By creating value for stakeholders we benefit as a business and grow together with the countries in which we operate. The industry also plays an important role in the creation of secondary businesses, the development of infrastructure and the transfer of technical skills.
We believe that less developed countries derive great benefit from the presence of responsible, world-class companies and we hope that our success will encourage other leading global companies to invest there.
This section gives a consolidated picture of the economic value contributed by Randgold in 2011, including taxes, duties, and dividends paid to governments and investment in countries through local community budgets, infrastructure and other benefits. It also sets out our current approach to engaging with local suppliers and partners for mutual economic benefit.
Our philosophy of partnership with the African countries in which we operate means that all our projects are geared towards mutual benefits. As well as driving profits for the company and tax revenues for our host countries, Randgold’s mining projects create a series of local economic benefits including employment, revenue for local businesses and funding for community development projects.
Our aim is to build capacity in the countries where we operate, and we hope we can play a part in kick-starting national economies using mineral wealth. We also understand the risks involved in African investments and all our projects are preceded by a qualitative assessment combining governance, geological prospectivity, commercial infrastructure, environmental and social as well as other potential country risks.
Where possible we work with governments and international agencies such as USAID to ensure that as much social tax proceeds as possible return to those local communities most affected by our mines.
Our procurement policy is to form mutually beneficial relationships with the best local suppliers. This enables us to build trust on the ground and also learn more about the business culture of the countries where we are operating.
The economic value statement and graph below show how our policy of creating value for all stakeholders has translated this year into more than US$167 million in taxation and dividend payments to host governments (attributable portion), and more than US$18.6 million in direct community investment (attributable portion).
The information in the economic value statement below has been extracted from the financial statements and underlying accounting records, except as stated. However, this non-GAAP information is intended to summarise the overall contribution of the group to its stakeholders and is not intended to replace or provide an alternative to the IFRS financial statements.
In Mali, where our oldest mines exist, we have now contributed more than US$1 billion dollars to the Treasury through taxes and other payments. In the case of the Morila mine, the State of Mali has received almost twice as much as have either of the joint
Wherever possible and feasible, we procure goods and services from local suppliers. By doing so, Randgold stimulates the local economy. Our main supplier of hydrocarbons in Mali and Côte d’Ivoire is Ben & Co Holdings, which has become one of the biggest fuel delivery businesses in the region. In 2011, several small and medium size steel and tank manufacturers were identified within Côte d’Ivoire and use of these for sourcing construction materials is actively pursued. During 2011, Tongon spent US$52.4 million or one out of each six dollars of its total costs on local suppliers of goods and services. Where local suppliers are not able to meet our needs we encourage international service providers to partner with leading African companies and pass on their expertise. So we invited multinational supply chain managers to work with our logistics partners Multilog (formerly Afrilog) to train their employees
in stock control mechanisms.
DEVELOPING NEW INFRASTRUCTURE
As a gold mining company, we are frequently the major catalysts behind some vital infrastructure projects in the countries where we operate. These include power stations, roads, electrical lines, water and sanitation. Improved infrastructure provides the necessary foundation to supply our mines as well as driving economic growth for local communities.
Our strategy is to leverage the sustainable development benefits of these investments as much as possible. For example, a key focus for national energy policy in the DRC is the construction of hydroelectric power stations throughout the country. These will increase access to sources of energy after years of armed conflict and civil
unrest that made such access impossible.
We are now investing US$165 million to develop the 20MW Nzoro hydropower station adjacent to the Kibali River and other new power stations in the wider region. Taken together these developments will provide both a sustainable source of power for
our mining activities as well as helping local agencies to provide a safe and reliable electricity supply for the local community.
FORGING A PACT WITH COMMUNITIES
Our mines cannot operate without the goodwill of the communities in which they are based. Given the frequent lack of development and the complex social and political environments in which we operate, community relations are probably the single biggest risk factor we face. We strive to both minimise negative impacts on communities and to make the most of the economic and social benefits that our presence brings.
Our policy is to maximise local economic development by empowering local communities and to act with the highest ethical standards when managing issues such as grievances or resettlement requirements.
