Mining is a long-term business and our ability to create value – which we’ve done for nearly a century and plan to do far into the future – rests on our ability to operate responsibly and sustainably. That means protecting the health and safety of our people, minimizing our environmental impact throughout the mine lifecycle, respecting human rights, and sharing the wealth we generate fairly, among other performance aspects.
Newmont delivered strong sustainability performance in 2017, but this was overshadowed by a tragic construction accident at our Ahafo Mill Expansion project in April 2018 that resulted in six fatalities. In the early days following the accident, we are focused on supporting the people who lost loved ones in the accident and cooperating with authorities to investigate its causes. This loss has had a profound impact on families, friends, colleagues and the entire Newmont family. It is with great humility and resolve that we renew our commitment to making sure our people go home safe every day.
Turning to our contributions to sustainable development last year, and where we have room for improvement:
In 2017, we installed fatigue monitors in our fleet of 270 haul trucks, which, along with training, helped keep our drivers and roads safer. We also focused on testing the controls we have in place to prevent accidents and learning from our mistakes. These efforts form the foundation of our Fatality Risk Management program, which continues to mature. In 2018, we will hold ourselves accountable for classifying and reporting injuries more consistently, in keeping with the highest industry standards.
We also measure sustainability in terms of delivering healthy business results – now and into the future. In 2017, we improved adjusted EBITDA by 12 percent to $2.7 billion and free cash flow by 88 percent to $1.5 billion on the back of lower-cost production from newer mines and ongoing productivity improvements across the portfolio. This performance gave us the means to fund five new projects, raise our dividend by 87 percent, and increase our investment in exploration – an investment that paid off as we added 6.4 million ounces of gold to our Reserve base.
We also commissioned economic impact assessments in Ghana and Australia in 2017 to quantify our contributions in more human terms, including jobs created and taxes and royalties paid. While more than 40 percent of our Ghanaian workforce is from the surrounding community, local youth groups staged demonstrations at our Ahafo operation in 2017 calling for more jobs. We are engaging with these groups and local government to resolve the issue, and in the meantime, have expanded enrollment in apprenticeships and other skills development programs to help create opportunities against a backdrop of higher unemployment rates.
Sustainability is not a static concept – rather, it is an evolving product of engagement and consensus. The role business plays in advancing human rights has become clearer over the last few years, and we continue to advance our implementation of the United Nations Guiding Principles on Business and Human Rights Reporting Framework. We are putting the principles and the reporting framework into action by conducting human rights assessments in impacted communities; evaluating vendors’ practices and values in our supply chain; improving diversity and inclusion in our workforce; and reporting our results. While we succeeded in increasing female and national representation in our leadership ranks in 2017, we are still in the early stages of our journey to achieve parity.
One product of successful engagement in 2017 was re-establishing relations with regional government leaders in Peru. We now meet regularly to address social and environmental issues. This relationship also served as the foundation for a coordinated relief effort after severe flooding damaged thousands of homes and hundreds of miles of roadways, affecting more than 450,000 Peruvians. Our efforts to engage the Chaupe and Pajares families to resolve land ownership disputes in Peru have met with less success to date, but we remain committed to dialogue and finding a mutually acceptable solution.
In Suriname, we asked experts to assess our efforts to uphold principles of free, prior and informed consent in developing Merian. The resulting report recognized our efforts to engage with the Pamaka community and provide for long-term value creation through employment, training and our community development foundation. It also identified areas for improvement in how we understand land tenure, livelihoods and social and cultural norms. We applied what we learned to another development in Suriname, and were honored to secure free, prior and informed consent from the Ndyuka people to proceed with our Amazonia exploration program.
Another area of focus in 2017 was raising our environmental standards. We continued to implement our energy and climate change strategy, and reached a decision to invest in our Tanami Power project, which will reduce costs and carbon emissions by 20 percent and strengthen supply reliability. We also improved our approach to responsible tailings and heap leach management, and how we integrate business and closure planning.
While Newmont’s team has been recognized for leading environmental management and social responsibility programs in Ghana, the Company’s high profile has also attracted negative attention. In response to allegations that our operations pose health risks to surrounding communities – and despite a lack of sound science to support them – the region established community and regulatory monitoring programs to foster transparency and independent verification of its environmental performance.
We also established a robust set of public targets for 2017 and met the vast majority of them – including those related to completing human rights risk assessments; eliminating fatalities; increasing female representation; improving local employment and procurement; meeting community commitments; lowering fresh water use; and completing planned reclamation activities. We are also on track to meet targets to lower our greenhouse gas emissions intensity. We fell short of our target to lower injury rates by 10 percent. Finally, we were able to resolve 100 percent of community complaints and grievances within 30 days at nearly all of our sites, but achieved 97 percent at our Yanacocha operations.
It was an honor to be recognized as the top mining company in the Dow Jones Sustainability Index for the third consecutive year in 2017, and to be named to the Wall Street Journal’s 250 best managed companies. Newmont was also ranked as one of the world’s most admired companies by Fortune magazine based on the quality of our management team and our strong performance in the areas of social responsibility, long-term investment, people management and innovation.
This recognition speaks to the caliber of our team, as well as our success in executing our strategy and living our values. But it does not relieve us of an ongoing responsibility to understand the needs and expectations of our stakeholders and to bring our resources and relationships to bear in resolving issues of mutual concern. We continue to report in line with the United Nations Guiding Principles on Business and Human Rights Reporting Framework, and to actively participate 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 2017, but our work to drive further improvements in alignment with society’s long-term challenges and expectations never ends. Please read our sustainability report for more detail on our past performance and future 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