The head of the world’s third most-valuable gold company says he feels no pressure to do a sizeable mergers and acquisitions (M&A) transaction, despite larger rivals Barrick Gold Corp. and Newmont Mining Corp. striking multibillion dollar deals of their own in recent months.
“Getting bigger for bigger’s sake, I’ve never been a big fan of that,” Sandeep Biswas, chief executive officer of Melbourne-based Newcrest Mining Ltd., said in an interview. “There’s either got to be real synergies, or real technical or other capabilities, where one can enhance the combined entity.”
After about seven years of deep cost-cutting, write-downs and asset sales, there are signs the tide is turning in the beaten down global gold sector.
The biggest gold mining companies have started to do large acquisitions again, with Barrick and Newmont paying US$16-billion combined to sweep up rivals Randgold Resources Ltd. and Goldcorp Inc., respectively. The recovery in the price of gold bullion over the past few months is adding to the air of optimism.
But even with Barrick and Newmont getting bigger through acquisitions, the gold industry remains far more fragmented than it was a decade ago, with significantly fewer large capitalization producers anymore, and a much bigger pool of riskier intermediate and junior gold companies.
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