Supply Chain Stewardship
Each year, Newmont procures around $3.5 billion in goods and services from more than 9,000 suppliers worldwide, including thousands of local suppliers based near our projects and operations. Understanding the risks present in our supply chain and working with suppliers that share our values and goals are critical to our operations. Sourcing products and services from suppliers that are irresponsible, contribute to conflict or violate human rights is contrary to our purpose, can be detrimental to our performance and cause irreparable harm to our reputation and relationships with stakeholders.
Sourcing and procurement
Our policies and standards require us to work with our suppliers in a manner that promotes a responsible, sustainable supply chain. We are committed to fair competition and continuously improving costs and efficiencies while leading in safety, operational, technical, social and environmental practices.
To effectively identify and manage the multitude of risks and opportunities throughout our supply chain, we have started work on a global Supplier Risk Management program. Supported by standards, guidelines and procedures, the framework applies greater consistency in assessing all our suppliers against the significant risks facing our business.
In accordance with our Human Rights Standard, sites include appropriate human rights clauses in contracts with all new suppliers as well as those that are up for renewal. In 2016, we expanded our contract terms to align more with our Human Rights Standard, and also implemented a Supplier Code of Conduct that commits our suppliers to ethical, safe, and socially and environmentally responsible conduct and to managing their own supply chain accordingly. New suppliers and those with contracts up for renewal must read and acknowledge our Supplier Code of Conduct.
Our current pre-qualification process screens new suppliers against anti-corruption and sanctioned third parties, environmental, labor practices, human rights and impacts to society criteria, which ensures we give equal weight to non-technical aspects when awarding contracts. Once implemented, our Supplier Risk Management program will greatly enhance our qualification process as well as our process to screen, categorize and analyze each potential supplier against all risks. Risk action plans and performance monitoring will help mitigate risks for suppliers once on board.
Smelting and refining
We produce minerals essential to our global economy. Gold production comprises more than 96 percent of our total sales with the remainder from copper.
We transport our gold, in the form of doré, to refineries certified by the London Bullion Market Association (LBMA). Swiss refinery Valcambi refines the majority of gold produced at our North America, Peru and Ghana operations. The Perth Mint in Australia refines gold produced at our Australian mines, Swiss refinery Argo Heraeus refines the doré produced at our Merian mine in Suriname, and Asahi Holdings refines a small volume of our doré produced in Peru.
All four refineries comply with the LBMA Responsible Gold Guidance to ensure the entire chain of custody is responsible and does not source gold from areas and operations that finance conflict or degrade the environment. For more information about the refineries’ commitment to a responsible supply chain, please visit the Valcambi, Perth Mint, Argor-Heraeus and Asahi Holdings websites.
Our copper, in the form of concentrate and cathode, is sold to smelters and manufacturers for further treatment. All copper sales contracts include requirements to comply with permits, approvals and other laws, agree to anti-bribery measures, and – when appropriate – acknowledge our Conflict-Free Gold Standard. Most of our copper concentrate is sold directly to smelters with which we have long-term relationships. However, when we produce more concentrate than anticipated, sales will occasionally be made to independent trading companies. In these instances, we may not know in advance where the product is being delivered, but we conduct a vetting process to understand to the greatest extent possible where the trader will deliver our product.
Through industry associations such as the World Gold Council (WGC) and the International Council on Mining and Metals (ICMM), we aim to better understand the potential impacts of our products, their uses and value streams.
More information about our products is included in our 2016 10-K report.
During the year, we implemented a Supplier Code of Conduct and launched a formal global Supplier Risk Management program, which is scheduled to be completed in 2017 and rolled out in 2018.
Newmont considered selecting or contracting with a total of 461 new suppliers that were screened against anti-corruption and sanctioned third parties in 2016. The percentage of those screened against other key criteria were:
- 98 percent using environmental criteria
- 95 percent using labor practices criteria
- 36 percent using human rights criteria
- 98 percent using criteria for impacts on society
Data from our KCGM operation in Australia and Cripple Creek & Victor (CC&V) mine in Colorado are not included in these figures. At KCGM, we are implementing programs that should facilitate our ability to track this data going forward. At CC&V, which was acquired by Newmont in mid-2015, the migration of its contractor database into Newmont’s system in 2016 resulted in all of CC&V’s suppliers appearing as new suppliers in 2016, preventing us from accurately reporting the site’s 2016 data. We will track the above data for CC&V beginning in 2017.
Our global supplier spend in 2016 totaled around $3.5 billion. Of this amount, an estimated 70 percent was competitively bid, resulting in approximately 6,000 contracts.
Work will continue in 2017 to improve our ability to manage the risks and opportunities present in our supply chain. Key activities include:
- Applying our Supplier Code of Conduct to all new contracts and those up for renewal;
- Completing the first phase of our Supplier Risk Management program including the establishment of a steering committee, detailed qualification criteria and content, an audit program and a revised global Procurement Standard;
- Implementing a formal Supplier Relationship Management program to ensure we engage with critical suppliers in the planning phase and throughout the entire business relationship until the contract is closed out. This program aims to establish performance metrics and review cycles and also will help us develop collaborative initiatives in key sustainability areas such as energy efficiency, local employment and local supplier development; and
- Expanding our skills development training program in Ghana to all our regions and to other personnel outside the supply chain function.