Bonjour. Good Afternoon.
Mr. Chairman, honourable members of Parliament, thank you for the opportunity to present before the Standing Committee on Foreign Affairs and International Development.
As the second-largest gold producing company in the world by market capitalization, Goldcorp is very pleased to appear before the committee to share with you our view on how Canada's international development initiatives can be enhanced by the participation of the private sector. However, before sharing our experiences, challenges, and opportunities with regard to the role of the private sector, allow me to briefly describe our company and operations.
Goldcorp is a Canadian gold mining company with its head office in Vancouver, and a worldwide workforce of approximately 14,000 employees. If you take a look at a world map where Goldcorp currently has its operations, you would think that we were focused on the Americas. We have operations in Canada, United States, Mexico, Guatemala, Dominican Republic, Chile and Argentina. However, the majority of our company's production still remains here in Canada, representing 47% of total production. Mexico is in second place at 23%, and Guatemala is at 16%. Our mines in Dominican Republic, Chile, and Argentina are under construction. At the beginning of 2012, our company announced our commitment to the construction of both of these projects in Chile and Argentina, which represent an approximate investment of $5 billion.
Our company is known for being a growth leader in the industry, and a company that is responsible and welcomed in stable jurisdictions with low political risk.
While Goldcorp continues to expand significantly at the international level, we are also committed to managing and expanding our operations in Canada. Goldcorp currently has three mines in Ontario and one under construction in Quebec. The mines in Ontario collectively produce 1.2 million ounces of gold, which represents 80% of the gold produced in the province of Ontario.
Our other Canadian mining project, which is currently under construction, is located in northern Quebec and represents an investment of $1.8 billion.
The reason for mentioning these operations is to demonstrate that our experience with our operations and stakeholders, whether government, aboriginal groups, or academic institutions, has led, and continues to lead, to significant economic and social growth. For example, our company recently signed a collaboration agreement with the Cree Nation of Wemindji for the development of our Quebec project. The agreement, considered to be the first of its kind in Quebec, included the creation of several joint committees with Cree officials dealing with jobs and skills creation, education, and economic and business development activities.
To date, the significance of this agreement has been impressive. In 2012, Goldcorp awarded $49 million dollars worth of contracts at this mine in Quebec. Of this total amount, $39.7 million was awarded to Cree companies, which represents 81% of the total contracts awarded. This is a clear example of how a previous development project in Canada, which was the James Bay hydro project, led to the economic and social development of communities in northern Quebec. The Cree leaders had the vision and capacity to use the funds derived from this project to reinvest in their communities, develop the skills of their people, and invest in businesses that now supply Goldcorp and other projects in the region.
The most important aspect of the development activities was to increase the capacity of these communities to negotiate collaborative agreements with large multinational companies, in this case Goldcorp. With this collaborative agreement the Cree Nation will directly benefit from the success of the mine. This is the model we strive for at all of our international operations, and we have encouraged Cree officials to also reach out to local communities to share their positive experience where we operate.
However, challenges do exist when our company attempts to replicate similar collaboration agreements in other areas of the world. Our challenges often deal with the lack of capacity of local governments and businesses, the lack of capacity of national governments to provide essential services that are necessary for the social and economic benefit of local communities, and the lack of adequate skills and labour to provide services to the mining operation.
We see this as an incredible opportunity for the private and public sector to significantly contribute to Canada's international development interests. Goldcorp operates under the premise of sustainable prosperity, meaning our mining operations must contribute to significant economic and social development activities in the regions and countries where we operate. As a condition, these activities, whether directly or indirectly related to the mining operation, must be sustainable during and after the life of our mine.
While we do see improvements in the quality of life in the areas where we operate, we also see opportunities to increase this effect by partnering with organizations such as government, development institutions, financial and academic institutions, and non-governmental organizations with expertise in performing and delivering economic and social development activities.
Mining operations are often called upon to provide many basic services to our employees in communities where foreign governments have traditionally not been able to perform. In addition to job creation, our company also invests in many activities related to health, education, and business creation. As we know, mining companies are very skilled at providing and building the technical infrastructure needed to provide these services. Where we lack the skills and knowledge is in the training of the human capital and resources needed to actually manage and deliver the services within the clinics and the schools that we build, and manage the funds that we directly transfer to communities.
The very fact that our company funds many infrastructure projects also creates challenges for us with local and national governments by creating a dependence on the management and operation of these facilities. While our company has the ability to provide funding for the operation of the facilities, the strategy is not sustainable in the long term. A strategy to decrease this dependence needs to be implemented, and Goldcorp does believe that leveraging the skills of the Canadian government and NGOs will decrease the dependence and, therefore, increase the overall development activities in foreign countries. This is why we suggest that a trilateral partnership could be established with the Canadian government and NGOs, which are more capable of performing economic and social development activities.
From an extractive industry point of view, mining companies make investment decisions that are over the long period. Therefore, we have an interest in ensuring that we are operating in an environment that is considered stable over the long run. Our investments also include funding community development projects, which are an important part of our social licence to operate in communities and countries.
If governments believe that the extractive industry can contribute significantly to the economic development strategy of their country, they must ensure that they have the necessary capacity to regulate, monitor, and report on activities of operating companies. Perceived increased stability and confidence in their ability to accomplish these activities will result in an increase in foreign investment, thereby allowing the government to increase their revenues and provide more basic services to their communities.
By also participating in this partnership, non-governmental organizations will have further ability to capitalize on funding for extensive development activities in these communities.
Overall, this type of trilateral partnership will achieve the main objective that all three parties strive for; that is, increasing the social and economic benefits to the communities where our industry operates, and also the country as a whole. Therefore, to be successful, we need to implement these types of private-public partnerships, which will lead to the increased effectiveness of Canada's development initiatives, and certain criteria should be met.
Partnerships must include increasing the capacity of national and local governments in regulating, monitoring, and reporting on the extractive industries in their respective countries. Development activities must ensure that transparency initiatives within the development process are included, while advocating strong consultative processes with local and municipal communities. There must be a commitment by all parties to implement activities that are sustainable in the long term. We must also further partnerships with NGOs and government institutions that can supply much of the technical skills to increase the potential benefit of CSR activities. Finally, partnerships need to be established with the donor communities. This will increase credibility, and will bridge the path to long-term sustainability.
Goldcorp firmly believes that these types of strategies, which promote strong cooperation within the private and public sector, will enhance Canada's international development initiatives.
In addition, we believe that such partnerships will contribute to preserving the integrity and reputation of Canada's extractive industry as a strong contributor to economic and social development in the countries where we operate.
Thank you very much.