Governments
Host governments are among Gold Fields’ most important stakeholders, as they issue mining licences, develop state policies and enforce regulations. First and foremost, this requires us to adhere to all relevant legislation, including paying taxes and other levies. We are committed to working with governments – directly and via industry associations – at national, regional and local levels to establish ethical, sound and transparent working relationships that benefit the countries where we operate and our host communities.
Gold Fields does not provide any financial contributions to political parties unless explicitly approved by the Board in accordance with the Company’s Code of Conduct. No political donations have been made for several years.
Gold Fields’ Tax Strategy is to proactively manage tax obligations in a way that is transparent, responsible and sustainable, while acknowledging differing stakeholder interests.
Find our full Tax Strategy and Policy, which now includes tax risk and governance, at www.goldfields.com/pdf/ about-us/corporate-governance/policies/2022/gfl-updated-tax-policy.pdf
Resource nationalism
Many governments, particularly those in developing countries, view the mining industry as an opportunity for higher taxes and other fiscal and regulatory imposts – especially during tough economic times and ahead of elections. This is particularly relevant in Ghana, Chile and Peru, where tax revenues are declining while metal and gold prices recorded healthy gains over the past two years.
Political risk is now a top five Group risk, and addressing it requires increased actions and engagements by our corporate and country teams.
Gold Fields seeks to address the trust gap between government and mining in several ways, including:
- Creating approximately US$4bn in total annual value for our wide range of stakeholders, including host governments and host communities
- Actively creating host community value through host community employment, procurement and socio-economic investment, including legacy programmes
- Working with mining industry associations to highlight and communicate the work done by member companies, engaging with government on material industry issues and, usually as a last resort only, tackle unfair regulations and laws, including via legal strategies
- Working with our ICMM and World Gold Council peers to promote industry-wide best practice and demonstrate the benefits of a responsible and fairly regulated industry
We conduct independent desktop country risk assessments at least every two years, which provide valuable input on how we can increase government and community trust and confidence. The resulting key proposals reinforce many of the strategies our operations already implement, such as strengthened engagement with governments at all levels, community value creation and improved communication on mining’s socio-economic benefits.
Payments to governments by Gold Fields in 2023
| (US$m) | Australia | South Africa | Ghana | Peru |
| Royalties | 48 | 3 | 55 | 7 |
|---|---|---|---|---|
| Income tax1 | 192 | 1 | 149 | 62 |
| Dividends2 | — | — | 12 | — |
| Dividend withholding tax | — | — | 6 | 5 |
| Total | 240 | 4 | 222 | 74 |
| % of profit before royalties, taxes and non-recurring items | 29% | 2% | 55% | 60% |
| 1 | South Deep has carry-forward losses and allowances for offset against taxable income |
| 2 | In respect of the Ghana government’s 10% stake in the Tarkwa and Damang mines |
Australia
Against a background of high national inflation, low unemployment, consecutive interest rate rises and national cost-of-living pressures, the mining sector continues to buoy the Western Australian economy and state government finances.
The national referendum to amend the constitution to include constitutional recognition for Australia’s Aboriginal peoples was unsuccessful. Both sides of the debate dominated national headlines and political attention in H2 2023. Gold Fields will continue with its strategies to engage and provide value to the Aboriginal peoples at its four mines in Western Australia.
Legislation-related debates during the year was driven by the first tranche of the Commonwealth government’s industrial relation reforms through the Fair Work Legislation Amendment (Closing Loopholes) Bill of 2023. Among other things, this contentious bill contains provisions such as “same job, same pay” for labour hire workers, requiring employers with collective agreements to pay labour hire workers at least the same as their direct workforce. A second tranche of provisions concerning casual employment, gig economy workers, sham arrangements, right to disconnect and right of entry will be debated in 2024.
In Western Australia, the focus was also on Aboriginal cultural heritage during the year. Following increased objections from affected stakeholders ahead of the implementation of the Aboriginal Cultural Heritage Act of 2021, the government repealed the Act after five weeks. Instead, it proceeded with measures aimed at addressing the root causes of the Juukan Gorge incident in 2020.
The Commonwealth parliament passed the Nature Repair Bill of 2023 during the year, which provides a framework for establishing a voluntary national market to improve biodiversity outcomes. The relevant legislation is expected to be introduced into parliament in 2024. Additionally, the Mining Amendments Bill of 2023 was passed to help balance the competing interests of mining activity against carbon farming projects.
Throughout 2023, we engaged with the Western Australian government through the Chamber of Minerals and Energy of Western Australia and our Australian gold sector peers through the Gold Industry Group on issues impacting the gold sector and the mining sector.
We also formally committed to supporting the state government’s Respect in Mining programme pilot to improve gender equality and the safety of women in mining. The pilot will run at our Australian operations in 2024, embedding gender equality policies and practices to benefit all our people.
