Mark Bristow, the CEO of Barrick Gold (NYSE:GOLD), recently shared his perspective on the copper market, emphasizing the limitations of mergers and acquisitions (M&A) in addressing the impending copper shortage. In a notable interview with the Financial Times, Bristow expressed skepticism about the efficacy of consolidation efforts in bolstering copper production, advocating instead for a focus on discovering and developing new copper deposits.
According to Bristow, while consolidation may lead to the merging of companies, it does not necessarily enhance the production profile. In fact, he highlighted that consolidation often results in a reduction in production capacity, underscoring the need for alternative strategies to meet the growing demand for copper.
With global demand for copper poised to increase significantly, driven by factors such as the energy transition and the expansion of electric vehicle (EV) production, industry experts are urging mining companies to ramp up production capacity substantially. However, Bristow’s remarks suggest a departure from the conventional approach of pursuing large-scale M&A transactions to address supply challenges in the copper market.
One such prominent M&A deal in the mining sector is BHP’s proposed $39 billion takeover of Anglo American, which, if successful, would create one of the largest copper mining companies globally. However, Bristow noted the complexity of such transactions, particularly given Anglo’s significant assets in platinum and iron ore in South Africa.
Barrick Gold’s strategy, in contrast, revolves around the independent development of its own copper assets. At the forefront of this strategy is the Reko Diq project in Pakistan, a potential world-class copper-gold mine in which Barrick holds a 50% stake. Despite the hefty estimated cost of $5.5 billion for the first phase of development, Barrick remains committed to advancing the project, seeking investments from institutions like the International Finance Corporation.
The Reko Diq project holds immense potential to transform Pakistan’s economic landscape, particularly in the underdeveloped Balochistan province. With a projected lifespan exceeding 40 years, the project is expected to generate significant employment opportunities, with thousands of jobs created during both construction and operation phases.
To address potential challenges in finding qualified personnel for the project, Barrick has taken proactive steps, including the establishment of the Barrick Academy in Tanzania. This training facility aims to equip thousands of individuals from the MENA region with the necessary skills to support the mining industry’s growth and development.
In summary, Bristow’s remarks underscore Barrick Gold’s commitment to pursuing independent development initiatives, particularly in the copper sector, as a strategic response to the evolving dynamics of the global mining industry. This approach aligns with Barrick’s vision of sustainable growth and long-term value creation for stakeholders.