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Barrick Gold Corp has nearly doubled its inventory of some key supplies at mines to weather the disruptions caused by Russia’s invasion of Ukraine, Chief Executive Mark Bristow told Reuters on Wednesday.
The world’s second-biggest gold miner used to hold a month’s worth of supplies at mines but tripled its inventory when the covid-19 pandemic hit in early 2020.
This year, when it became clear Russia might invade Ukraine, Barrick ramped inventories up to five months’ worth for key supplies like cyanide, explosives, and steel balls used for milling, Bristow said.
“We’ve taken some of the inventory up to five months, because of the Russian issue,” he said in an interview on the sidelines of the Mining Indaba conference in Cape Town.
Russia’s Feb. 24 invasion of Ukraine has caused supply chain disruptions worldwide and sent gas and metal prices soaring, turbo-charging inflation.
Bristow also said he is concerned about fuel shortages.
“Our concern is that we are going to see stock-outs right across the world, and the impact of that is significant,” he said. “This is not a nice situation.”
Rising inflation is impacting consumers and companies alike. Gold Fields Ltd, for example, on Monday said inflation is eating into its contingency cost buffer for its biggest project, Salares Norte in Chile.
China’s covid-19 lockdowns have dampened demand, the Barrick CEO said, but if the situation there gets back to normal it will put even more stress on global supply chains.
“We are really investing and making sure we can protect ourselves as much as possible,” he said.
Asked whether Barrick was considering investing in Zambia’s Mopani Copper Mines, Bristow declined to answer, saying only that he was engaging with Zambian President Hakainde Hichilema’s new administration.
Zambia is looking for an outside investor to reinvigorate Mopani, which needs a big cash injection to ramp up production.
Bristow said Zambia got “ripped off” when its previous government took on $1.5 billion in debt to buy Mopani back from Glencore.
“Glencore sold at a very high price to the state when they left, and that’s a challenge to try and unwind that,” Bristow said.
Glencore declined to comment.
Zambia will have to increase copper production to utilize its smelting capacity, and make the Mopani and Konkola Copper Mines smelters more efficient, Bristow said. Barrick’s Lumwana mine in Zambia supplies to both smelters.
Zambia’s Hichilema has pledged to more than triple the country’s copper production to 3 million tonnes a year within the next decade.
(By Helen Reid; Editing by Marguerita Choy and Paul Simao)
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