Barrick Gold on the hunt for copper deals

Barrick Gold is looking to take advantage of a downturn in copper prices to make an acquisition in the sector, its chief executive Mark Bristow said, as the Canadian miner reaps the benefits of a higher gold price.

“The gold price is up and the copper price is down,” Mr Bristow told the Financial Times. “So there are bound to be opportunities.” 

Shares in Barrick have risen by 56 per cent this year, giving the world’s second-largest gold miner a market capitalisation of C$68bn (US$49bn). Gold prices are up by 13 per cent year-to-date at $1,695.49 a troy ounce, helping Barrick pay down its debt.

In contrast copper prices have fallen by 15 per cent, reviving speculation that Barrick might make a deal for US miner Freeport-McMoRan.

Mr Bristow said “there are no options off the table”, when it came to his interest in Freeport, which owns the Grasberg mine in Indonesia, the world's largest gold mine and second-largest of copper.

Since taking the top job at Barrick in early 2019, Mr Bristow has been vocal about expanding into copper, which he has called a strategic metal.  

In particular he has expressed interest in Grasberg, which is located in Papua province, just west of Papua New Guinea, where Barrick owns the Porgera gold mine along with China’s Zijin Mining.

Mr Bristow said he was keen to expand in Asia, despite a recent dispute with the government of PNG over a renewal of Porgera's license, which led Barrick and Zijin to shut the mine.  

“We have a very solid balance sheet now so we’ve got a lot more bench strength financially than Barrick had for a decade-and-a-half,” Mr Bristow said. “We’ve also got the management depth.” 

Copper mines have longer lives than gold mines so a large copper asset would help to diversify Barrick’s production. The company has forecast steady gold production of 5m ounces per year over the next 10 years. 

“If he doesn’t do anything soon he may miss the value opportunity, this is the good window, gold prices won’t stay this high,” one banker said. 

Mr Bristow said on the company’s earning call last week that there would be a “dynamic M&A” environment this year and that Barrick was “not shy” about making deals. Last year he launched a hostile bid for larger rival Newmont, which ended with a joint venture between the two companies in Nevada. 

James Goldstone, the manager of the Keystone Investment Trust at Invesco, which holds Barrick shares, cautioned against any deal that moved the company too far away from gold. Barrick has already made a large acquisition with the $6bn purchase of gold miner Randgold in 2018, he said. 

“It’s the gold story that will drive positive sentiment, and maintaining that focus on gold is something I’d like to see,” he added.