Fulfilling corporate social responsibility, Newmont?s example

 

Newmont Ghana Gold Limited is not yet the largest gold producer in the country, although when it opens a second mine at Akyem in the Eastern Region to join its 500,000 ounce a year production from its Ahafo mine in the Brong Ahafo Region, it will be in contention for that position.? But with regards to Corporate Social Responsibility, Newmont is one of the most committed corporations in the country not just within the mining industry, but among all of corporate Ghana.

Newmont?s outstanding attitude to corporate social responsibility takes form in arguably the most innovative and effective structures for this purpose seen so far in corporate Ghana.? Most importantly, not only does this structure ensure huge, impactful interventions by Newmont on its host communities but that these are carried out in such a sustainable way that the company?s fully-fledged CSR programmes will continue long after actual mining operations cease at Ahafo.

 

Newmont?s Ahafo Development Foundation

Newmont?s CSR programmes are built on a commitment, that the company made in December 2005 that US$1 per ounce of gold sold and 1% of net profit from the Ahafo Mine would be set aside and put into a Community Development Fund for sustainable community development.

The Ahafo Social Responsibility Forum (ASRF) was therefore formed in early 2006 to discuss how the money accruing into the fund would be utilized, among other things.? The ASRF is a 55 member multi-stakeholder group with representatives of both the company and the community, including youth and women, in addition to traditional leaders.

The deliberations at the ASRF Newmont in May 2008 reached three agreement with its ten host communities namely: Kenyasi No. 1, Kenyasi No. 2, Ntotroso, Gyedu and Womahinso in the Asutifi District as well as Yamfo, Susuanso, Afrisipakrom, Terchire and Adrobaa in the Tano North District.

The three agreements reached ? Relationship, Employment and Foundation Agreements ? make up the Ahafo Social Responsibility Agreement (ASRF).

The Relationship Agreement sets forth the understanding reached between the company and the community to advance sustainable and economic development of the Ahafo Community to which all parties express their full agreement and commitment.? The Employment Agreement spells out guidelines (validation, balloting etc) that will guide local unskilled labour employment which all parties including the communities express their full agreement and commitment.

The Foundation Agreement on the other hand sets out the terms and conditions under which Newmont shall fund the operations and objectives of Newmont Ahafo Development Foundation (NADef), that is at the centre of Newmont?s CSR efforts.? NADef was established in May 2008 following two years of engagement with the Ahafo Social Responsibility Forum (ASRF).? NADef is designed as a mechanism to manage Newmont?s sustainable community development commitment to its ten host communities.

It is run by a board with balanced community and corporate representation, and receives the US$1 per ounce of gold sold at 1% of Newmont?s net profits made that the company had committed to in December 2005.

The ASRF established NADef?s funding categories, which include human resource development, provision of infrastructure, provisions of social amenities among others. It is also a venue for broader discussions between Newmont and the community regarding development concerns and issues.

Indeed NADef is a unique corporate foundation in that there is a high level of community ownership and participation in projects choice, execution and management. Another unique and indeed crucial feature of NADef is that it re-invests a percentage of Newmont?s contribution and the dividends accruing, into an endowment fund.?? This ensures that the foundation?s activities will be funded and sustained, even after mining operations eventually end.

As at the end of 2011, NADef had completed over 30 key infrastructural and non-infrastructural projects across the ten host communities, while numerous other projects are at various stages of completion. Some GH?6.0 million has been committed to various projects, both infrastructural and non-infrastructural, by the end of 2011. A lot more is available to be spent as the host communities through NADef came up with further projects for funding, by the second quarter of 2012, the foundation had received about GH?19.5 million from Newmont. Early this year, another 21 new projects were approved, at a cost of GH?631,925.75.

Projects undertaken by the communities include the construction of classroom blocks, community and school libraries, chiefs palaces; provision of community water and sanitation facilities, drawing of community layout and support towards recreational activities.

