Barrick Gold Corporation is an international gold company headquartered in Toronto, Canada, with operating mines and development projects around the world, including third world countries, such as Papua New Guinea and Tanzania.

The absolute necessity to build trusted relationships with its host countries around the world through a commitment to the environment, social and economic development, health and safety and human rights has never been more evident than in recent times. And failure to strictly adhere to these principles can prove extremely costly, as evidenced by recent examples, especially in these developing countries.   

It is in these third world countries Tanzania and PNG where Barrick is outlaying significant sums in the form of monetary compensation to foreign governments for breach of tax laws and to disaffected residents of localities that have been environmentally impacted by mining activities.  

In these two instances alone the sums involved run into hundreds of millions of dollars.

In January this year Barrick coughed up $300 million to the Tanzanian government in settlement of legacy tax avoidance issues inherited from Acacia Mining, which it acquired in 2019. The settlement included $10 million to the University of Dar es Salaam and $40 million for road upgrades and housing infrastructure. The settlement amount also covers remediation work following poor water management on mining sites and a commitment to the adoption of environmental risk management practices to best practice standards.   

Not surprisingly the settlement has cleared the way for US$50 million in brown and greenfields exploration activities in the highly prospective gold region. These new tenements come with a commitment from Barrick to a local supplier strategy and a community development program, consistent with the mine’s ‘social license to operate’ ethos.

Barrick is currently locked in a dispute with the PNG government over its refusal to extend mining rights of the Porgera gold mine, which accounts for 5% of Barrick’s annual production globally. The dispute relates to social unrest and pollution concerns and the alleged illegal processing of remaining ore in its milling circuit after the mine was placed on care and maintenance.

Barrick has already offered the PNG government more than half the mine’s economic benefits for 20 years, but this offer, reportedly worth hundreds of millions of dollars, has been refused.

These significant sums for breaches of trust and failure to protect the environment and its people have given rise to the prominence of sustainability reports in annual reports of companies which traditionally comprised vast amounts of financial data that focused on the economic performance of the business.   

Sustainability reporting covers much more than financial performance outcomes and includes details of the environmental and social impact of business activities and demonstrates corporate values and the level of commitment to sound governance principles.

The inextricable link between sustainability reporting and financial reporting is a permanent feature of business analysis as we see investors, banks and governments around the world now look to sustainability reporting and not just financial reporting when forming investment and capital allocation decisions.   

Kerry Daly