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KLOSTERS, SWITZERLAND – On a chilly evening in early March, Peter Munk picks me up from my hotel in his tiny Fiat Punto, manual transmission, that he drives himself. His wife Melanie is stuffed in the back and our destination is the local schnitzel restaurant, where the Munks are treated like anyone else in Klosters, the Swiss ski village near Davos.
What a change. The last time I spent more than a few minutes with Mr. Munk was in 2008, in Montenegro’s glorious Bay of Kotor, the Mediterranean’s only fjord. We were on his chartered superyacht, the 50-metre Te Manu, a nautical pleasure palace with a crew of 11 that would have made any oligarch proud.
Has Mr. Munk, the founder, co-chairman and former chief executive officer of Barrick Gold Corp., fallen on hard times since then? Yes and no.
At $27-billion, Barrick is worth less than half of its peak in 2011, just before the gold price collapsed and the financial horror of the company’s now-suspended Pascua-Lama mining project in the Andes was exposed. Mr. Munk’s wealth has declined along with the share price (although he owns only 2.1 million common shares), but certainly not to the point where he is flying economy and forgoing oysters and champagne.
Instead, the Fiat represents the new, simpler life of the Hungarian emigrant to Canada who turned a motley collection of gold assets into the world’s mightiest gold producer. Mr. Munk will leave the Barrick board at the company’s annual shareholders’ meeting in Toronto on April 30, after which John Thornton will go from co-chairman to chairman. The Barrick board meetings, endless encounters with institutional investors and phone calls at three in the morning will disappear, along with many of the perks that went with his status as one of the world’s most powerful mining bosses. The little Fiat will get driven more often. The vacations in Klosters, which the Munk family considers home, and Montenegro will get longer.
The transition could save his life or kill him. Mr. Munk is 87 and has been equipped with a pacemaker for more than a decade. His famous energy is draining away and he knows he can’t do the job any more. At the same time, the man who spent more than half a century building businesses on five continents could find that retirement bores him rigid, or worse. “Leaving Barrick is like a Chinese restaurant, sweet and sour,” he says “Sometimes you feel sweet in your mouth, sometimes sour. I live it – Barrick is me. But I have heart issues. I can’t travel like I used to.”
I ask if he’s worried about his health. “I don’t mind dying,” he says. “I just don’t want Barrick to die.”
Indeed, Mr. Munk is worried about Barrick’s future. A couple of years ago, before Mr. Thornton, a former Goldman Sachs president, joined the Barrick board, he and Ivan Glasenberg, CEO of Glencore International (now Glencore Xstrata), talked about merging their companies. Mr. Munk’s idea was to create a fully diversified multinational that could withstand the jarring ups and downs of the commodities cycle.
If that had happened, the world’s biggest gold mining company and the world’s biggest commodities trader would have formed a global resources giant to rival BHP Billiton and Rio Tinto, with a market value (based on today’s values) of about $67-billion (U.S.). “It would have been a perfect combination,” Mr. Munk says.
Mr. Munk talks to me from the living room of his Klosters chalet, which is called Viti Levu, after the Fijian island where he and partner David Gilmour started the Southern Pacific Hotel chain in the 1960s. The woody chalet is large and comfortable, with a heated pool in the basement, but is far from ostentatious. Its best feature is the magnificent view of Gotschnagrat Mountain, which the Munk family has skied since the 1970s.
Mr. Munk stopped skiing two years ago, because of his heart, and it was a big blow to his recreational life; he had skied every year for 71 years. Melanie, his second wife, and their five children – two with his first wife, Linda, two with Melanie, and one adopted – keep the family tradition going. The walls are decorated with enlarged photos of the skiing Munks. Melanie keeps a large family scrapbook in the living room and shows me the newspaper articles about the ski disaster in March, 1988, when a Gotschnagrat avalanche severely injured the wife of her cousin Charles Palmer-Tomkinson, who was skiing with Prince Charles, and killed Major Hugh Lindsay, one of Charles’s best friends. On separate occasions, Mr. Munk and his wife have broken bones on the runs, which are considered among the most challenging in Europe.
A mining mega-merger
When I met Mr. Munk in Montenegro six years earlier, he was a mere 80 years old and was full of bluster and optimism as he talked about his plans for the future, as if he were an MBA fresh out of school. Gold prices were on the rise and the financial crisis triggered by the Lehman Bros. collapse was still a couple of months away. He and Barrick seemed on top of the world.
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