Scholarships given by the Foundation are being enjoyed by 3,091 students from the host communities, at the secondary and tertiary levels of education in schools across the country.? The amount spent on their scholarships is about GH?2.74 million. Also, 426 community members have received some GH?120,000 through a micro-credits scheme with payments per beneficiary ranging from GH?100 to GH?500.

Actually, since Newmont started operations in 2006, its contributions to the welfare, wealth creation and infrastructure and amenities engaged by its host communities extend far beyond the activities and achievements of NADef, which is indeed the core mechanism for the company?s CSR activities, but by no means is the only one.

Other Community Development Interventions

Newmont?s holistic CSR interventions have made pivotal contributions in the areas of infrastructure community health, education and training.

Newmont has engaged in a number of infrastructure projects as part of its partnership with the local Ahafo communities. These projects include construction of a new police station and barracks, upgrading of water and sanitation facilities, improvements in local schools and hospitals and housing in support of the company?s resettlement programmes.? Furthermore the Ahafo areas have been able to ?piggyback? on new infrastructure built for the mine, like cellular communication services and the electronic power grid.? Road improvement and an upgrading of the nearest airport at Sunyani have also been undertaken by government, partly in support of the mine project.

Newmont has made contributions to health care in the Ahafo region through its partnership approach with local medical services and other stakeholders. Among other interventions, the company has: supported the renovation of the Kenyasi Health Centre and construction of nurses? quarters, a collaborated with the Asutifi District Assembly to construct three health compounds in local villages; supported capacity building efforts for 60 local health ?volunteer? and supplied bicycles and medical equipment to enable them deliver better services; and collaborated with international development partners to deliver medical equipment to the newly Hwidem Hospital.

Newmont has also worked with the Ghana Health Service to support the management of HIV/AIDS and malaria in local communities through education and, in the case of malaria, through the distribution and retreatment of long-life bed nets.? As a consequence, Newmont has helped to reduce the incidence of malaria significantly in its host communities.

Indeed, the Global Business Coalition on HIV/AIDS and Malaria recently recognized this work by giving Newmont an international award, and describing the company?s efforts as ?Outstanding?.

 

Skills Development and Education

One of the most important contributions that Newmont is making to the Ahafo area is in the area of improved education and skills development for employees and other currently members alike.? Indeed between 2006 and 2010 alone, the company invested almost US$13.5 million in support of several education and training programmes, which represent an ongoing effort to promote sustainable development in the region through social investment.

At the centre of Newmont?s education interventions is a community capacity building/vocational training programme, involving total investment of US$12.3 million.

Commencing in 2009, Newmont Ghana committed US$1.1 million to a four year Apprenticeship Programme at the Ahafo mine for the local youth, enabling them to acquire employable mechanical and electrical skills which have London City and Guilds Certification.

Many of those who completed the programme will be employed at the mine.? Indeed, it is instructive that even before the mine was built more than US$600,000 was spent on training local youth of the Ahafo area to prepare them for jobs there.? This included a US$100,000 investment in the local, National Vocational and Training Institute.

In 2009, Newmont further committed US$500,000 to a ?Skills Development for Income Improvement Programme? to train 270 local students in such specialities as catering, dressmaking, electrical, masonry, carpentry, wielding etc.

Newmont has also committed total investment of US$1 million into improving education in its host communities. A new school for the Ntotroso Resettlement Community was built which improved upon the old structure by adding classrooms, a library and other facilities at a cost of US$100,000.? Also a new fully furnished six-classroom school block, office and store, library and washroom facility for Dokyikrom was constructed at a cost of US$299,000.Newmont has supported an international NGO, the Academy for Educational Development, and a local group, the Centre for Educational Development, Evaluation and Management Ghana, with US$100,000 in a three year commitment to build the capacity of teachers and parents in six local schools to improve the standard of learning, especially of English and Mathematics at basic level in Ahafo.

Newmont has committed more than US$200,000 in support of educational programmes of national significance since 2006 including the Otumfuo Education Fund and Junior Achievement Ghana. The company has also provided a US$500,000 donation to assist the University of Mines and Technology in acquiring badly needed infrastructure.

