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The gold industry’s growth binge is over, and mining companies have sobered up. After a dismal year in which bullion and mining stocks dropped sharply in value, gold companies are slowly regaining their footing and learning to live with the lower precious metal price.
Canadian gold companies, from heavyweights Barrick Gold Corp., Goldcorp Inc. and Kinross Gold Corp. to the smaller Agnico Eagle Mines Ltd., slashed their bullion reserves and collectively recorded $17-billion (U.S.) in impairment charges in 2013.
Barrick chief executive Jamie Sokalsky, who closed the book Thursday on a $10.4-billion net loss for the year, called it the most difficult year in the company’s 30-year old history and said it has gone through a “sea change.” The world’s biggest gold producer epitomized the industry’s mantra of “growth, growth, growth, growth” during the commodity boom. But in the past few months it has overhauled its board, sold expensive mines, put the brakes on a key project and paid down some of its debt while trying to calm shareholders irate with how the company was governed.
With no real clarity on whether gold will climb above $1,300 an ounce, companies have eliminated production that costs more than the spot price and hacked away at expenses to conserve cash.
“It’s a culture of not just chasing ounces and producing ounces for the sake of it,” Mr. Sokalsky said in an interview. “It’s a shift in culture in the mining industry in general, not just at Barrick.”
Barrick took $11.5-billion in impairment charges last year, including about $6-billion related to its South American Pascua Lama project, which has been suspended indefinitely because of ballooning costs and delays.
The company has written down a total of $15.4-billion in assets since Mr. Sokalsky took over as chief executive in a management shakeup in the summer of 2012.
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