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Barrick Gold Corp. founder Peter Munk had a vision for his company. Barrick’s new chairman John Thornton has another one.
Less than a year on the job as chairman, Mr. Thornton appears to have killed Mr. Munk’s dream of turning Barrick into a giant diversified mining company, and plans to forge a deep business relationship with China are no longer on the table.
Instead, Mr. Thornton wants the world’s biggest gold producer to return to its roots when it was a nimble operator with an entrepreneurial spirit, a streamlined corporate structure and a pristine balance sheet that earned a top credit rating.
Barrick, like the rest of the gold industry, was forced to clamp down on expenses when bullion began plummeting in 2011. Under Mr. Munk and previous management, Barrick had started becoming leaner by selling and suspending expensive operations and shrinking production.
But Mr. Thornton suggested Barrick had lost its way over the past decade and is pushing the company back to its “original DNA.” Gone are the layers of managers between Barrick’s executives and the 19 mines that it operates. Barrick’s Toronto headquarters is now a skeleton crew of 150, compared with 500 in its heyday.
Plans to boost copper output or expand into another commodity – a goal that Mr. Munk and Mr. Thornton appeared to share at one time – have been set aside.
“First and foremost our focus is gold. We have no plans to diversify into other metals and we have no plans to add to our existing copper position,” Mr. Thornton told analysts on a call to discuss year-end results.
Mr. Thornton and his new executive team repeatedly stressed that Barrick was focused on a handful of mines in the Americas, particularly in Nevada, the home of the company’s best mine, Goldstrike. The company said it would get rid of any asset that does not deliver a 10- to 15-per-cent return on investment capital.
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