Building Local Capacity for Business

Newmont?s Ahafo Linkages Programme (ALP) set up together with co-financier, International Finance Corporation, in 2007 is aimed at to increasing income and employment opportunities for the local community. It seeks to do this by promoting the development of local suppliers who can provide needed goods and services, by supporting the diversification of the Ahafo economy, and by creating or improving business associations and other institutions that can nurture the region?s entrepreneurs.

ALP, which, by 2010 had trained 120 local, small and medium sized supplier businesses of the Ahafo host communities, at a cost of US$1.7 million, consists of three elements.

One is local Suppliers and Contractors Development, aimed at building the capacity of selected micro and SMEs so that they are better positioned to win contracts on a competitive basis with Newmont and with other large companies.

Another is Local Economic Development, to build the capacity of local SMEs engaged in non-mining related activities, such as brink production, to help ensure the development of a diversified and sustainable economy outside the mining sector.

The third element is Institutional Capacity Building, which strengthens local business associations and consulting services the lack or very low availability of business support services to the business community in the Ahafo area.

Contributing to Agribusiness and Food Security

The biggest single initiative embarked by Newmont though has been the Agricultural Improvement and Land Access Programme (AILAP) which the company initiated in 2006 which has cost of US$6.6 million and which trained and empowered 3,200 farmers from the Ahafo host communities.

AILAP is a post-settlement mitigation facility set up to assist farmers directly affected by the development of the Ahafo mine. The programme?s focus has been to deliver agricultural inputs, technical assistance and incentive programmes to encourage traditional land access agreements and give farmers incentives to reinitiate production farming activities following resettlement.

AILAP has resulted in dramatic increases in the area under cultivation; for cocoa, plantain and maize by 300% or more.? The project has raised productivity sharply as well; for maize the average yield has reached 3.74 metric tonne per hectare, well above the baseline of 1.74. for plantain, the yield increased from 8.6 metric tonnes per hectare to 10.

Working in consonance with AILAP is Newmont?s Ahafo Agribusiness Growth Initiative (AAGI) a community based, integrated agricultural development project focusing on eight communities in the Ahafo South area which has also been supported by other donors as well. AAGI focuses on strengthening agricultural productivity, improving farm management skills and access to micro-finance, building economies of scale through Farm-Based Organisations (FBOs), formation and development and increasing market linkages and enhancing supply chain interventions.

By the end of 2010 some 1,800 farmers had been empowered to produce chili pepper, plantain, ginger and soybeans to market specifications, while 850 farmers had been trained in farm-based organisations on business development, good agricultural practices, micro-finance and marketing. All this has led to significant increases in the production of chili pepper, soybeans, ginger, maize and plantain, and the amount of land under cultivation, while facilitating the access of farmers to much-needed credit.

When Newmont initiated the development of its Ahafo mine, it worked with local chiefs and government authorities as well as with the households who were necessarily displaced to establish new communities and support the purchase of new farmland for those smallholders who lost their plots.? Some 1,700 households were resettled with compensation amount to US$45 million.

As part of these efforts, Newmont also developed two programmes aimed at supporting affected communities. Importantly both of these programmes were designed with significant input from the local communities, development NGOs and relevant government agencies.

One is the Livelihood Enhancement/Empowerment Programme and which is now known as Skills Development and Income Improvement Programme, funded at some US$3.5 million, and designed to support those members of the community whose sources of livelihood were displaced by the mine and who actively sought new alternative lines of income generation activity.

The other is the Vulnerable Peoples Programme funded at US$1.6 million, and designed to support households which suffered transitional vulnerability stemming from a pre-existing situation or from physical or economic displacement due to land access issues associated with mining operations.

In meeting its corporate social responsibility, Newmont has set exemplary conduct for the rest of corporate Ghana to emulate. And the Ahafo area in particular and Ghanaian society in general is much the better for its existence.

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