Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Barrick Gold Corp Chief Executive Mark Bristow on Wednesday said he sees no competition from rivals in his pursuit of Freeport-McMoran Inc’s Grasberg copper-gold mine in Indonesia but cautioned any deal for the asset would take time to pull off.
Bristow has fanned speculation that Barrick, the world’s No. 2 gold miner, is poised to deepen its exposure to copper and last week expressed interest in acquiring Freeport’s flagship Grasberg mine.
Grasberg ranks as the world’s second-largest copper mine and largest gold mine and would enable Barrick to take advantage of rising demand for copper in the electric vehicle industry.
In an interview, Bristow ruled out a hostile approach for Freeport while reiterating interest in Grasberg.
Grasberg ranks as the world’s second-largest copper mine and largest gold mine and would enable Barrick to take advantage of rising demand for copper in the electric vehicle industry
“And there’s no competition for Grasberg,” he added. “First of all, it’s held in a U.S. company so no Chinese company can access it. Secondly Rio Tinto sold out of it.”
Rio Tinto Plc sold out its Grasberg stake in 2018.
“It’s reckless to go and do a hostile in a complicated jurisdiction or a complex, old corporation, because the embedded liabilities are significant,” Bristow told Reuters at Barrick’s Toronto headquarters after the company reported a better-than-expected quarterly profit.
“So it’s got to be something that works out for the best interests of everyone.”
A Freeport representative did not immediately respond to a request for comment.
Bristow said there is no deal on the table at this stage but said his comments were aimed at sending a message to the market. Any transaction could take years to execute, he said.
Barrick has been selling its less productive mines to focus on so-called Tier 1 assets following the acquisition of Africa-focused Rangold Resources a year ago.
Bristow is also seeking to resolve a dispute in Papua New Guinea, where Barrick has struggled with unrest and the government is seeking increased benefits from the Porgera joint venture with China’s Zijin Mining.
Resolving that impasse would give Barrick licence with investors to expand in Indonesia, Bristow said.
“How that works out under my management is going to be important on whether the market will give me that slack to continue to pursue world-class assets in that environment,” he said.
Barrick has a full geological team and has signed a handful of confidentiality agreements to access data at some of the more entrepreneurial miners in Canada, Bristow said, declining to provide names.
“We’re hunting in Canada, but we are very clear about our investment filters.”
Barrick boosted its dividend by 40%, benefiting from higher gold output and improved prices.
(By Jeff Lewis and Shariq Khan; Editing by Marguerita Choy and Lisa Shumaker)
Comments
David Teskey
Indonesia is requiring the building of Smelters and other value added facilities that dozens of companies have looked at and decided there is no profitability of these facilities in Indonesia. What specialty does Barrick have in copper smelters and refineries?