IN THIS SECTION
Vision of the Chair

 

Vision of the Chair

Dear Shareholders

This is my first report as Chair of Gold Fields. I’ve worked with the mining industry for many years and bring this experience to my new role. I also bring a global perspective derived from my time at the World Bank, where we engaged in high profile work premised on the capacity of the resources sector to create prosperity and wealth and to alleviate poverty, especially in developing nations.

Despite my brief tenure at Gold Fields, I have already gained an appreciation of the company and its values as well as an understanding of its considerable contributions to development. This is not just through its duty to investors, but also through its responsibilities to other key stakeholders – host governments, employees and local communities. These contributions and the emerging theme of ‘sustainable gold’, as well as the increasing geographical spread of Gold Fields operations, are the focus of my first introductory statement.

Confidence in Gold Fields

The past year has seen gold retain its position as a safe haven investment in the face of global political and economic instability. This is supported by the strong performance of the gold price as well as underlying fundamentals that appear to indicate the metal’s upside potential is greater than the downside risk. These fundamentals include strong investment demand and continued economic growth in emerging markets, led by China and India, where rising disposable incomes have boosted the demand for gold jewellery. On the supply side, stagnant global gold production, as well as the discovery of ever fewer large deposits, has supported the strong gold price.

In C2010 our share price outperformed those of our large gold mining peers. We believe that this is due to the fact that investors are starting to recognise the value opportunity inherent in Gold Fields, both in terms of its eight superior mining operations across three continents, but also because of its exciting growth performance. The continued optimisation of our existing operations and realisation of our future growth portfolio is central to our strategy and looks set to deliver lasting returns to shareholders.

The Gold Fields growth strategy rests on three pillars:

  • Optimising our operations
  • Growing Gold Fields
  • Securing our future responsibly

This report includes a transparent and systematic account of our progress in all three areas, underpinned by a sound corporate governance framework, commitment to proficient risk management and effective engagement with our stakeholders. My confidence in the future of Gold Fields is based not only on our extensive worldwide portfolio of quality greenfields and near-mine exploration projects; it is also rooted in our global Mineral Resources and Mineral Reserves position that has few equals.

It is sustained by the excellence of our management team and our continued investment in top talent.

Our worldwide expansion means that the company is also firmly on track to achieve its target of 5 million attributable ounces of gold, either in production or in development, by 2015.

Global investment that builds on our South African history

Earlier this year, Citibank rated South Africa as the richest mineral resource holder in the world, valuing its resources at US$2.5 trillion in current terms, well ahead of Russia and Australia. Not only is mining the country’s foundation industry; but as recently as C2009, it contributed around 9% (R330 billion) of Gross Domestic Product (GDP). Mining remains one of the largest employers of unskilled and semi-skilled labour, supporting the livelihoods of around half a million people directly and another half a million in related industries. Employment and wage benefits from mining extend well beyond South Africa to many countries in sub-Saharan Africa.

Innovative new approaches are needed to address the challenges faced by the mining industry in South Africa over the past decade. These challenges include largely external factors such as the volatile and rising Rand-US Dollar exchange rate and recent global economic and political upheavals. They also include the need for improved infrastructure, sustainable energy solutions and new ways of dealing with regulatory constraints, policy uncertainty and wage increases. Finally, they include mechanisms to enhance the productivity of labour and address health and safety risks as well as the shortage of human capital.

Notwithstanding these challenges, Gold Fields has operated proudly in South Africa since 1887. Our intent is to remain in South Africa for at least the next 50 years, motivated largely by our investment in the lucrative South Deep project, and to continue our ambitious global expansion programme.

The South African operations continue to present a unique opportunity for meaningful wealth creation and distribution. Building on this foundation makes us even more effective as a leading global gold company.

‘Sustainable gold’ wherever we operate

Gold Fields addresses these challenges directly through our commitment to ‘sustainable gold’. This means ensuring we achieve sustained production and growth, as well as contribute to sustainable development wherever we operate.

Our ability to bring our large longlife quality Mineral Reserve base to account depends on a continued and demonstrable commitment to sustainable development, which underpins our ‘social licence to operate’ in respect of both host governments and local stakeholders. This in turn helps shape our future growth environment. Our greatest priority in this regard is safety, as efforts to create a safe environment are underpinned by a commitment to our most important value, “if we cannot mine safely, we will not mine”.

We are determined to move beyond the stigma of underground gold mining as inherently dangerous by improving safety performance and consistently reducing the risk of fatalities. It is my personal goal during my tenure as Chair to ensure continued progress on our journey to Zero Harm. We are also complementing existing safety measures with programmes that enhance workforce productivity through capacity building and our proactive health, housing and welfare initiatives that focus on employee wellbeing 24 hours a day.

Gold Fields is also working with our peers and stakeholders on challenging industry-wide themes such as artisanal and small-scale mining, illegal mining and ‘conflict gold’.

Our work with the Rand Refinery, in which we are a significant shareholder, is at the forefront of the World Gold Council’s (WGC) Responsible Gold programme, which is addressing chain of custody and conflict free gold (p176). How we proactively and responsibly address these themes wherever we operate will increasingly distinguish us as “the leader in sustainable gold mining”.

Our commitment to ‘sustainable gold’ is both astute risk management and responsible business practice and therefore fundamental to creating the conditions for enhanced medium- and long-term shareholder value.

Contributing to a legacy of strong human capital

Developing human capacity at all stages and levels across the gold value chain will increase our ability to deliver on production targets and growth goals.

The majority of our employees in South Africa pass through the Gold Fields Academy on an annual basis. The Academy also provides thousands of workers and community members with basic literacy and numeracy skills. It trains selected workers to be, for example, electricians, plumbers and carpenters. These are skills they can use after leaving the mining industry, allowing them to contribute elsewhere in the economy. Significant investment is also required at university level as the mining sector is rapidly running short of crucial engineering and technical skills. Over the past year alone, Gold Fields committed R26 million (US$3.6 million) in support of mining faculties at South African universities, in addition to numerous ongoing partnerships with tertiary institutions in all our host countries.

Gold Fields creates significant economic value not just for employees, but also for our local communities and host governments through royalties, taxes and social upliftment programmes.

This is based on the understanding that mineral rights are, justifiably, viewed as part of the national patrimony. This is founded on the belief that we wish to create a positive and lasting post-mining legacy. Economic value creation applies above all to our investors who must be rewarded for their investment – a goal we prioritise as we position ourselves as the investment of choice in 2011 and beyond.

Retirement of Alan Wright as Chair

In November last year, I was privileged to take over the position of Chair from Alan Wright, who has served Gold Fields with distinction for over 40 years. Leaders like Alan have helped shape the mining industry, ensuring the sector remains a contributor to national wealth. Over the few months I have worked with him, he has been generous in sharing his enormous experience of the company. I am committed to doing Alan’s Gold Fields legacy justice.

I would also like to express my sincere appreciation to my fellow directors for the enthusiasm with which they welcomed me and their energetic and informed contributions to Board deliberations. In particular, this includes Chris von Christierson, who will be retiring at the AGM on 17 May 2011 after serving on the Board with dedication for 12 years.

Finally, I would like to thank our Chief Executive Officer, Nick Holland, his management team and all Gold Fields employees for their unwavering commitment to the company and its values.

Dr Mamphela Ramphele
Chair