State of the industry: Interview with Gary J. Goldberg
Colorado-based Newmont Mining Corporation has enjoyed over 90 years of history in the mining industry, becoming one of the world’s largest producers of gold in the process.
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In this interview, Chief Executive Officer Gary J. Goldberg opens up about the current status of Newmont and where the company is headed, including insight on recent acquisitions, leadership initiatives, future trends and what separates Newmont from other gold mining companies.
Q: Tell me the current status of Newmont and where the company is headed?
A: I’m proud to say that we’re executing our strategy to lead the gold sector in value creation. One of my first actions as CEO was to recalibrate our strategy to focus on value over volume. That strategy has three parts. The first is to improve the underlying business, and we’ve been successful in reducing total injury rates by 50 percent and costs by 20 percent over the last two years. The second is to strengthen the portfolio. We’ve generated $1.7 billion by divesting non-core assets, and are reinvesting in lower-cost, longer-life mines like Cripple Creek & Victor in Colorado, Merian in Suriname and Long Canyon in Nevada. The final part of our strategy is to create value for shareholders. We’ve reduced our net debt by 35 percent since 2012, generated positive free cash flow for the last five quarters running, and maintained our dividend despite the lower gold price environment. In short, we’ve made great progress toward making Newmont a more profitable and reliable business, but we’re not resting on our laurels. Our goal is to build on that momentum to take our performance to the next level, and I believe we have the right people, discipline and strategy to do that.
Q: Let’s discuss recent acquisitions and their role in achieving your long-term future for Newmont
A: Taking our performance to the next level includes improving the value and risk profile of our asset portfolio. We weigh all opportunities – operations, projects and acquisitions – on the same scale and only fund those that offer strong returns, acceptable risk and are a good strategic fit. Cripple Creek & Victor, our most recent acquisition, was an unparalleled opportunity to add immediate cash flow, and to improve portfolio mine life and costs in a favorable jurisdiction.
Q: Company culture is typically the unsung hero for most businesses. Tell me about the company culture at Newmont.
A: Our success to date is the result of our people, and they have made safety, accountability and continuous improvement a way of life at Newmont. That culture translates to good discipline in how we manage our portfolio and our balance sheet, and a sharp focus on delivering value over volume.
Q: Where is Newmont in terms of automation? What lies ahead for the company in terms of technology?
A: We use semi-autonomous equipment where it makes sense to improve safety and efficiency, particularly in our underground mines. We also leverage proprietary exploration, metallurgy and resource modelling technology for competitive advantage. Looking ahead, I can see an increasing role for technology to aid faster and better decision making, and to support a more efficient and integrated approach to how we manage our operations.
Q: How does Newmont approach sustainability?
A: Sustainability is integrated into every part of our business, and we’re honored to have been named the mining sector leader in overall sustainability by the Dow Jones Sustainability World Index. Our approach to sustainability translates into safe working conditions and good opportunities for employees; sustainable economic development for our host communities; and strong returns and prospects for our shareholders and other stakeholders.
Q: What are the top initiatives being worked on under your leadership? What plans are being made for the future?
A: Our top priority is to continue delivering our strategy, which is to improve the underlying business, strengthen the portfolio and create value for shareholders. Specific initiatives include our Full Potential program – a structured approach to improving costs and efficiency at our operations – which has netted about $1 billion dollars in cash flow improvements since it was launched in 2012. We’re also working to build the next generation of Newmont mines – Merian and Long Canyon – on time and on budget, and the next generation of Newmont leaders. Our development and succession programs are geared to maintain a robust and diverse talent pipeline, and our engagement and inclusion programs are designed to help us attract and retain the best and brightest.
Q: What do you believe separates Newmont from its competitors? How does your leadership play a role in this?
A: My job is to bring the right people, resources and focus to the business – and our people are our primary source of competitive advantage. They deliver industry-leading safety and sustainability performance, and have some of the strongest technical capabilities, including mine planning, resource modeling, processing and exploration. Our people have also built one of the best growth pipelines in the gold sector. We’ve been able to differentiate Newmont based on these accomplishments, and by delivering sector leading total shareholder returns.
Q: What trends do you see in the mining industry, either right now or on the horizon?
A: The only thing that’s constant is change. Our ability to manage change – from economic slowdowns and price volatility to Ebola outbreaks and social activism – will continue to be critical. Closer to home, I see gold fundamentals strengthening on the back of declining mine supply and rising consumer and central bank demand for gold. While that will certainly be a welcome change, we’re not counting on it and will continue to run our business to thrive in all cycles.
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.