Chief Executive’s Message
Our commitment to operating a sustainable business makes a positive difference in the lives of employees, business partners and community members around the world. Leading sustainability performance also underpins our ability to deliver consistent and superior business results, pursue profitable growth, and attract and retain talented people. I’m pleased to report on our contributions to sustainable development in 2016, and where we have room for improvement in achieving our purpose, which is to create value and improve lives through sustainable and responsible mining.
In 2016, our team maintained industry leading injury rates, lowered serious injuries by 75 percent, and worked for the entire year without a fatality. Despite this strong performance, we have more to do to create a sustainable safety culture. Work to verify the controls we have in place to minimize safety risks began in 2016 and will continue in 2017. We will also maintain efforts to reduce workplace health exposures through engineering controls like cleaner burning engines and better ventilation.
We generated cash from continuing operations of $1.9 billion in 2016 and more than doubled free cash flow to $784 million on the back of ongoing cost and productivity improvements. These profits were used to repay debt, return capital to investors and invest in our best growth prospects. We self-funded construction of two new mines – Merian in Suriname and Long Canyon in the United States – creating a foothold in prospective new gold districts. Both projects were built safely and benefited from strong stakeholder engagement and support. We also advanced profitable expansions in the United States and Australia and added four million ounces of gold to our reserve base through our exploration program. Failure to secure permits in a timely manner, however, delayed expansion projects in Ghana until the first half of 2017.
Results of an employee engagement survey helped us better understand what makes Newmont a good place to work and where we have room for improvement. Employee engagement improved significantly since the last survey was fielded in 2014. The majority believe that Newmont demonstrates its commitment to sustainability (90 percent) and to promoting diversity in the workforce (70 percent), but males rated the Company’s commitment to diversity higher than females. We are working to address that disparity by creating a more inclusive culture, and improving female and national representation in our leadership ranks.
Newmont was named the mining sector leader by the Dow Jones Sustainability Index for the second consecutive year in 2016. We were also ranked as the top mining company in the S&P 500 for environmental, social and governance (ESG) performance – and in the top 10 overall – according to Bloomberg’s ESG disclosure score. The score is intended to measure a company’s capacity to anticipate and manage risk, and help investors weigh this competency on a consistent basis.
Our teams met public targets to improve complaint resolution, concurrent reclamation planning, and local procurement, but fell short of targets to improve local hiring at one operation and complete water management action plans at two others. Sustainability targets were also integrated into Newmont’s compensation program in 2016 to heighten awareness of and accountability for social and environmental performance.
Other highlights for the year include:
- Our Ghana team being recognized by the U.S. State Department for their efforts to train security forces to protect operations and communities in a way that upholds human rights
- Partnering with Nevada state and U.S. federal officials to establish a historic sagebrush ecosystem conservation agreement
- Executing plans to create a more inclusive workforce and recruit, retain and engage indigenous employees in Australia
- Achieving a perfect score of 100 on the United States’ Corporate Equality Index (CEI), and a designation of Best Place to Work for LGBT Equality
- Joining forces with other business leaders to achieve gender equality in U.S. company leadership ranks by 2030 through the Paradigm for Parity
- Reaching a landmark cooperation agreement with the Pamaka people in Suriname and establishing a community development fund that is already being used to dig wells and upgrade roads
Most of these examples demonstrate the importance we place on working collaboratively to improve our sustainability performance and standards. We continue to report in line with the United Nations Guiding Principles on Business and Human Rights’ Reporting Framework. Newmont is also an active participant in the International Council on Mining and Metals Sustainable Development Framework, the United Nations Global Compact, the Voluntary Principles on Security and Human Rights, the Partnering Against Corruption Initiative, and the Extractive Industries Transparency Initiative among other globally recognized standards.
We delivered strong sustainability performance in 2016, but our work to drive further improvements in alignment with society’s long-term challenges and expectations never ends. Our priorities for 2017 include eliminating fatalities; capturing the cost of carbon in our investment system; securing the permits we need to grow our business in Ghana; and resolving a long-standing land dispute in Peru.
Please read our sustainability report for more detail on our performance and improvement targets. On behalf of the entire Newmont team, I thank you for your interest and welcome your feedback.
Gary J. Goldberg
President and Chief Executive Officer