Barrick Shuts Copper Unit, Bolstering Drive to Focus on Gold

Barrick Gold Is Not for Sale: Dushnisky
  • Move comes after asset sales including Zaldivar stake in July
  • `I see them selling everything that is non-core,' analyst says

Barrick Gold Corp. is shutting its standalone 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 $1.01 billion. This year, the Toronto-based company has also sold the Cowal Mine in Australia and a 50 percent 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 percent in the past year and shares heading for a fifth straight annual drop, Barrick has said it wants to cut debt by at least $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.

Closing Office

Barrick fell 1.3 percent to $6.75 at the close in New York. The shares have lost 37 percent 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.

‘Remaining Copper’

“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 $15.8 billion in the second quarter of 2013 and was $13.1 billion at the end of the current second quarter, according to data compiled by Bloomberg.

“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.”

While the company has shrunk by about 10,000 employees since 2012, most of that was the result of assets being sold, according to Lloyd. He said that the company has “eliminated hundreds of positions globally as part of cost-cutting efforts over the past two years.”

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