Responsible gold mining and value distribution - Terry Heymann - 2014 FDI Statistics Workshop

Responsible gold mining and value distribution

A presentation by Terry Heymann | 20 March 2014Managing Director, Gold for Development, World Gold Council

Measuring Globalization: Better data for better policyOECD, Paris

Introducing the World Gold Council

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• The gold industry’s market development organisation

• Member companies represent the

• Active in the investment, jewellery, central bank and technology sectors

• Offices in London (head office), New York, Beijing, Shanghai, Tokyo, Mumbai and Chennai

World Gold Council | Responsible gold mining and value distribution | 20 March 2014

Offices

London (Head Office)

New York TokyoBeijing

Shanghai

Mumbai

Chennai

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Responsible Gold Mining & Value Distribution (2013)

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 investors

Why 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 how gold mining is supporting socio-economic development


Methodology

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• The World Gold Council undertook a quantitative assessment of the value distribution associated with the world’s leading gold mining companies.

• Each participating company was asked to provide information on payments by country and which of those payments went to individuals or commercial entities in the same country.

• Companies were asked to include payments related to both producing operations (where gold is being poured and they have a source of revenue) and non producing operations (where no gold is being poured, there is no source of revenue, yet costs are still incurred).

• The World Gold Council consolidated the data on a country-by-country basis. The data was also consolidated to provide global information on the amount of money that stays in the country where the operation is located and the amount of money that is paid to businesses or providers of capital outside the country.

What do we mean by “Responsible Gold Mining” ?

• 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 gold 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.


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Country Profile

Argentina

Case Study

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 socio-economic 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 in 2004. Since then, the company’s workforce has grown significantly and its work with Veladero has led to opportunities beyond mining


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Key figures

• 15

• 220,000

• 96

• 804

• 469

• $55bn

• $35bn

• $8bn

• 79%

• 7%

• 85%

participating companies

number of employees and contractors

Number of operating gold mines

Gold tonnage in 2012

Gold tonnage in 2012 in non-OECD countries (58% of total)

Total expenditure in 2012

Total payments to businesses

Total payments to governments

% of expenditure incurred in-country

Increase in gold tonnage from 2009 to 2012

Increase in total expenditure from 2009 to 2012


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Global value creation and distribution


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Global Highlights


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Takeways

Impact – Gold mining makes a very significant contribution to the economies of those countries where gold is mined

Transparency – Greater transparency should lead to better development outcomes. This report provides a comprehensive view of economic contribution made by gold mining companies

Collaboration – Responsible 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.

• 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.


Responsible gold mining and value distribution

A presentation by Terry Heymann | 20 March 2014Managing Director, Gold for Development, World Gold Council

Measuring Globalization: Better data for better policyOECD, Paris

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Responsible gold mining and value distribution - Terry Heymann - 2014 FDI Statistics Workshop