Mining Indaba: Bristow pleads with African miners to create ‘partnerships for prosperity’

A renewed focus on creating meaningful partnerships between miners, host communities and governments is quintessential to unlocking economic prosperity for African stakeholders, Barrick Gold (TSX: ABX; NYSE: GOLD) CEO Mark Bristow told the Investing in Africa Mining Indaba on May 9.

The chief executive of the world’s second-largest gold producer by volume calls it “partnerships for prosperity,” which he believes is critical for building Africa into a resource powerhouse.

Bristow pointed to one of the biggest tests for partnership the world ever faced was the arrival of Covid-19.

“Historians of the future will marvel at how governments initially bungled their response to the pandemic, both at home and abroad,” he said. “Global problems need global solutions. But instead of the developed countries leading a coordinated response, we saw them give a shameful display of selfishness, initially at least, starving poorer countries of vaccines while they sat on stockpiles of the stuff,” said Bristow.

“If ever there was a need for partnership, this was it, and they failed the test.”

Fast forward a couple of years, and the world is now dealing with renewed concerns regarding Covid mutations and the war in Eastern Europe, which has raised the spectre of nuclear for the first time since the Cuban Missile Crisis of the 1960s conflict.

“The ongoing war is inflicting serious damage on the major economies already dealing with double-digit inflation and imminent recession. We do not know just how badly these events will impact developing countries,” said Bristow.

“But without a doubt, there will be dire implications for their economies and direct foreign investment, exacerbating already weak economies. And this also goes for Africa. And particularly, its mining sector, which has already been declining in recent years,” according to Bristow.

The executive lamented resource nationalism and overzealous government policies seeking to extract the maximum value from fledgling mines were stopping investment in its tracks.

“Increasing the tax burden on a mine will drive the cost of mining to a point where they are not economically viable. So again, today, I would like to renew my plea for governments and miners to work together in a long-term partnership that will benefit them and their stakeholders equally. Mining paves the way for even greater and more rewarding ventures,” said Bristow.

Economic building blocks

Barrick today operates mines in 17 countries across four continents. In 2021, Barrick contributed US$1.4 billion to its African host countries through taxes, royalties and dividends, which resulted in broader economic contributions of US$3.3 billion.

These numbers do not capture the full benefits, like the value created by upskilling generations of workers and enhancing the national labour pool. Barrick has a global policy of employing, training and empowering host country nationals which has delivered a 94% local workforce and 69% of all our senior management representing nationals.

According to Bristow, when Barrick merged with the Africa-centred Randgold Resources in 2019 – at that stage the industry’s most profitable gold company – it adopted Randgold’s foundational philosophy of partnership with its host countries as the key to building the world’s most valued mining business.

“And by a partnership, I mean sharing the value of our mines and creating faith and trade fairly with our hosts. It means being a good citizen and a good neighbour,” he said.

Over the years, Barrick has invested billions of dollars in countries across the world and Africa and the Middle East.

According to Bristow, mining is one of the three primary building blocks vital for growing any economy, the others being agriculture and tourism.

“Most African countries, and certainly all of those represented here today, boast potential for all three. However, unlike the other two, mining is a capital-intensive industry, which requires large upfront capital investment and demands a long-term commitment from all partners,” said Bristow.

Mining can stimulate economies with broad-based growth from the long, uncertain exploration process to mine development and mine closure and remediation. Through mining’s economic contributions to governments, it can fund business and skills development, education, health care, culture, and sports. Investment in infrastructure is also usually a top priority for miners.

“The discovery process is long and uncertain and needs ongoing investment. Developing mines and remote infrastructure for regions can be difficult and expensive. That’s why mines only provide positive returns after a production period,” said Bristow.

“The growing tendency amongst both governments and investors to extract almost immediate benefits is, in fact, destructive of our mining industry’s ability to deliver our full potential,” he said.

“Successful large-scale mines like Barrick’s need constant reinvestment to remain profitable, which is often at odds with governments’ urge to take all they can get as soon as possible.”

Mutual trust

Bristow said the scenario was most recently seen playing out in Zambia, more than once, and in the Democratic Republic of Congo. According to the executive, there had been no significant new investment since introducing a repressive mining code in 2018.

“And we witnessed it in Mali as successive governments over the past two decades raised the economic sharing from 55-45 in favour of the government to 70/30, also in favour of the government,” said Bristow.

“Partnerships need mutual trust, transparency, and long-term commitments to work. Corruption destroys a country’s ability to build trust and attract long-term investment. I must say that in some jurisdictions, new governments are now looking at rowing back to a fairer dispensation.”

According to Bristow, in Africa, every job created in the mining industry creates 6 to 10 other jobs – one of the highest ratios in the world. “As one would expect, the positive impact of mining is much greater in developing economies than in developed ones. However, it’s not something we all accept and promote in our rush to grab some more,” said Bristow.

He believes Africa has two enormous assets: its unparalleled mineral endowment and the relative youth of its population, who hunger for education and opportunity.

“To fully utilize these assets requires a renewed and real commitment to partnership between governments and mining companies and other business and service providers to create a truly sustainable public-private partnership,” said Bristow.