Ghana
The Ghanaian economy experienced its worst crisis in 40 years, driven by rising debt, inflation and living costs, as well as stagnant economic growth. Without a parliamentary majority for the ruling party before the 2024 general election, the government is unlikely to significantly address the effects of this crisis or the risks related to increasing taxation and regulatory interventions, poor public perceptions of the mining industry, illegal mining and poorly regulated ASM (see Host communities).
After subscribing to a three-year loan from the International Monetary Fund (IMF) of US$3bn, the economy showed some signs of recovery, while inflation more than halved to levels of around 22% early in 2024. Subject to economic reforms and greater fiscal discipline, the funds provided by the IMF should return a level of stability to the economy; however, the government continues to look for ways to shore up its revenues – and the country’s gold mining sector is an obvious target.
The Group’s fiscal relationship with the government is governed by a 2016 Development Agreement (DA) for Damang and Tarkwa, which requires Gold Fields to invest in these mines over a specific time in return for a flexible corporate tax rate from 32.5% to 35% and a royalty tax on a sliding scale based on the gold price. For 2023, Gold Fields Ghana contributed US$222m in the form of taxes, royalties and dividends to the government.
The Company is currently contending with the government’s need to shore up revenue and the impact thereof on the renewal of exemptions under the DA and compliance with in-country regulations. Among these are the government’s refusal to renew DA fuel exemptions for Damang and Tarkwa with effect from 1 January 2023, as well as a Covid-19 levy, both of which are being contested. Customs exemptions on other items have been approved.
A transfer pricing audit for 2014 – 2019 on Gold Fields was conducted by the Ghana Revenue Authority (GRA). The audit was resolved and a negotiated position reached, in terms of which Gold Fields had to pay an additional US$8m. A comprehensive 2018 – 2020 tax audit was resolved, with the GRA dropping DA-related issues, while a GRA customs clearance audit for 2018 – 2022 concluded with immaterial exposures for Gold Fields.
In 2023, under the domestic gold purchase programme, Gold Fields Ghana sold 127.4koz gold (18% of Damang and Tarkwa’s 2023 production) to the Bank of Ghana (BOG), pursuant to a gold purchasing agreement. Payment was made by BOG in Ghana Cedi at the prevailing gold market price. The payment forms part of our DA requirement to convert at least 30% of our gold proceeds into the local currency to cover local costs. The Ghana Chamber of Mines is still finalising negotiations with the BOG on the volumes of gold to be sold by mining companies for 2024, though it is likely to remain consistent with 2023.
Gold Fields is engaging with the Minerals Commission of Ghana on the proposed JV between Tarkwa and AngloGold Ashanti’s neighbouring Iduapriem mines, with the government’s shareholding and tax issues the major negotiating points. In February 2024, the government approved the sale of our 45% holding in the Asanko gold mine to our JV partner Galiano Gold.
Chile
In Chile, most political and social stakeholders support our decision to proceed with the Salares Norte mine’s construction in the Atacama region of northern Chile. Salares Norte has been one of Chile’s largest investment projects over the past few years, and was identified by the government as a key project for economic upturn in the Atacama region. The project is governed by an investment stability agreement with the Chilean government.
Although there was initial uncertainty regarding left-wing President Gabriel Boric’s economic and regulatory policy direction when he took office in 2022, he had limited political capital and support in congress to push forward structural reforms. In fact, during the current administration the mining sector has continued to operate normally and, in recent months, a number of large projects have been inaugurated.
In December 2023, the second attempt to approve a new constitution was rejected by Chileans in an exit plebiscite. The government has ruled out a third constitutional vote, in the short term at least.
On the regulatory front, the mining royalty bill was approved by congress in May 2023 but, for now, this only applies to the copper and lithium mining sectors. The bill aims to achieve higher tax revenues and regional benefits without affecting critical mining investments. Environmental mining regulations have been far more rigorously enforced under the Boric presidency, which has seen a number of mining projects halted and penalties imposed for infringements.
Our engagements in Chile focus on supporting communities close to Salares Norte in coordination with regional and local governments. These efforts are aimed at promoting social development initiatives focused on education and health, and will continue during Salares Norte’s ramp-up to full production.
Peru
In Peru, we engage at local, regional and national government levels to address operational, social and sustainability matters. While prior years were characterised by political instability and widespread community unrest, the government under President Dina Boluarte, who took office in December 2022, has seen greater political and social stability. Community unrest has become far more isolated and limited to the south of the country. Even during the height of social unrest, when certain mines were targeted, protests were not widely spread or violent in the Cajamarca province where our Cerro Corona mine is located.
