Key stakeholder issues

In 2012 and 2013, the key issues raised by stakeholders focused on indigenous peoples’ land rights, operational impacts, and educational and skills development, capacity building and economic opportunities, and availability of services.

The table below outlines the top concerns by site and the ways in which we responded.

Key Stakeholders: Investors

IssueResponse
Securities Class Action Lawsuits In February and March 2012, lawsuits seeking class action status were filed in U.S. District Court in New York and in the Province of Ontario, respectively, claiming that Kinross made actionable misrepresentations, and failed to make timely disclosure of information relating to the Company’s Tasiast mine in advance of a Company news release on January 16, 2012. It is not uncommon for class action litigation of this nature to be brought against a company following a period of volatility in its share price, which in this case occurred following the Company’s January 16, 2012 news release. Kinross believes that these allegations are without merit, and will vigorously oppose and defend against these lawsuits and any further litigation that may result. For a more detailed discussion of these matters, please refer to the Company’s 2013 Annual Information Form and 2013 Form 40-F dated March 31, 2014, copies of which are available at http://www.kinross.com/investor-centre/financials/2013.aspx.

Paracatu, Brazil

Key Stakeholders: Neighbouring communities, including the Quilombola community

IssueResponse
Historic Quilombola land claim and construction of a new tailings dam As descendants of slaves with a distinct culture and traditions, Quilombolas are given special recognition and protection under Brazilian law. Legislation in Brazil requires the government to grant title to the Quilombola people who either still occupy their traditional lands or who are found, through a process administered by the Instituto Nacional de Colonizacao e Reforma Agraria (INCRA), to have rights to certain lands. An INCRA report issued in 2009 concluded that local Quilombola communities have historic rights to land in the Paracatu area, a portion of which would be affected by the new Eustaquio tailings dam. No Quilombolas are living in the area affected by the new dam. Several iterations of compensation arrangements have been considered as a condition of the Operating Licence for the new dam, approved in November 2011, the Company was required to develop a social investment plan for the affected communities. The proposed social investment plan was presented by the Company in 2012, and is now under consideration by the communities. The proposal and land compensation arrangements are being discussed as part of a conciliation process promoted by the General Public Attorneys. A proposed donation of land from Kinross to one of the communities is also under evaluation.
Trespassers at Paracatu

Since establishment of modern mining operations at Paracatu, there have been recurring incidents involving trespassers attempting to steal gold from the flotation tails. As reported previously, these incidents have led to enhanced surveillance and security measures by Kinross’ security team. Our approach has been to improve fencing, lighting, patrols, and other measures to limit access to the target areas, and to co-operate closely with local law enforcement officials.

In late 2013 and early 2014, the situation escalated and increasing numbers of people were entering the property illegally. Kinross’ security team continues to take steps to enhance the physical barriers around the area and has increased the level of surveillance.

Kinross supports the Voluntary Principles on Security and Human Rights and has implemented an extensive Human Rights Adherence and Verification Program. As part of this program, staff receive training in human rights annually. All actions taken by security personnel at Paracatu, including working with the military police in Brazil, have been conducted in accordance with the Kinross Global Security Standardization Program.

Dust, noise, and vibration at Paracatu Kinross continues to address neighbourhood concerns regarding dust, noise and vibration from pit operations in Paracatu. Since 2011, there has been an overall decrease in the number of complaints due to an increase in the number of controls, quick response time when a complaint arises, the construction of natural noise barriers, involvement of the community monitors in the monitoring process, and the use of sophisticated technologies for monitoring controls and operational changes. See our case study entitled Community Monitoring Program Builds Trust in Paracatu for insight into those efforts.

Maricunga, Chile

Key Stakeholders: Rural and urban indigenous Colla community, neighbouring community of Tierra Amarilla

IssueResponse
Historical claims from the Rio Jorquera Colla Community In 2011, the Rio Jorquera Colla community and Kinross commissioned a third-party study related to the community’s concerns about the use of and impacts to indigenous lands along road access to the Maricunga Mine. After several rounds of consultation, in December 2013, we reached an agreement with the community which resolved the community’s concerns relating to key issues over the life of the Maricunga mine, including C-611 road access, power lines, the Rancho del Gallo camp bypass road, and a separate Annual Co-operation Agreement encompassing a variety of sustainable development initiatives and benefits with a strong focus on agriculture and water management. Approval from the government’s National Corporation of Indigenous Development (CONADI) is pending. To learn more about our work with the Colla, see Working with Indigenous Peoples.
Notice of Violation On September 6, 2013, the Superintendencia del Medio Ambiente (SMA) posted a Notice of Violation (NOV) related to Kinross’ Maricunga operation. The NOV and associated fine of $4.6 million were related to discrepancies between decade-old permits and current operations that Kinross self-reported to the authorities in 2012 as the result of an internal compliance review. Kinross has co-operated with the agencies to provide additional information and to develop a compliance plan. No environmental damages or health impacts have been identified relating to these discrepancies. Kinross appealed the SMA's sanctioning process to Chile's Second Environmental Court, which annulled the fine in June 2014. As part of the Court's ruling, the SMA is required to consider additional information and evidence submitted by Maricunga in issuing its final decision.
Pantanillo Bofedal

As reported in our previous CR Report, a wetland (bofedal) located near the Pantanillo groundwater extraction and supply area has experienced a reduction in surface and groundwater levels. Attempts to restore the wetland by surface irrigation were unsuccessful. A more robust action plan to rehabilitate the bofedal was developed and presented to the applicable environmental agency (the Servicio de Evaluacion Ambiental) in 2012. In late 2013, Kinross was fined approximately $40,000 in connection with this matter. Additionally, Kinross was required to file a more detailed description of its rehabilitation plan and is awaiting approval of the updated plan. The file may be forwarded to the National Council for the Defense of the State for further action.

