Mark Bristow, CEO of one of the world’s largest gold producers,
says his company is looking to expand its copper business.
“Copper is the most strategic metal,” Bristow told Barron’s. “Gold is of course precious.”
Copper is essential to the electrification of the world in the coming decades due to its superior conductive capabilities. Copper now generates around 20% of Barrick’s earnings (ticker: GOLD).
Bristow says Barrick is looking to buy copper assets and wants to focus on areas some rivals find off limits. He points to the company’s success in Zambia, where Barrick operates a major copper mine, and in the Democratic Republic of Congo, where it has a major gold mine.
“These are clearly countries where we have a competitive advantage over traditional copper miners in the western world who are too scared to go to those countries,” he said. “We are comfortable in the African environment.”
Bristow spoke to Barrons after the company released its fourth-quarter financial results on Wednesday. The CEO said the company was in its best shape, with an attractive cluster of mines across multiple continents, ample free cash flow, a strong balance sheet and solid production prospects. Investors reacted favorably to the report. The stock is up 22% this year, closing Friday at $23.14.
He’s a hands-on manager who came to Toronto-based Barrick in 2019 when the company merged with Randgold Resources, an Africa-focused gold miner he ran.
Barrick aims to increase its gold production to 4.8 million ounces per year by the end of the decade, from 4.4 million in 2021 and 4.2 million to 4.6 million this year.
Despite that focus and its interest in copper, Bristow said on the company’s earnings conference call that Barrick would be disciplined on acquisitions. “We talk a lot about mergers and acquisitions, but we’ve 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 soaring copper prices, Freeport now has a market value 50% greater than that of Barrick, which has a market capitalization of $41 billion.
Barrick and the greatest
(NEM), which produces more than six million ounces of gold a year, are rivals for industry leadership.
“Bigger isn’t always pretty. We focus on quality,” Bristow told Barron’s.
The company says it owns or has interests in six of the world’s top 10 gold mines, defined as those with at least 500,000 ounces of annual production, a reserve life of 10 years or more and costs below the world average.
“If you’re going to run a world-class business, you have to be global, and Barrick is global,” Bristow said. “You cannot keep running to the refuges of the world. Some of the assets will not be in perfect addresses.
Operating in Africa, the developing world – and everywhere else – means connecting with political leaders and employing local people in mines and as managers, he said.
Bristow hates the idea of bringing in expatriates to run mines. In Mali, where Barrick operates a major gold mine, all the leaders are Malians.
“In every country where we operate, I personally know the leader of that country – except for the United States, I can pick up the phone and call them or send them a WhatsApp or an email and they will answer me because we built a loving relationship.”
Bristow, a swaggering South African who enjoys big game hunting, follows a grueling travel schedule, visiting each of Barrick’s 17 global mines quarterly over a six-week period.
“We start in North America and go to Africa, then Papua New Guinea, then Argentina and Chile and all the way to the Dominican Republic and back to Toronto for quarterly results,” he said.
He wants Barrick directors to see operations and hold two board meetings a year at a mine.
The jewel in Barrick’s crown is a 61.5% interest in a Nevada gold mining complex in which Newmont holds a 38.5% interest. The two companies merged their adjacent operations in the state in 2019 after Barrick withdrew a hostile takeover bid for Newmont.
“Without a doubt, it is a spectacular asset base with significant potential. It’s the largest mining complex in the world,” Bristow said, noting that it produces 3.5 million ounces of gold per year. He said the two companies had “lost faith” in the mine before the joint venture. With “real geologists” subsequently brought in to assess the ore body, production prospects now appear solid.
The mine is a major employer in Nevada with 7,000 full-time employees and 7,000 contract employees. Total payroll is $1 billion a year, with full-time staff earning an average of $90,000 a year “excluding bonuses and extras,” Bristow says.
He said those salaries 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 joint ownership project. An earlier version of this article misrepresented ownership issues.
Write to Andrew Bary at [email protected]