Why Barrick Gold’s CEO Is Looking to Boost Its Copper Business

Mark Bristow, the CEO of one of the biggest gold producers in the world,


Barrick Gold
,
says that his company is looking to expand its copper business.

“Copper is the most strategic metal,” Bristow told Barron’s. “Gold of course is precious.”

Copper is critical to the electrification of the world in the coming decades because of its superior conductive capabilities. Copper now generates about 20% of the profits at Barrick (ticker: GOLD).

Bristow says Barrick is looking to buy copper assets and wants to focus on areas that some rivals find forbidding. He points to the company’s success in Zambia, where Barrick operates a large copper mine, and the Democratic Republic of Congo, where it has a big gold mine.

“These are clearly countries where we have a competitive advantage over traditional copper miners from the Western world that are too scared to go to those countries,” he said. “We are comfortable in the African environment.”

Bristow spoke to Barron’s after the company reported fourth-quarter financial results Wednesday. The CEO said that the company was in its best shape ever, with an attractive group of mines on several continents, ample free cash flow, a strong balance sheet, and a robust production outlook. Investors reacted favorably to the report. The stock is up 22% this year, closing Friday at $23.14.

He is a hands-on manager who came to Toronto-based Barrick in 2019, when the company merged with Randgold Resources, an African-focused gold miner that he headed.

Barrick aims to boost its gold production to 4.8 million ounces annually by the end of decade from 4.4 million in 2021 and a projected 4.2 million to 4.6 million this year.

Despite that goal and its interest in copper, Bristow said on the company’s earnings conference call that Barrick would be disciplined with acquisitions. “We talk a lot about M&A, but have done very little,” he said.

There had been speculation that Barrick might merge with Freeport-McMoRan (FCX), one of the world’s largest copper producers. But with copper prices surging, Freeport is now 50% larger in market value than Barrick, which has a market cap of $41 billion.

Barrick and the larger


Newmont

(NEM), which produces more than six million ounces of gold annually, are rivals for industry leadership.

“Bigger is not always beautiful. We’re focused on quality,” Bristow told Barron’s.

The company says it owns or has stakes in six of the 10 top gold mines in the world—defined as those with at least 500,000 ounces of annual production, a 10-year reserve life or more and below-average costs globally

 “If you’re going to run a world- class business, you have to be global and Barrick is global,” Bristow said. “You can’t keep running back to the safe havens in the world. Some of the assets are not going to be in perfect addresses.”

Operating in Africa, the developing world –and anywhere — means forging ties with political leaders and employing local people at the mines and as managers, he said.

Bristow hates the idea of dropping in expatriates to run mines. In Mali, where Barrick operates a large gold mine, all the managers are Malians.

“In every single country in which we operate, I know the leader of that country personally—except for the U.S. I can pick up the phone and call them or send them a WhatsApp or email and they will respond to me because we have built a relationship.”

Bristow, a swashbuckling South African who likes big-game hunting, keeps a punishing travel schedule, visiting each one of Barrick’s 17 global mines each quarter over a six-week period.

“We start in North America and go to Africa and then Papua New Guinea and then to Argentina and Chile and up to the Dominican Republic and come back to Toronto for the quarterly” results, he said.

He wants Barrick’s directors to see the operations and holds two board meetings a year at a mine.

Barrick’s crown jewel is a 61.5% stake in a Nevada gold mining complex in which Newmont holds a 38.5% stake. The two companies merged their adjacent operations in the state in 2019 after Barrick withdrew a hostile takeover offer for Newmont.

“Without a doubt, it’s a spectacular asset base with significant potential. It’s the biggest mining complex in the world,” Bristow said, noting that it produces 3.5 million ounces of gold annually. He said that both companies had “lost faith” in the mine before the joint venture. With “real geologists” brought in subsequently to evaluate the ore body, the production outlook now looks strong.

The mine is a major employer in Nevada with 7,000 full-time staff and 7,000 contract workers. The total payroll is $1 billion annually with full-time staff earning an average of $90,000 a year “excluding bonuses and extras,” Bristow says.

 He said those wages are a multiple of the average in Las Vegas where the casino industry dominates.

Correction & Amplification

Barrick Gold controls 61.5% and Newmont 38.5% of the Nevada Gold Mines, a huge jointly owned project.  An earlier version of this article misstated the ownership stakes.

Write to Andrew Bary at [email protected]

https://www.barrons.com/articles/why-barrick-golds-ceo-is-looking-to-boost-its-copper-business-51645281013