We work with communities by supporting and participating in the development of elected local community development committees. We provide the funding and resourcing for these committees which allocate money to community development projects within a strategic framework set by our ‘sustainable development filter’
(see details on page 79). Committee budgets are approved at mining company board level and these funds are entirely separate from payments to governments, such as the ‘Patent’ social tax, resettlement related compensation or medical care through our
clinics. They are also complemented by charity fundraising events initiated by our employees and joint ventures with charitable bodies such as the medical charities Doc to Dock and CURE.
ARTISANAL AND SMALL-SCALE MINING
As a mining company, we are sensitive to the potential for community issues to appear due to tension between our operations and artisanal and small-scale miners (ASM). To mitigate the business risks from alienating the ASM community the company invests in creating alternative available livelihood activities such as agriculture. We also seek to build effective co-habitation partnerships with legal ASMs based on work close to, but not on, our permits. This has been particularly relevant this year to the Gounkoto and Kibali areas. Randgold always tries to find effective ways to manage the artisanal mining issue in compliance with national laws and best
practice guidelines such as the IFC Guidelines.
Our total spend on community development and related projects more than tripled this year to a total of US$18.6 million (attributable portion). This came from our community development budgets, advantageous infrastructural development for the
community and philanthropy. Some of the many individual projects supported by these funds in 2011 include the construction of a school in the Massawa area of Senegal, the creation of a market gardening programme for women in Côte d’Ivoire
and the drilling of water boreholes for a number of organisations in Mali. At more mature mines, such as Morila, emphasis has shifted towards local economic development schemes such as agriculture projects.
In Sitikily, near the Loulo mine, we have also funded an initiative with USAID that enables one of their governance committees to work with the local mayor to ensure that as much as possible of the patent tax paid by the mine is returned to the local community.
Ongoing work at all our mines includes analysis on the feasibility of agribusiness. In particular we encourage each mine to form alliances with agricultural entrepreneurs and businesses to train local farmers to produce agricultural products. The local farmers then sell their produce to a central co-operative set-up on or close to our
mines’ locations. When set up the owners of the co-operative include the mine, the joint venture partners from formal agribusinesses and entrepreneurs. The farmers, who supply the agribusiness with produce – such as honey, chicken, eggs and vegetables – will inherit the mining company’s share of the co-operative as part of our closure plan. The agribusiness also has the aim of increasing non-mine employment
opportunities during the operation of the mine.
Randgold has a grievance procedure in place that all members of the local community can access if they believe that they have been unfairly treated or discriminated against. The procedure has been set up using guidance laid out by the IFC Performance Standards and the Equator Principles. This process aims to maintain a
peaceful social atmosphere in the case of a non-work related disagreement. A total of 395 grievances were registered at our five major sites through our grievance mechanism in 2011 (Refer to the table below). In total, 97% of these grievances have now been resolved with the remaining 11 under review at the time of writing.
Large areas of land are required to manage a successful gold mine and that unfortunately can mean some people must be displaced. At Randgold, we are committed to minimising involuntary resettlement and, where it does need to take place, to ensuring resettled people have their standard of living improved, or at least
restored. We conduct our resettlement process in full consultation with the affected parties and in accordance with legislative requirements. We are guided by the IFC’s Performance Standards in regards to land and resettlement.
The focus for our resettlement process is the ‘affected person’. Transparent and two-way consultation is fundamental to our resettlement process and a public participation process (PPP) is the starting point for all our resettlement activity. PPPs use the locally elected community committees as a key mechanism for discussing options, alongside radio broadcasts, meetings with tribal and religious leaders and open forums attended by the CEO. The results of the PPP are incorporated in a RAP which is also put forward for further consultation.
Our policies are designed to maintain community structures wherever possible and ensure that we compensate fairly in mitigation for any adverse effects on the community where they cannot be avoided. On the ground in many of the places we work financial compensation is not considered best practice. In the vast majority of cases we have a policy of a ‘like for like’ asset replacement.
In 2011, we spent an attributable US$18 million (US$41 million on a 100% basis) on RAP implementation. In all cases those people who were relocated moved to an improved socio-economic situation, while maintaining their neighbourhood relationships in their new homes and farms.
The Tongon resettlement process began in 2008 and, despite the complexities caused by the ongoing legacy of the recent civil war, the successful resettlement of more than 400 people, their extended families and agricultural land was completed in 2011. Relocations were focused around new hamlets located where good farmland was available.
