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Responsible Gold Mining and Value Distribution | The World Gold Council

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In an industry first, member companies of the World Gold Council have collaborated to combine data which provides a comprehensive, country by country view on how value generated by the formal gold mining sector is distributed and how much of that value remains with host nations. This data covers expenditure in 2012 and includes payments to suppliers, employees and governments.
  • 1. Responsible gold mining and value distributionA presentation by Terry Heymann Managing Director, Gold for Development, World Gold Council7 November 2013

2. What is the value distribution report? A new report that quantifies the overall economic contribution made by leading responsible gold mining companies by providing, for the first time, a collective analysis of the value distributed to different stakeholder groups including employees, suppliers, governments, communities and investorsWhy has it been developed? Mining can make a significant impact to economic growth and development. In many countries around the world, it is a key driver of GDP, tax revenues, foreign exchange and employment. Yet for a number of years there has been a debate about whether the benefits of mining are fairly distributed. For countries to benefit from their mineral reserves, a number of stakeholders need to be involved, including government, communities, companies and the investors who fund these companies. Unfortunately, there is often the perception that one set of stakeholders benefit to the disadvantage of others. This report has been developed to show, for the first time, how gold mining is supporting socio-economic development.World Gold Council | Responsible gold mining and value distribution report | December 20132 3. What is responsible gold? Responsible gold mining is mining which takes place in compliance with applicable laws which observes high standards of safety and health protection and of environmental stewardship. Responsible mining is respectful of local communities and their cultures and of their human rights; manages its impacts responsibly and which provides acceptable and realistic benefits for all its stakeholders.3 World Gold Council | Responsible gold mining and value distribution report | December 2013 4. Global value creation and distribution:World Gold Council | Responsible gold mining and value distribution report | December 20134 5. The report tells us: ImpactGold mining makes a very significant contribution to the economies of those countries where gold is mined Globally, the companies included in this report spent over US$55.6bn in 2012 Of this $55.6bn in total expenditure, $35.2bn (62%) went to other businesses (e.g. suppliers), $8.3bn (15%) in wages and salaries, $8.5bn (15%) in taxes to government and $3.4bn (6%) in payments to providers of capital (including dividends and interest) The research shows that significant expenditure is incurred in the country of operation. Of the $55.6bn in total expenditure, at least $44.7bn (80%) was paid out in the country where the operation was situated. The report also profiles numerous examples of community development, education, healthcare or infrastructure projects that gold mining companies develop in the areas where their mines are situated.World Gold Council | Responsible gold mining and value distribution report | December 20135 6. The report tells us: TransparencyGreater transparency should lead to better development outcomes. This report provides a comprehensive view of economic contribution made by gold mining companies Transparency and good governance are widely recognised as being amongst the key elements in enabling countries with resource-based economies to translate their mineral endowment in to socioeconomic development. This report complements the work of the G8, G20 and the OECD and existing reporting undertaken by leading gold mining companies who already observe high levels of transparency. This report goes beyond the disclosure provided by the Extractive Industries Transparency Initiative (EITI), which documents payments to governments; this report extends analysis to include a deeper exploration of the industrys contribution to national economies including payments to suppliers and employees. The World Gold Council has already taken a lead, with its member companies, in promoting transparency; a specific example is the development of the Conflict-Free Gold Standard which supports the responsible sourcing of gold from conflict-affected and high-risk areas.World Gold Council | Responsible gold mining and value distribution report | December 20136 7. The report tells us: CollaborationResponsible mining contributes to the development of host countries in a number of ways, but collaboration is important Gold mining contributes to economic growth and development in the form of jobs, investment in skills and local capacity building, supply chain opportunities, social investment and infrastructure. However, gold mining companies are not able to provide unlimited job creation, wholesale improvements in the standard of living, and eradication of poverty