Barrick shuts copper unit
Company places greater focus on gold as part of ongoing cost-cutting
TORONTO Barrick Gold Corp. is shutting down its stand-alone copper unit, advancing a drive to focus on its main assets and cut costs four years after the company expanded that business.
The move follows the July sale of half of the company’s stake in its Zaldivar copper mine in Chile to Antofagasta Plc for US$1.01 billion. This year, the Toronto-based company has also sold the Cowal Mine in Australia and a 50 per cent stake in the Porgera mine in Papua New Guinea.
Barrick, the world’s largest gold producer, bought copper-producer Equinox Minerals Ltd. in 2011, a decision that caused its debt to balloon. With copper prices down 23 per cent in the past year and shares heading for a fifth straight annual drop, Barrick has said it wants to cut debt by at least US$3 billion this year. In the past two months, the company has said it will sell a package of gold mines in Nevada and Montana, and some analysts said the company may not be finished shedding assets.
“I see them needing to sell everything that is non-core,” Andrew Kaip, an analyst at BMO Capital Markets, said in an interview earlier this week.
Barrick fell 2.2 per cent to US$6.69 in New York trading. The stock has lost 36 per cent this year.
About a dozen employees in Toronto will be affected, and were informed of the decision last week, Andy Lloyd, a spokesman for Barrick, said in a telephone interview on Friday. A few may be moved elsewhere in the company, he said.
The company is also closing its Salt Lake City office, a decision that was announced internally on Sept. 1, Lloyd said. The company had already shed about 20 positions from that site, and most of the remaining 110 employees will lose their jobs when the office closes in November, he said.
Barrick will still have a presence in the copper industry through the Lumwana mine in Zambia and Jabal Sayid in Saudi Arabia, though the Saudi project is run by the company’s joint-venture partner, according to Lloyd.
“The only remaining copper asset that we actually operate is Lumwana, and so it doesn’t make sense any longer to have a separate group that is overseeing those assets,” he said.
While Barrick considers all of its remaining copper mines to be “non-core,” Loyd declined to comment on what the company may sell.
“Just because it’s on the non-core list doesn’t mean it would automatically be sold,” he said.
Total debt peaked at US$15.8 billion in 2013 and was US$13.1 billion at the end of the second quarter.
“We’ve been consistently becoming leaner and more efficient,” Lloyd said. “We’ve essentially had job reductions at most, if not all, of our offices around the world.”