The Kibali RAP is the company’s biggest to date involving up to 17 000 people from more than 3 600 households. The two largest villages have now been successfully relocated. June 2011 saw the official opening of the new Kokiza resettlement, which will include over 4 000 brick houses, 20 schools, police stations, clinics, new gardens and several churches including a large Roman Catholic Church.
At Gounkoto, we have completed the resettlement of all affected households and all affected farmers have been satisfactorily compensated. This includes the resettlement of Faraba village (eight households) and the resettlement of the chief of Sansamba
and his extended family to Sakola, with their full co-operation.
If a mining project infringes on people’s human rights it can face real financial, reputational and in some cases legal risks. Our overall objective is to uphold fundamental human rights wherever we do business. Operating with respect for human rights is a particularly relevant consideration in post-conflict zones, such as the DRC and Côte d’Ivoire, where there is a greater exposure to human rights risks.
We recognise our responsibility to respect human rights by essentially doing ‘no harm’ to the individuals and groups within the sphere of impact of our mines. We do not see this as a passive responsibility, we recognise that it requires us to take positive
steps to ensure our projects do not infringe on the enjoyment of rights in our areas of impact.
We identify any potential human rights issues at an early stage as part of the ESIA that we carry out on all projects. As projects develop we then put in place management structures to mitigate those risks.
It is Randgold’s policy not to arm any security forces on our mines. Instead, we agree legally binding contracts with the relevant local authorities that take into account the Universal Declaration of Human Rights and aim to ensure safety and security for any
military or policing matters. We also include a human rights clause in our agreements with all suppliers. This binds them to comply with Randgold’s ethics and our ‘zero tolerance’ anti-bribery policy. It also puts a legal duty on the supplier to ensure there is no child or forced labour within the supply chain.
However, we recognise that in areas of weak governance, legal compliance based approaches cannot always guarantee that companies are fulfilling their responsibility to respect the full framework of fundamental rights. We therefore also provide
relevant staff, including security personnel, with appropriate cultural and human rights training and guidance and where possible invite relevant agencies of the United Nations to conduct training.
We also work with partners in both the local and international community to raise awareness and education levels concerning fundamental human rights.
Although our mines are located in relatively stable locations within each country, the fundamental protection of human rights for our employees and the communities in which we operate remains a challenge. The DRC remains an active conflict zone where the Lord’s Resistance Army and other militia operate and we have therefore fixed detailed and binding human rights agreements with the regional governor in the Haute Orientele area where the project is situated.
This year security guards at the Kibali gold project as well as the Tongon, Morila and Loulo mines received training from the human rights and child protection officers of either MONUC, the United Nations Organization Mission in the DRC or ONUCI, the UN
operation in Côte d’Ivoire.
Plans have been prepared for the remainder of the security personnel in the group to receive human rights training in 2012. From 2012, human rights appreciation training will be incorporated into induction training for all employees.
We are proud of the real partnerships we have built up with all our local communities, but we understand that our license to operate is not indefinite. It is important that we are constantly and consistently active on the ground to ensure that we incorporate
community feedback and expectations into both our business planning and day-to-day activities at our mines. This involves resolving all outstanding grievances alongside any future ones.
In the coming year, we face particular challenges with two mines at very different stages of their life. As construction at the Kibali site continues, the increased building activity makes ongoing communication with all local stakeholders vital. At Morila, although we have extended its life beyond its original closure date, the mine is winding down production and our detailed closure plan, including a strategy for agribusiness, needs to be implemented to ensure we reduce the impact of mine closure on the local economy.
We also have planned steps to improve our reporting on issues such as human rights and resettlement. In particular, the management of human rights is an issue that we expect to attract increasing attention. Our policies and operational management of this issue are currently site specific and while this has been very effective on the ground, we recognise that we need to bolster these efforts. In 2012, we will undertake work to establish a more structured company wide human rights policy and control system. This will include consideration of extending the formal embedding of the Voluntary Principles on Security and Human Rights into our security management practices in West Africa and also the consideration of the guiding principles on business and human rights formulated by the UN Secretary General’s Special Representative on Business and Human Rights, Professor John Ruggie.