Stronger mining CSR means more benefits for host nations – WGC

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The World Gold Council published survey results Thursday, which showed that in 2013, 15 WGC member companies spent total of US$47 billion of which 79% was expended in countries hosting their mining operations, and provided work for more than 160 000 people.

Local suppliers of good and services within those host countries were the biggest recipients of WGC members’ investment at 71% or $37.4 billion.

World Gold Council

In the World Gold Council report, “Responsible gold mining and value distribution, 2013: A global assessment of the economic value created and distributed by members of the World Gold Council”, the United States ranked first in WCG members’ spending at US$7.5 billion, followed by Australia at $6.3 billion, Canada at $4.1 billion, Argentina at $3.7 billion and the Dominican Republic at $3.3 billion.

As WGC members paid a total of $4.65 billion to the governments in which they have operations, the U.S. topped the list at $750 million in government payments, followed by Peru at $582 million, Argentina at $482 million, Mexico at $368 million, and Australia at $363 million.

“Last year, official government donors spent a total of $135bn on overseas development assistance, but less than half of that actually entered local economies,” said Scott Gilmore, founder and CEO of Building Markets. “By comparison gold mining contributed over $37bn of value to host countries, representing 79% of total expenditures.”

The $26.36 billion in total business that the gold mining companies conducted with suppliers far outranked payments to governments and payments to people and communities. U.S. suppliers earned $4.9 billion from WGC member companies in 2013, followed by Australia at $4.8 billion, the Dominican Republic at $2.74 billion, Canada at $2.4 billion and Argentina at $1.8 billion.

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“One of the interesting facts in the report is the relative level of payments to suppliers,” observed Christopher Sheldon, practice manager, extractive industries at the World Bank. “In order to maximize mining’s contribution to development we need to focus on how these payments to suppliers can benefit local business more and promote economic diversification through the use of local content.”

WGC mining company in-country expenditures for people and communities totaled $6.4 billion in 2013 with the U.S. again placing as top beneficiary at $1.6 billion, followed by Canada at $1.1 billion, Australia at $1.09 billion, and Peru at $355 million.

Numbers of employees and contractors employed by WGC member companies totaled 162,816 persons. Peru topped the list with 19,368 employed by WGC gold companies, followed by the United States with 16,474 employees and contractors, Papua New Guinea with 11,133 persons, and Ghana with 10,958 employees and contractors.

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Total global gold output for 2013 was 3,039 tonnes with the WGC member operations accounting for 732 tonnes of production or 24% of total global gold production.

In an e-mail to Mineweb, Newmont Mining Group Executive, Corporate Communications, Omar Jabara said, “Newmont’s direct economic contributions in the countries where we operate totaled nearly $9 billion in 2013.” Newmont is a long-time member of the World Gold Council.

“In addition to employing nearby residents at our operations, Newmont partners with local entrepreneurs to establish and grow businesses that provide supplies and services to our mines, as well as other potential customers,” he stressed. “Nurturing local enterprises also includes supporting institutions that teach skills and trades to local residents, thereby empowering them to take advantage of the many economic opportunities generated by our mines and our suppliers.”

“Beyond partnering with local entrepreneurs, Newmont also invests in community infrastructure, health care, education and capacity building,” said Jabara.

Fellow WGC member Barrick Gold did not respond to Mineweb’s request for comment as of deadline early Friday morning.

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“2013 was not ‘business-as-usual’ for the gold mining industry,” said WGC Chairman Randall Oliphant, the executive chairman of New Gold. “A sharp decline in the gold price, combined with increases in the costs of key input commodities, such as diesel and steel, created the perfect storm that rendered many mine operations unprofitable. The companies included in this report made accounting write-downs of their assets worth $25bn.”

“Looking forward, host countries and mining companies can both benefit from mining activities and it is in their interest to collaborate and find a mutually acceptable arrangement,” he added. “I hope this report provides a useful fact base for the discussion about the distribution of benefits among stakeholders.”

Terry Heymann, managing director of gold for development at the World Gold Council observed, “This report shows the continuing commitment of responsible gold miners to helping stakeholders understand the economics of mining. By developing a consistent and transparent approach to reporting costs and providing comprehensive insights on the monies paid to governments, business and employees, the report seeks to address concerns of a ‘trust and data deficit’ and highlight the contribution gold mining companies are making to national economies.”

The survey includes data from 15 gold companies with operations in over 25 countries with a total of over 160 000 employees and contractors. The 2103 figures include data from 87 producing gold mines and 60 non-producing operations including exploration, pre-mine development and closed mine sites. All gold-producing companies who are members of the WGC were invited to participate.

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