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Barrick expects deal opportunities in copper, but won’t pay premiums

9th August 2022

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Barrick Gold boss Mark Bristow expects deal-making opportunities to arise in copper amid a dearth of attractive new deposits, although for now it’s difficult to find value.

BHP Group has returned to major dealmaking in a hunt for metals vital to the shift to electric transport and clean energy. But many deposits that could be targeted are tricky and expensive to develop and mine, Bristow said in a telephone interview Monday.

“If you’re looking at copper, there are going to be some opportunities,” the chief executive officer said. “M&A right now is not easy to find value.”

After strengthening its balance sheet, Barrick is “always looking at opportunities” but won’t be paying above-market prices and has fared better with small earn-in deals that fall below the radar, he said. The Toronto-based firm’s intention is to focus on its own portfolio of projects, including a giant undeveloped copper-and-gold deposit in Pakistan.

While South Asia is a challenging place to operate, that’s where the large deposits are sitting at a time when the industry has shifted its attention away from the large, low-grade deposits of South America where authorities are looking to introduce more onerous rules, including tax hikes.

A proposed new royalty system in Chile, for example, “destroys the copper industry,” Bristow said. “You are basically wanting someone to come and invest in your country for no return.”

Besides Asia, the central African copper belt offers opportunities, he said.

In gold, Bristow said a decline in prices combined with higher production costs are exposing recent M&A transactions that were priced at a premium. While stress in the gold industry may spur more deals, buyers would have to take on a lot of marginal deposits in order to gain access to prized assets, he said.

Edited by Bloomberg

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