In prior reporting periods extending back over the past several years, Kinross has been expanding operations both organically (expansion of existing operations) and by acquisition and merger.
Over the past two years, however, Kinross has faced a number of workforce reductions at our operations in North America, South America, and Mauritania, as well as the suspension of activities at our development project at FDN and our La Coipa mine in 2013 (see Looking Back at Kinross in Ecuador for a discussion of the process we followed at FDN).
To manage these workforce reductions, Kinross has adopted an approach to retrenchment based on the International Finance Corporation (IFC) guidelines and, wherever possible, has strived to go beyond them. In all cases, our retrenchment is carried out in full compliance with the regulatory requirements of each jurisdiction.
Our La Coipa mine was a long-life mine in the Atacama region, with a strong mining tradition and respected presence. In October 2012, our La Coipa employees were informed about a possible suspension of operations in 2013 as the La Coipa ore body was economically marginal as it was approaching the end of its mine life. In April 2013, all employees received a formal notification of the decision to suspend operations in the second half of the year. While operations were originally expected to wind down in August 2013, they were extended until the end of October. Throughout this period, we worked collaboratively with the union to keep everyone informed of the process and to ensure as smooth a transition as possible for our employees. To support and assist our La Coipa employees through this period, we worked with our human resources and health and safety teams on programs to “be safe” during this period of anxiety and stress surrounding job loss. We undertook a proactive search for transfer opportunities to other Kinross sites through our Talent Management Review process and fostered awareness across Kinross about available candidates. As part of our outplacement plan, we offered skills development and training to support employees in their job search and hired a recruiter to look for vacant positions in the local mining market. Approximately 75 employees found other jobs within Kinross, most of them at the nearby Maricunga mine. At the end of the process, some La Coipa employees were able to find positions with other mining companies in the region. While exploration activities are underway at La Coipa Phase 7, the site remains in care and maintenance. The suspension of operations resulted in a reduction of 443 Kinross employees in Chile.
Kinross acquired Tasiast in 2010, and our initial plan was to expand production in a significant manner. To that end, we built new accommodation facilities and expanded the workforce from approximately 500 employees to almost 2,000 employees over the course of 2011-2012. As part of our company-wide capital reduction in 2013, we deferred any decision on a possible mill expansion at Tasiast to 2015 at the earliest. As a result, the Tasiast mine plan for the next few years calls for significantly less activity than would have occurred with the expansion and therefore we needed to align the size of our workforce to this smaller scale of operations. The reduction of 287 national and 50 expatriate positions at Tasiast was conducted with full transparency. In October 2013, Kinross announced that it planned to reduce its workforce in Mauritania by about 300 nationals 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 ex-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. In March 2014, we completed a feasibility study for a Tasiast expansion based on an optimal mill size of 38,000 tonnes per day, but a final construction decision will not be made until 2015.
Preparing for Closure at Kettle River-Buckhorn
As we approach the end of mine life for Kettle River-Buckhorn in 2015, we have taken steps to retain employees through to the wrap up of operations, while simultaneously preparing them for potential opportunities at Kinross. For example, we helped 17 interested and qualified support/administrative staff (janitors, clerical staff, and others) acquire the skills and training they needed to take on operational positions (operators, technicians and others). Not only does this enable us to retain these employees as we start to cut back on staffing levels, it gives them the skills and knowledge that they will be able to use in their next jobs. We have also brought in employees from other Kinross operations in Alaska and Nevada to talk about life in those communities, and we have started a rotation program for Kettle River-Buckhorn employees at these other mines. By working a rotation, employees gain the experience to transition from underground to surface mining and will have a better sense of what it is like to live in these communities. To support the transition for employees who wish to stay in the community, we have prepared a comprehensive social closure plan that includes state and local agencies as well as other major employers in the region and supports entrepreneurial initiatives that help employees to transition to jobs outside the mining sector.