Mark Bristow,
President and Chief Executive,
Barrick Gold Corporation
"With its refocus on geology as a core discipline, Barrick’s exploration programmes span the continent’s main gold belts in West, Central and East Africa, where it is hunting for new Tier One assets as well as for additional reserves to extend the lives of its existing mines."

How have Barrick’s post-merger structure and strategy impacted on the business, including its Covid-19 response?

At the beginning of 2019, Barrick Gold Corporation and Randgold Resources merged to create a new business which they aimed to make the world’s most highly valued gold company. The deal was driven by their belief that if the best assets were managed by the best people, they would deliver the best returns.

Less than two years later, the new Barrick, led by what is arguably the industry’s best management team, has made enormous progress towards this goal. A flatter and fleeter structure with strong regional leadership has had an immediate impact on the company’s performance. This was also, incidentally, instrumental in Barrick’s prompt and effective response to the Covid-19 pandemic. Not only did it shield its employees and businesses from this unprecedented threat, it also provided significant support to its host countries and communities, in the spirit of partnership to which Barrick is committed.

Barrick’s strategy is focused on Tier One assets – those mines capable of producing more than 500 000 ounces of gold annually for at least 10 years, at the lower end of the industry’s cost profile. It already operates six of these mines. One of these was created when Barrick merged its assets in the American state of Nevada with those of Newmont in what is now the world’s largest gold producing complex. The subsequent sale of non-core assets, including the Massawa project in Senegal and the interest in the Kalgoorlie mine in Australia started a process designed to realise more than $1 billion.

The success of the Barrick-Randgold merger prompted a series of other value-creating consolidations. This in turn has renewed global investment interest in the industry, with Barrick now attracting investment from major generalist funds and broadening its shareholder base. The recent upsurge in the gold price has also demonstrated that the industry remains a major component of the world economy.

Barrick, and before that Randgold, has been conspicuously successful in operating mines in Africa. To what do you attribute that?

The new Barrick has been based on the model that made Randgold’s Africa-focused business one of the world’s most profitable gold companies. This model recognises that to be successful, such businesses need a licence to operate which stretches beyond the usual statutory requirements to encompass their acceptance by host countries and communities as valuable corporate citizens and as welcome neighbours. It embraces the full suite of stakeholders and acknowledges that they should share equitably in the economic benefits mining creates.

The effectiveness of this approach was demonstrated in Tanzania, where Barrick ended a three-year-long standoff between the government and Acacia Mining. Barrick took over the Acacia assets, settled that company’s tax dispute with the authorities, resolved long-standing environmental issues and established a joint venture, Twiga Minerals Corporation, with the government. Twiga now oversees the management of the re-opened mines as well as the implementation of a 50/50 economic benefit-sharing agreement.

Elsewhere in Africa, the Randgold-developed Loulo-Gounkoto in Mali and Kibali in the Democratic Republic of Congo rank among Barrick’s Tier One assets, proof that despite its mainly infrastructural challenges, the continent with its rich mineral endowment is a very competitive investment destination for gold miners. With its refocus on geology as a core discipline, Barrick’s exploration programmes span the continent’s main gold belts in West, Central and East Africa, where it is hunting for new Tier One assets as well as for additional reserves to extend the lives of its existing mines.

What is mining’s greatest potential contribution to Africa?

Poverty remains one of the greatest challenges facing the world today and in Africa, gold miners can make a significant contribution towards the economic development of their host countries. Barrick believes this should go well beyond the payment of taxes and royalties and the creation of employment. It was committed to the principles of ESG long before that became an investment criterion and all its operations run community upliftment programmes which include the provision of educational and healthcare facilities and the establishment of legacy projects designed to deliver local economic opportunities after the eventual mine closures. Barrick also has a local employment and development policy and it is worth noting that both its world-class African mines are almost entirely operated and managed by host country nationals.

The health and safety of its employees is obviously a priority and Barrick constantly seeks to improve its already creditable record in this regard. Care for the environment is another concern and Barrick is making steady progress in improving its water usage and reducing its carbon footprint. As part of a group-wide move towards cleaner energy, Kibali draws much of its electricity from its three hydropower plants while Loulo-Gounkoto is pioneering the use of solar energy.

Every enterprise in any country comes with its own set of risks and Africa is not without its challenges. But as Barrick is demonstrating, through strong host country partnerships and a demonstrable willingness on the part of miners to uplift economies through benefit-sharing, the rewards can be made to far outweigh the risks.

Africa abounds with mining opportunities. Investors, miners and governments should join forces to embrace them.