Our engagement with national government and congress, particularly on regulatory matters, primarily takes place through the National Chamber of Mines, Oil and Energy (SNMPE). The industry has good working relationships with various public bodies at all levels of government. Our main challenges has been the increase in public officials’ turnover at national level due to political instability, which increased the risk of permits delays and policy uncertainty. This was managed through close monitoring and timely engagement with government.
We continue to build trust between Cerro Corona and its host communities through ongoing stakeholder engagement and Shared Value projects, including rolling out comprehensive water infrastructure. We implemented social development projects in partnership with the government, through the Works for Taxes and government grants programmes, focused on water and sanitation infrastructure and agricultural development.
As we consider future options for Cerro Corona, we will develop more long-term community investment programmes that extend beyond any potential closure. Gold Fields’ first legacy programme, as part of our 2030 ESG targets, is the dairy value chain development benefiting farmers near the mine by generating an alternative source of income for host communities. This is currently undergoing the baseline studies phase prior to implementation.
South Africa
South Africa is currently experiencing low economic growth caused by ongoing electricity shortages, infrastructure degradation and, in the mining sector, lower commodity prices. In addition, South Africa continues to be confronted with challenges relating to economic disparity, poor service delivery, political and social instability, and corruption, which increase the risk of social unrest and rising social demands.
With a general election scheduled for May 2024, the weak economic environment could very well lead the governing African National Congress (ANC) party adopting more populist economic measures, as it is facing opposition from leftist parties.
From a regulatory perspective, South Deep is guided primarily by the Mineral and Petroleum Resources Development Act No 28 of 2002 (MPRDA). One of the MPRDA’s key requirements is to facilitate meaningful and substantial participation of Historically Disadvantaged South Africans (HDSAs) in the mining industry. To address this requirement, the Mining Charter provides several empowerment actions and community investment programmes with a corollary timeframe. All mining right holders must submit an annual compliance detailing progress against the Mining Charter and their Social and Labour Plan (SLP), a mechanism used to achieve the objectives of the Mining Charter.
The main objective of the SLP is to contribute to the transformation of the mining industry and ensure host communities benefit from the exploitation of mineral resources. This includes promoting employment and advancing the social and economic welfare of all South Africans. The SLP requires the mining industry to develop and implement comprehensive human resources development programmes (including employment equity plans) and local economic development programmes, as well as processes to protect jobs and manage downscaling and/or the closure of mining projects.
The latest version of the charter – Mining Charter 3 (MC3) – was tabled in September 2018. It de facto confirmed South Deep’s current BEE ownership level of 35%, which we believe meets the principles and spirit of the Charter. It has also created the framework for the mine’s ongoing transformation.
As part of the mine’s empowerment structure, South Deep established two independent trusts in 2010 to channel dividend and other income to communities living near the mine and in labour-sending areas. These are the South Deep Community Trust and the South Deep Education Trust. Since their launch, these trusts have invested R15m and R91m in community and education projects, respectively.
The MCSA and Gold Fields also engaged with the government around reforms to regulations on self-generating electricity supplied by private sector companies. The regulatory approval process around South Deep’s pioneering 50MW Khanyisa solar plant assisted in easing restrictions, facilitating a self-generating power supply – particularly for those using renewable energy sources. Gold Fields is also engaging with the regulator and the public electricity utility, Eskom, around selling surplus renewables electricity back into the public grid.
Mining Charter Scorecard
In reviewing South Deep’s 2023 – 2027 SLP (SLP III) submission, the Department of Mineral Resources and Energy (DMRE) indicated that it did not satisfy regulation 46 of the MPRDA, mainly because of an administrative misalignment between South Deep’s SLP III submission cycles and the prescribed five-year SLP cycles calculated since inception of the South Deep-converted Mining Right in 2010.
To restore the SLP cycle alignment, South Deep agreed to reconstitute SLP III to cover the five-year period from 2020 to 2024 (instead of 2023 – 2027). Because South Deep had already submitted its programmes for 2020 – 2022, the revised SLP III cycle had to include 2020 – 2022 targets and actuals and only targets and programmes for 2023 and 2024.
When formulating SLP II and SLP III, South Deep engaged and consulted with the relevant stakeholders and, as such, the reconstituted SLP III does not require further engagement. It should be noted that the DMRE issued a directive requesting the mine not to start any of the planned local economic development projects for 2023 and 2024 pending its approval of the reconstituted SLP III. As part of SLP III, we spent over R62m (US$3.4m) for 2023 on SED projects that supported education and training, infrastructure development, healthcare, supplier and enterprise development water and sanitation in 2023. Combined with the South Deep Community and Education trusts, the amount is over R69m.
