Barrick Gold faces DRC test

Barrick Gold’s decision to double down on Africa is a bet on Randgold Resources boss Mark Bristow keeping his Midas touch on a continent where many miners have floundered.

Barrick Gold’s decision to double down on Africa is a bet on Randgold Resources boss Mark Bristow keeping his Midas touch on a continent where many miners have floundered. That wager is facing its first test.

Among the assets Barrick will acquire in the $5.4bn deal for Randgold is Kibali, a mine Bristow built from scratch in the Democratic Republic of Congo (DRC). While that operation has been a crowning achievement for Randgold, it is set to challenge Bristow’s troubleshooting skills even before he takes over as CEO of the enlarged company.

Sokimo, Randgold’s stateowned partner in Kibali, has protested it was not informed of the deal in advance and said it would “assert its rights”.

Barrick will not be the first company to be squeezed by an increasingly assertive government in Kinshasa.

Glencore paid $150m earlier in 2018 to settle a dispute with state-owned Gecamines, which used identical resource nationalist language as Sokimo when objecting to FreeportMcMoRan’s plan to sell a copper and cobalt mine to Chinese buyers. Freeport is said to have paid Gecamines $100m to smooth the transaction.

Even Bristow came away empty-handed when he led fellow CEOs in lobbying for concessions on the DRC’s new mining code. While the latest spat will not lead to a repeat of March’s face-to-face showdown with President Joseph Kabila, Bristow has already come out fighting, rebuffing Sokimo’s assertion that it is entitled to intervene as the merger would introduce a “de facto new partner” at Kibali.

The deal “would have no effect” on the company that owns Kibali, Randgold said.

“The Congo government can’t block the transaction,” Bristow said. “We’ve engaged with the government in accordance with the legislation.”

Bristow said comparisons with Freeport are misleading as the US company is exiting the DRC as part of its deal. “It’ sa very different transaction to that which we are proposing,” said Bristow. “There’s no change of control for Kibali.”

That has not stopped DRC mining minister Martin Kabwelulu from invoking the nation’s new law, which decrees any takeover at a mine requires state approval.