Distributing Economic Value

The direct economic value we generated for our stakeholders in the reporting period included the following:

  • Cost of Sales: Our cost of sales was $1,047.1 million in 2009 and $768.8 million in 2008, including labour, energy, consumables and maintenance costs, but excluding accretion, reclamation expenses, depreciation, depletion and amortization.
  • Wages and Benefits: We provided wages and benefits of $302.2 million in 2009 and $281.5 million in 2008.
  • Shareholder Value: As a measure of our strong financial and operating performance in recent years, and our commitment to providing superior returns for Kinross shareholders, we declared our first-ever common share dividend in February 2008. In 2009, we paid dividends of $62.4 million to shareholders of record.
  • Payments to Providers of Capital: Our interest and dividends paid to providers of capital in 2009 amounted to $92.6 million for the year compared to $101.2 million in 2008.
  • Payments to Governments: We pay taxes and royalties in jurisdictions where we operate, including Canada, the United States, Brazil, Chile and the Russian Federation. In 2009, we paid $298 million in income tax, mining tax, royalties and land use payments to various governments, compared to $146.1 million in 2008.
  • Direct Community Investments and Donations: In 2009, Kinross contributed some $3.9 million in direct economic value through donations and community investments to our communities in Canada, the United States, Chile, Brazil, Ecuador and Russia. In 2008, our contributions were $2.2 million.
  • Pension Plans: The Company has several retirement plans covering employees in North America and South America.
  • Government Financial Assistance: Kinross does not receive significant financial aid from governments, apart from standard tax relief measures that are available to businesses in the jurisdictions where we operate.
  • Local Recruitment: Wherever feasible, we hire employees locally and provide supply contracts to local and regionally based businesses. We have been able to successfully recruit the majority of our mine site operations and management teams from local talent pools. Approximately 99% of our total workforce, excluding contractors, is hired locally from the host community, region, state, province or country.
  • Direct and Indirect Economic Value: Kinross’ mining activities can help other economic sectors of society grow, particularly in remote regions and developing economies. In the Community section of this report, we discuss our community investment contributions in 2008 and 2009 – to schools, health care, local infrastructure, small business development, indigenous-related initiatives and other activities.

Economic Value Distributed and Retained
Kinross Total
(millions $)

 
2009
2008
Direct Economic Value Generated
2,412.1
1,617.0
Economic Value Distributed    
Operating Costs1
881.4
606.3
Employee Wages and Benefits
302.2
281.5
Payments to Providers of Capital2
92.6
101.2
Payments to Governments3
298.0
146.1
Community Investments4
3.9
2.2
Economic Value Retained
834.1
479.7

 

2009 Economic Value Distributed and Retained By Country
(millions $)

 

Direct
Economic
Value
Generated
 
Operating
Costs
1 
Employee
Wages and
Benefits
 
Payments to
Providers
of Capital
2 
Payments to
Governments
3 
Community
Investments
4 
Economic
Value
Retained
 
Brazil
413.7
 
228.0
 
36.0
 
5.3
 
37.8
 
1.7
 
104.9
Chile
445.2
 
198.9
 
43.8
 
0.3
 
13.5
 
0.2
 
188.5
Russia
900.2
 
115.5
 
45.5
 
16.6
 
186.3
 
0.9
 
535.4
United States
653.0
 
186.1
 
121.7
 
N/A
 
52.7
 
0.3
 
292.3
Corporate and Other
 
152.9
 
55.2
 
70.4
 
7.7
 
0.8
 
(287.0
)
1 For purposes of calculating economic value distributed and retained, operating costs exclude depreciation, depletion and amortization and impairment charges. Wages and benefits, community investments and payments to governments, other than income and mining taxes, normally form part of operating costs, but have been excluded as they appear on separate lines in the calculations.
2 Payments to providers of capital include dividends paid to Kinross shareholders and interest paid on long-term debt.
3 Payments to governments include income, mining and other taxes, certain royalties and land use payments.
4 Community investments include donations and investments in non-core infrastructure.

2009 Total Local1 Spending
(millions $)

 
Percentage of spending on
goods and services that is local
United States2
55%
Chile
97%
Russia
20%
Brazil
16%
Ecuador
38%
Total Kinross Operations
37%
1 Each Kinross site has defined “local” based on the geographic definition of “local” for their operation.
2 Excludes Round Mountain (data not available).

Measuring Our Benefit Footprint

Mining creates wealth in the communities where we operate. At a global level and by country, this is captured in our reporting of economic value generated, distributed and retained.

Locally, beginning in 2010, Kinross sites will take this evaluation to another level by tracking what we refer to as the “benefit footprint.” This benefit footprint is a measure of the extent to which our operations contribute positively to the sustainability of local communities.

Measuring the benefit footprint begins with a geographic breakdown of our spending at the local, regional, national and international levels. This is then coupled with an assessment of the extent to which that spending is leveraged into long-term socio-economic development. Ultimately, we hope to see non-mining exports from the community increase over the life of the mine. Understanding our benefit footprint at each of our sites will better inform our strategies for community engagement, community investment, public-private partnerships and capacity-building.

To learn about Kinross’ contribution to community development in local communities, see Community and Social Development.