle
1 Host governments can create an 2 ENABLING ENVIRONMENT matched to the mining life cycle High Labour/activity level MINING ACTIVITY GOVERNMENT REVENUES COMMODITY PRICE CYCLE Low Exploration Site design Operation Final closure and Post-closure 1-10 years and construction 2-100 years decommissioning A
Slide 26: Central government engagement is a story of capability and partnership
Central government engagement is a story of 1 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:
Slide 27: Our license to operate rests on combined central and local support
1 2 3 OUR LICENSE TO OPERATE rests on combined central and local support CENTRAL GOVERNMENT But is remote: Sets the operating • Far from the affected The community counts: framework: people • Knows what it needs • With reasonable • With far wider • Understands what capability interests and prioritie
Slide 28: Starting to enable more transparent revenue flows to host communities
3 starting to enable more TRANSPARENT REVENUE FLOWS to host communities IMPLEMENTATION STATUS Yet to be assessed against the 2016 Standard Satisfactory progress Meaningful progress Inadequate progress/suspended LEVERS TO ENABLE GOOD ROYALTY FLOWS Revenue flow from the centre to regions is mixed Regi
Slide 29: Focus on value creation in host communities
4 Focus on VALUE CREATION IN HOST COMMUNITIES Host community procurement • Support areas where community suppliers can participate creates community • Identify community suppliers with ability to supply the mine jobs and supply • Provide skills development to close capability gaps opportunities Proc
Slide 30: Generate value in our host communities
US$m GOLD FIELDS’ TOTAL VALUE CREATION (Q1-Q3 2018 ANNUALISED) 3000 151 2750 4 296 2381 217 Gold Fields’ 2500 commitment to 2000 15952 GENERATE VALUE 1500 Our host in our host communities community spend is US$647m 1000 = 23% of total 467 4473 28% value creation, 500 27% of total in- country value H
Slide 31: Summary takeaways
SUMMARY TAKEAWAYS Mining companies Breaking out of the Managing our tax, We need to work Getting this chain are already enabling resource trap to royalty revenues with host communities right enables development in our create diversified from central to close some big gaps communities and host countr
Slide 32: Breaking the Resource Curse
Breaking the RESOURCE CURSE NICK HOLLAND CEO GOLD FIELDS
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