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Incoming Barrick Gold Corp. chairman John Thornton has friends in high places in China – including the country’s premier, central bank chief and anti-corruption czar, to name a few.
Now Mr. Thornton’s job is to turn those connections into new business opportunities for the gold miner as it seeks to turn the corner on a string of costly setbacks.
Mr. Thornton’s clout in China is the key reason Barrick founder and outgoing chairman Peter Munk chose him as his successor and persuaded the company’s board to award a $11.9-million (U.S.) signing bonus – an amount that became a flashpoint for shareholders already upset with the company’s performance. Barrick’s stock price has dropped sharply amid nearly $14-billion in writedowns tied to two major projects and a recent $3-billion share issue to help pay down its $15-billion debt load.
Since becoming Barrick’s co-chairman in a June, 2012, management shakeup, Mr. Thornton said he has been laying the groundwork with the Chinese.
The former Goldman Sachs president has spent more than 20 years working with Chinese policymakers. He shares Mr. Munk’s vision of turning Barrick into a diversified mining giant and tapping China to join the effort.
“We are the world’s leading gold company and we should continue to be that under all circumstances. We are in copper. I personally happen to think we should be in copper,” Mr. Thornton said in an interview this week after Barrick announced he will become chairman at the next annual meeting.
In Mr. Thornton’s view, forging ties with China in some ways is simply a natural fit. For example, rumours circulating for months suggest Barrick may want to sell its gold directly to China’s reserve bank to help increase its gold reserves.
“This is just a matter of logic. If the biggest central bank in the world has explicitly told the world that it intends to diversify over time into various asset classes, and if one of those asset classes is gold and if you’re the biggest gold company in the world, ipso facto the likelihood there will be some kind of relationship there,” Mr. Thornton said.
He has not spoken to Zhou Xiaochuan, governor of the People’s Bank of China, about this idea but he did consult Mr. Zhou about working for Barrick.
Mr. Thornton said his Barrick talks with the Chinese have been with the highest levels of the communist government right on down the system. He stresses he does not want what he calls a “transactional” or one-off deal with the Chinese. He wants to build an enduring relationship with the government.
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