In addition, South Deep spent R302m (US$ 18 m) between 2020 – 2023 on skills development and training for its employees, as well as various initiatives to upskill community members, including adult education programmes. Worth noting are two youth-focused employment and skills programmes:
- In partnership with the Yes4Youth organisation, South Deep enrolled 80 unemployed youth from the local community to work on the mine to gain work experience and equip them for jobs in the mining industry. This programme will continue during the current SLP cycle, with a further 65 cadets enrolled in 2023 of which 54 are still on the programme
- The mine also partnered with the Signa Academy to engage disabled youth into a workplace emersion programme. During 2022, a total of 87 disabled youth were enrolled with 86% completing the programme, while 58 or 84% of the second cycle completed their programmes during 2023. For the third cycle intake, the mine enrolled 56 candidates who are expected to complete their training later in 2024
| Year (2023) target1 | ||||||
| Element | Description | Compliance target | MC3 target | Gold Fields target | Measure | Year (2023) progress1 |
|
Ownership |
Representation of HDPs |
26% |
Meaningful economic participation |
35% |
||
|
Full shareholder rights |
||||||
|
Inclusive procurement (five-year implementation plan required) |
Inclusive procurement |
70% of mining goods’ procurement spend must be on South African manufactured goods (60% local value = South African manufactured goods) |
70% achieved |
The total mining goods procurement budget must be spent on South African manufactured goods produced by the following categories, per defined percentage: |
||
|
21% on HDSA-owned and controlled company |
37%RA |
|||||
|
5% on women or youth-owned and controlled company |
14%RA |
|||||
|
44% on BEE |
57%RA |
|||||
|
80% of service procurement spend must be sourced from South African-based companies |
80% |
Achieved |
The total services budget must be spent on services supplied by the following categories, per defined percentage: |
|||
|
50% by HDPs |
67%RA |
|||||
|
15% by women-owned and controlled company |
28%RA |
|||||
|
5% by youth-owned and controlled company |
5%RA |
|||||
|
10% by BEE |
88%RA |
|||||
|
Research and development (R&D) |
90% |
Minimum of 70% of the total R&D budget to be spent on South African-based R&D entities |
R0RA |
|||
|
Sample analysis across the mining value chain |
Utilise South African-based facilities or companies for the analysis of 100% of all mineral samples |
|||||
| Employment equity (as per the Mining Charter) (five-year implementation plan required) |
Board | % black persons | 67% | 50% black persons with exercisable voting rights of which 20% must be female |
80%RA | |
| % black women | 33% | 60%RA | ||||
| Executive management | % black persons | 67% | 50% black persons of
which 15% must be black women |
75%RA | ||
| % black women | 33% | 25%RA | ||||
| Senior management | % black persons | 47% | 50% black persons of
which 15% must be black women |
36%RA | ||
| % black women | 12% | 14%RA | ||||
| Middle management | % black persons | 64% | 60% black persons of
which 20% must be black women |
52%RA | ||
| % black women | 25% | 19%RA | ||||
| Junior management | % black persons | 67% | 75%RA | |||
| % black women | 18% | 18%RA | ||||
| Employees with disabilities | 1.5% of all employees | 1.3% | 2.8%RA | |||
| Core and critical skills | HDPs represented in core and critical skills pool |
77% | 50% black persons | 75%RA | ||
| Human
resources development (HRD)2 |
HRD expenditure as % of total annual leviable amount (excluding mandatory skills development levy) | 5% leviable amount | Invest percentage of leviable amount as defined in the HRD element in proportion to applicable demographics | In 2023, South Deep spent 5% of its annual payroll on skills development programmes | ||
| Mine community
development
(MCD) (five-year implementation plan required) |
Meaningful contribution towards MCD with bias towards mine communities both in terms of impact, and in keeping with the principles of the social licence to operate | 100% compliance with approved SLP MCD commitments | N/A | Publish the SLP in two languages (dominant community language and English) |
Yes | |
| Implement approved commitments in the SLP3 |
During 2023, South Deep continued developing the
following SLP projects. The projects are at various
stages of implementation:
|
|||||
| Housing and living conditions2 |
Improvement of the standard of housing and living conditions of mine employees | 100% compliance with commitments per the H&LCS | Mine to submit a Housing and Living Conditions Plan, in terms of Section 4 of the new H&LCS for the mining industry | 1:1 person to room ratio | Implement all commitments per the H&LCS | The occupancy rate for 2023 was 74%. South Deep still maintains one person per room for its dense accommodation facilities, and promotes home ownership through interest fee loans and discount on the purchase of company homes |
BEE – Black Economic Empowerment
HDP – Historically Disadvantaged Person
H&LCS = Housing and Living Condition Standard
1 This column records the mining rights holder's performance against the Mining Charter scorecard targets
2 This element has not been assured externally
3 Only the number of community development commitments and its progress are
externally assured