Gold industry needs more consolidation, says Barrick CEO
Harare/Toronto — Barrick Gold’s top executive says the gold industry needs more consolidation so it can increase exploration to boost depleting reserves, lure more generalist investors and improve efficiencies.
The flurry of deals that characterised the sector in the past two years will likely continue, with miners in Australia already “stamping their mark” on the industry, CEO Mark Bristow said in a virtual SA mining conference. Mergers & acquisitions are likely to dominate the sector in Africa, and are needed in Canada, where the world’s second-largest gold miner is based.
“The industry still needs further consolidation,” Bristow said on Wednesday. “Canada still needs more work on consolidation.”
While there was a rush for deals after Barrick’s 2018 mega-merger with Randgold Resources and Newmont’s subsequent acquisition of Goldcorp, purchases have slowed as gold’s rally to an all-time high in 2020 pushed up the price of assets.
Gold mining deals worth about $14bn have been completed, or agreed, so far in 2020, compared with about $26bn in 2019, according to data compiled by Bloomberg.
Bristow cautioned producers against merely “rearranging the deck chairs” through deals. Gold miners must invest in finding new deposits to replace reserves, he said.
For its part, Barrick remains interested in acquiring more so-called tier-1 assets, including Freeport-McMoRan’s Grasberg mine in Indonesia, Bristow said.
“Barrick as you know is completely, single-mindedly focused on tier-1 assets, and so it’s going to be of interest to us because there aren’t many tier-1 assets left that we don’t own or own part of,” he said.
Tier-1 gold assets are generally considered to have output of at least 500,000 ounces a year and long-term costs at the lower end of industry averages.
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