Message from CEO
At Kinross, we believe the mining industry has a unique opportunity to make a positive and lasting difference in the lives of individuals, communities and over time, even countries.
When managed responsibly and respectfully, mining generates well-paid jobs in often remote locales, provides valuable skills training and educational opportunities, supports much-needed community services, bolsters the local tax base, and protects the environment while mitigating impacts.
Kinross’ long-term strength is underpinned by our ability to generate value and a sustainable return for our shareholders, employees and the host communities and countries where we operate. This is a responsibility that we, at Kinross, recognize and strive to instil throughout our operations and in every aspect of our business.
In September 2012, we launched the Kinross Way Forward, a company-wide realignment focused on financial discipline and profitable results, and grounded in the principles of responsible mining. The Way Forward has been instrumental to Kinross’ ability to weather the downturn in the gold price, which plunged 28% in 2013, and directly impacted our balance sheet, cost structure and share price. Difficult decisions were made to reduce costs and reinforce our balance sheet strength, but our commitment to health and safety, the environment, and community remains unchanged.
Kinross has had the lowest injury rates among our peers for the past two years and suffered zero fatalities in 2013. These results are the result of a company-wide effort to instil a safety-first culture at every level of the organization. Managers and supervisors focus on leading indicators and preventative practices, including regular meetings and training and inspections, to raise awareness and track progress. This across-the-board accountability has had a measurable impact on our safety record; at our Tasiast operations in Mauritania, for example, lost-time injuries have declined dramatically from 11 in 2011 to zero in 2012 and 2013.
Like other gold producers faced with increasing costs and a lower gold price, Kinross has had to retrench its workforce at some operations as well as at our head office. We suspended economically marginal operations at our La Coipa mine in Chile, and we also delayed a go-forward decision on the Tasiast mill expansion, which resulted in a rightsizing of the Tasiast workforce to reflect the current scale of operations. The Company was also unable to reach an acceptable agreement with the Government of Ecuador to develop its Fruta del Norte project, and wound down its activities in the country in 2013.
Although these decisions regrettably meant letting some of our workers go, we took steps to support them in line with the best practices of the International Finance Corporation guidelines. In the case of La Coipa, for example, we first looked to place workers in opportunities at our nearby Maricunga mine; for those employees we couldn’t place, we implemented an outplacement program, including publishing a compendium of the La Coipa workforce that was distributed to other local mining companies.
Despite the challenging market conditions, Kinross remains committed to engaging its employees and supporting skills development. One example is our Training Centre at the Kupol mine in the Far East of Russia – a region which traditionally suffers from heavy out-migration. The Centre has provided valuable skills training to nearly 2,000 employees since 2008 in a range of sought-after trades, from heavy equipment operator to electrician. The training has not only strengthened the skill set at our Russian operations, but provided local employees with professional advancement opportunities. See our case study on training at Kupol.
Partnering with Community
Community engagement is a cornerstone of responsible mining and key to the success of our day-to-day operations. Kinross builds its strong community relations based on respect, partnership, and two-way dialogue – principles and practices we continually measure, evaluate and build on through our Site Responsibility Plans (SRPs). In 2013, Kinross engaged more than 84,000 stakeholders throughout our nine operations and to date has not experienced major events or permitting delays as a result of stakeholder concerns.
Our operations in Paracatu, Brazil, which are located less than a kilometre from the city of 84,000, exemplify the central role community engagement plays in maintaining our licence to operate. Kinross works directly with local community members to monitor the impacts of its activities at the mine such as blasting, and instituted a 24-hour telephone hotline to respond quickly to community complaints. See our case study on community monitoring in Paracatu. Through our Integrar program, we work with the Paracatu community to support programs that stimulate capacity building, training, entrepreneurship, sustainability and income generation and jobs, reaching over 10,000 people in 2013. The state of Minas Gerais has recognized this program as one of the best initiatives supporting the Millennium Development Goals (MDGs).
Maintaining high environmental standards and minimizing operational impacts is integral to our licence to operate. We continue to make progress on our multi-year water strategy. In 2013, we also completed cyanide code certification for our Chirano operation in Ghana. There have also been challenges. In Chile, we successfully appealed the sanctioning process, which had resulted in a fine, for permitting non-compliances at our Maricunga operations. In June 2014, the fine was annulled by an environmental court and Chile's environmental agency was required to reconsider the matter. The non-compliances, which were self-reported, had no health or environmental impacts. Separately, Maricunga was fined approximately $40,000 in late 2013 in connection with the drainage of an Altiplano wetland area known as a bofedal. See the Key Stakeholder Issues table to read more.
At the same time, both our Fort Knox operations in Alaska and our operations in Paracatu, Brazil are testaments to the ability of long-life mines to sustainably co-exist with ecosystems and nearby populations. In early 2014, the mayor of Paracatu released the results of an independent study, which, similar to epidemiological studies commissioned by Kinross in 2012, found that naturally occurring arsenic in the ore at the mine does not pose an increased health risk to the population due to mining activities. Similarly, Fort Knox is successfully turning back the clock on a century of artisanal mining with the reclamation and ongoing monitoring of a wetlands area less than five kilometres downstream from its tailings dam which is now home to a vibrant fish hatchery as well as beavers, bald eagles and moose. See our case study on Fish Creek.
Building a Foundation for the Future
Mining has a unique opportunity to transform the mineral resources buried below ground into a foundational stepping stone for greater prosperity in the communities and host countries where we operate. Our economic benefit footprint, which Kinross began mapping in 2011, underscores the contributions made to the local tax base, job creation, in-country procurement and community investments. In 2013, 88% of Kinross revenue was spent in our host countries through wages, procurement and taxes; 97% of our workforce was hired from our host countries and 74% of our goods and services were sourced in-country.
This positive socio-economic impact is powerfully felt in the areas of influence around our mines. For example, a 2013 survey conducted near our Tasiast operations by Mauritanian sociologists found that the number of local households living below the poverty line had been cut by more than half since 2011 and the unemployment rate had declined from 47% to 24%. This progress can be partly attributed to Kinross’ partnership with the local Bedouin co-operative, whose 35 members have received literacy and business skills training, and have been contracted to provide Tasiast with maintenance and transportation services. See our case study on Tasiast.
We will continue to explore opportunities to improve how we partner, monitor, mitigate and measure our commitments and impacts.
Priorities include the launch of a rigorous fatality prevention plan as part of our safety-first agenda, the continued rollout of our water conservation strategy, and cyanide code certification for Tasiast, which will bring all of our cyanide operations under the International Cyanide Management Code. Our Global Energy Efficiency Program, a key part of our Kinross Way Forward initiative, will continue to focus on improving energy efficiency, and reducing costs and greenhouse gas emissions at our operations. Mid-2015 also marks the expected closure of our Kettle River-Buckhorn operations in Washington State. We are working closely with the community, employees and local agencies to develop a comprehensive transition plan that will facilitate a lasting positive legacy in the area.
For the first time this year, our Corporate Responsibility (CR) Report features limited independent assurance in five key areas: safety, energy, greenhouse gas emissions, water use and waste generation. By taking this extra step, our goal is to ensure a high level of transparency and provide stakeholders with greater confidence as they benchmark our performance.
None of these achievements would be possible without the hard work and dedication of our employees and the support of the communities and countries where we operate. I am proud of what we have accomplished and, on behalf of Kinross, I can say we are committed to being the best partner, community member and employer we can be.
J. Paul Rollinson
Chief Executive Officer
Kinross Gold Corporation