For additional information, see Addressing Wetland Recovery at Maricunga.

Kupol and Dvoinoye

Key Stakeholders: Chukotka communities, indigenous peoples, governments

IssueResponse
Community involvement in environmental monitoring At a regular community consultation meeting in April 2013, community representatives raised several questions about the Kupol mine and the environment. To address these questions about environmental performance and controls at the mine, six indigenous community representatives, along with a journalist were invited to tour the Kupol operation. The tour was held in October and provided visiting representatives with an opportunity to meet with Kupol site engineers and learn about the mining process. The information gathered was shared with interested environmental groups following the site visit. A second session is planned for August 2014 and will be expanded to include another group of representatives from three districts in the area of the Kupol mine.

Kettle River-Buckhorn

Key Stakeholders: Communities, governments, businesses, special interest groups, employees

IssueResponse
Water quality

Water quality remains an ongoing and challenging area of focus for regulators, community stakeholders and for the Kettle River-Buckhorn mine.

Achieving compliance at the mine requires a dedicated effort to maintain high water quality standards in a natural environment characterized by complex hydrology and an extensive number of regulatory requirements. To learn more about water quality issues encountered during the reporting period and our efforts to address these, please read Maintaining Water Quality at Kettle River-Buckhorn in the Environment section of this report.

Planning for closure With mine closure anticipated in mid-2015, Kinross is undertaking an assessment of the implications for the community in order to have an informed dialogue with stakeholders and plan for the transition to post mining. To help inform the process, we have drawn upon best practices in closure from other Kinross sites, and a social and economic impact analysis is underway. We are also partnering with local and state economic development agencies to help the community with this transition. Informal community consultations were initiated in 2013 and a structured engagement process was begun in 2014.

Chirano, Ghana

Key Stakeholders: Communities, governments

IssueResponse
Agricultural compensation From 2003 to 2005, Chirano Gold Mining Company provided monetary compensation to farmers operating in areas that would be needed for construction of the mining and processing facilities. Compensation payments were higher than standard crop evaluation methods, and were accepted by the affected farmers. Since that time, a group of farmers has challenged the level of compensation received. In 2012, the Land Valuation Board presented its report findings to the farmers and to the mine. Chirano provided its records to the Board to address inconsistencies. While the 2012 report awaits a decision from the responsible Minister, the Chirano mine has placed 50% of the compensation amount recommended by the Land Valuation Board into escrow pending a formal response from the Minister.
Local employment and economic benefits Local employment is a priority for the Chirano mine. In 2013, Chirano moved to a self-perform model for the open pit operations. This created new opportunities for local employment, as we trained and placed 80 locals as truck drivers. This year, as we move to self-perform at the site’s underground operations, we do not expect to create significant opportunities for local skills. Thus, as part of Chirano’s CR strategy, we are working with the community and local suppliers to explore opportunities for income generation through procurement rather than local employment.

Tasiast, Mauritania

Key Stakeholders: Communities, governments, local chiefs and elected authorities

IssueResponse
Workforce reductions and local unemployment In October 2013, Kinross announced that it planned to reduce its workforce in Mauritania by about 300 nationals and 50 expats, and began formal consultation with the government and unions in adherence with Mauritanian law. As a result of the consultations, the announced layoffs did not occur until December 2013. Although the redundancies were managed in compliance with Mauritanian law, a small group of the dismissed workers began a protest against the layoffs after the fact. In May 2014, Kinross and the former employees, as represented by the workers delegates, agreed to a negotiated settlement of all outstanding issues related to the layoffs. The terms of the agreement and the benefits awarded thereunder were consistent with a recent precedent set by another mining company in Mauritania. A tripartite government technical commission made up of representatives of the Ministries of Mines, Labour and the Ministry of Employment helped facilitate the negotiations and endorsed the settlement agreement. While the loss of these positions is regrettable, providing local employment to Mauritanians with the proper experience and qualifications remains a priority. At the end of 2013, we continued to provide employment to over 1,400 people at Tasiast, 88.5% of whom are Mauritanian. Tasiast’s contractors employed over 2,300 people, of which almost 90% were Mauritanian nationals. Tasiast is committed to using national workers wherever possible and has invested heavily in training and skill development programs for the local workforce, and has spent $25 million on this program to train workers and create apprenticeships over the past three years. The Company has also filed a detailed “Mauritanization Plan” with the Mauritanian government showing how it intends to progressively increase the number of locals employed at the operation.
Generating economic benefits Generating economic benefits continues to be a priority for all stakeholders at Tasiast. In addition to local employment, we are working with local NGOs to help create economic opportunities through local procurement/shared values projects, such as the Tasiast Development Co-operative, to enable skill development among local people, generate economic value and increase the percentage of local goods and services purchased by the mine site.