Kinross calls for industry to trumpet benefits footprint

2nd December 2013

By: Simon Rees

Creamer Media Correspondent


Font size: - +

TORONTO ( – The mining sector should do more to broadcast its full benefit footprint on local and national economies, Kinross Gold VP corporate responsibility Ed Opitz told delegates at a recent conference in Toronto.

By doing so, the industry will also help debunk much of the “resource curse” thesis, he told the audience at the Mine Latin America conference on November 15.


Opitz explored the resource curse, first coined by Richard Auty in 1993, and then expanded upon by Jeffery Sachs, in 1995.

At its heart, the thesis argues that countries richly endowed with natural resources experience the threat of heightened corruption, poorer development strategies and growth-debilitating inflation. 

It is argued that the curse entails governments of resource-rich nations focusing a disproportionate amount of time, effort and money on facilitating the needs of the extractive sectors as opposed to delivering on other economic and civic commitments. 

The resource curse also feeds into popular misconceptions about the mining industry. Under this scenario, foreign mining companies are deemed suspicious at best, reprehensible at worst. They seem to propagate corruption, attempt to dodge taxes and only engage in community programmes with great reluctance.

“It’s a story that captures the imagination: you have corrupt and inept government officials in poor, underdeveloped countries being duped by corporate fat cats with jets,” Opitz said.

“The gut response is often to say: ‘well we’re good guys; we just need to work harder telling our story’,” he said. “So mining companies seek to provide transparency on the amount of taxes paid and jobs created.”

The growing success of the Extractive Industries Transparency Initiative (EITI) is illustrative of this. “The EITI was formed back in 2002 and has gained a lot of momentum. There are now 23 compliant countries and 16 candidate countries, focused mainly on Africa but also in Latin America and Asia. Even the US is signing up for [the] EITI,” Opitz said.

“More recently, voluntarily measures are being replaced by mandatory requirements, such as Section 1504 of the Dodd Frank Securities Reform Act of 2010. This has upped the ante, significantly increasing the amount of detail required on a project-by-project basis,” he said.

“But transparency [is perceived] not to have really changed many on-the-ground issues of development and poverty reduction … so governments are being asked by their constituents, and they’re asking themselves, whether they are getting a fair share of the pie,” he said. “As a result, we are witnessing governments seeking greater royalties.”


Any measures that reduce the threat of the resource curse feeding into resource nationalism, while also highlighting the value added by the industry, must be considered critical. 

One important methodology is to consider mining’s complete benefit footprint. “Focusing on [just] government revenue includes only one aspect of the economic benefits generated by mining. By definition this ignores the benefits of wages paid, the procurement of goods and services, and the investment in community development,” Opitz said.

Companies and the sector as a whole should consider all facets of expenditure as having beneficial weighting. “[Remember] Becker’s law of economics: everything that has been bought has also been sold. This means that anything showing up as a cost of production for a mining company represents somebody else’s income,” he said.

“What Kinross has done as a mining company is to try and track where that spending is going,” he explained. “We can show that the total impact is much greater than the 3%, 6% or the 7.5% discussed in terms of royalties and taxes.”

Opitz used Kinross’s 2012 benefit footprint as illustrative of the more comprehensive model.

“Of the value we generated last year, 68% was captured in host countries,” he said. “We had $4.3-billion in metal sales, about $780-million in income from financing activities.”

Kinross spent 13% on governments, 10% on employees, 70% on suppliers and 0.2% on community investments. “This left about $400-million, or 7%, for corporate needs, such as G&A [general and administrative expenses], exploration and dividends,” he said.

Of the monies spent “local jurisdictions accounted for about 22% of revenue, 11% was spent regionally, 35% at the national level: a total of 68%,” he added.

“This information then allows us to go beyond our corporate level GRI [Global Reporting Initiative] and EITI reports and disclosures. [It enables us to] have a conversation with our stakeholders locally and to give them an accurate picture of the total impact of our operations in their communities,” he explained.

“It also helps us focus our community investment programmes in areas that best leverage our benefit footprint, such as buy-local programmes with our employees, local business programmes, and investment in health and education,” he said.

The value of this model and the ability to analyse it has been gaining traction, Opitz said, highlighting a recent World Gold Council (WGC) report as an illustrative example.

Out of a total expenditure of $55.6-billion by the gold mining industry in 2012, 80% was spent within host countries, according to the WGC.

By contrast, tourism delivers far less for a host country in dollar-for-dollar terms. Opitz cited a United Nations Environment Programme report that noted only $5 in every $100 spent by tourists from developed countries will stay within a developing country.

“The message to take from this is that mining areas enjoy stronger poverty reduction in social development performance than non-mining areas,” Opitz argued.

“So why does the debate continue? Why are we still seeing increasing taxes and resource nationalism?” he asked. “Well that’s life. The fact is that economic development and poverty reduction are not easy and most governments face real, intractable economic issues and a lot of political pressure to show positive progress.

“Kinross and the industry as a whole must continue trying to do the right thing when it comes to expanding the benefit footprint across operations,” he said. “There are some things we do really well as an industry and we’re getting better at it all the time.”

Edited by Henry Lazenby
Creamer Media Deputy Editor: North America


The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?