by their efforts alone. Collaborative efforts are required - with governments, civil society, communities and the donor community. Mining is a long-term business, where mining companies take on significant risk on behalf of their investors. Typically from initial exploration to the start of mine production will involve between ten and fifteen years of investment. Mine development which includes geological, technical, financial and socio-environmental appraisals, is undertaken in the context of fluctuating commodity prices and foreign exchange movements. Of the $44.7bn paid out in country, $39.2bn (88%) was associated with producing operations and $5.4bn (12%) was associated with non-producing operations, which are incurring costs but no income.World Gold Council | Responsible gold mining and value distribution report | December 20137 8. Research on gold and socio-economic development There is a growing body of research demonstrating that gold and gold mining contribute to socioeconomic development, particularly for developing nations This research builds on a recent report The Direct Economic Impact of Gold - commissioned by the World Gold Council and undertaken by PwC. The Direct Economic Impact of Gold analysed the entire gold value chain from large scale mining supply to consumer demand in order to quantify how gold contributes to global GDP. The prime metric for evaluation was gross value added (GVA), which measures the contribution to gross domestic product (GDP) - not expenditures incurred by gold mining companies. The 15 largest gold producing countries, which accounted for around three quarters of global output, directly generated at least US$78.4 billion of gross value added (GVA) in 2012 approximately equal to the GDP of Ecuador, a country of over 15 million people. Gold mining supports national wealth creation contributing a significant part of the economy in countries as diverse as Mexico, Ghana and Uzbekistan. Additional reports assess the multiplier impact; workers in gold mining have up to 28 dependents in GhanaWorld Gold Council | Responsible gold mining and value distribution report | December 20138 9. Global HighlightsWorld Gold Council | Responsible gold mining and value distribution report | December 20139 10. Case study: Argentina Barrick is the main private employer in San Juan province, San Juan used to be one of the poorest provinces in the country, but as the economy grows, poverty rates are declining and other key socioeconomic indicators are showing signs of improvement Infant mortality fell from 19.6 per 1,000 births in 2003 to 11.0 in 2010 a 44 percent decrease, and nearly double the 28 percent drop in the national infant mortality rate Industrias Metalurgicas Jaime, a San Juan-based company began assembling off-road truck hoppers for the Veladero operation in 2004. Since then, the companys workforce has grown significantly and its work with Veladero has led to opportunities beyond mining Of companies surveyed, total gold output increased 17% from 2009 to 2012 (from 30 to 35 tonnes) yet payments to suppliers almost trebled from $535m to $1,460m and wages increased almost five times from $72m to $338m Gold sales from companies surveyed contributed to over 2% of national exports in 2012 World Gold Council | Responsible gold mining and value distribution report | December 201310 11. Case study: ArgentinaWorld Gold Council | Responsible gold mining and value distribution report | December 201311 12. Case study: Burkina FasoIn 2011, IAMGOLD announced a five-year partnership with Plan Canada to support youth and economic development in Burkina Faso.The goal of the project is to improve the quality and relevance of pre-vocational education for approximately 6,400 girls and boys, aged 1318 years, who are identified as kids at risk.IAMGOLD has committed $1.0 million to the project along with in-kind contributions in country and has provided support on various practicaland technical elements of the programme.Among the key 2012 accomplishments, focus areas for vocational training were identified through a market survey and 13 schools were renovated or newly constructed and equipped as training sites.Gold sales from companies surveyed were equivalent to 26% of national exports in 2012Payments to government from companies surveyed represented 3.5% of total government revenueWorld Gold Council | Responsible gold mining and value distribution report | December 201312 13. Case study: Burkina FasoWorld Gold Council | Responsible gold mining and value distribution report | December 201313 14. Case study: Chile Despite gold output falling 11% from 2009 to 2012 among companies surveyed (from 14.5 to 12.9 tonnes), in country expenditure more than trebled Payments to suppliers and wages/salaries represented over 90% of total in country expenditure in both 2009 and 2012 The Maricunga and La Coipa mines are located approximately 4,000 metres above sea level in the Atacama Desert, one of the driest places on Earth. In this water-stressed area, Kinross has undertaken extensive studies to better understand the hydrological cycle in the area and implemented measures to improve water Annual precipitation is appro

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