Barrick Gold CEO Says Mergers Won't Fix The Copper Shortage

Author: Stjepan Kalinic | May 09, 2024 09:02am

Barrick Gold‘s (NYSE:GOLD) CEO, Mark Bristow, believes that mergers and acquisitions do not address the impending copper shortage. In light of BHP‘s proposed $39 billion takeover of Anglo American, Bristow advocated for mining companies to focus on discovering and developing new copper deposits rather than pursuing consolidation.

"You can consolidate, but it doesn't bolster the production profile. Consolidation often leads to production reduction," Bristow remarked in an interview with the Financial Times, underlining his stance on the limitations of M&A to solve the copper supply challenge.

As global demand for copper is expected to surge, driven by the energy transition and expanding electric vehicle (EV) production, industry experts are calling for substantial increases in production capacity.

BHP has until May 22 to make a formal offer for Anglo American, which, if successful, would create one of the largest copper mining companies in the world. However, the complexity of the transaction and Anglo’s significant assets in platinum and iron ore in South Africa make it a challenging pursuit for many companies.

"BHP is the ultimate 800-pound gorilla. It's a complex transaction," Bristow noted.

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Barrick’s strategy hinges on the independent development of its own copper assets. The company’s central focus is the Reko Diq project in Pakistan, a potential world-class copper-gold mine in which the company holds a 50% stake.

The first phase is estimated to cost a hefty $5.5 billion, prompting Barrick to seek investments from institutions like the International Finance Corporation.

Reko Diq has the potential to be a transformative project. With a projected lifespan exceeding 40 years, it’s poised to become a major contributor to Pakistan’s economic landscape, particularly for the underdeveloped Balochistan province. The project should create a significant number of jobs, with 7,500 positions during construction and a further 4,000 permanent roles opening up upon operation.

While finding qualified personnel can pose a problem in the mining industry, Barrick is ahead of the curve on this plan. Their recently opened Barrick Academy at the former Buywagi mine in Tanzania will train more than 2,000 foremen, supervisors, and superintendents from the MENA region.

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Posted In: GOLD