Modern Mining October 2015

COMMENT

Straight talking on mining by Randgold’s Mark Bristow

T he mining industry tends to be over-weight in senior executives who carefully weigh every word they say and who very rarely en- gage in straight talk – which is why it is so refreshing to listen to Mark Bristow, the dynamic (an over-used word but correctly ap- plied in his case) CEO of Randgold Resources. Once a year he hosts a media lunch in Johan- nesburg and at this year’s event he was in his usual top form, throwing out one quotable quote after another with a cheerful disregard for the conventions that normally govern dis- cussions between members of the media and the mining industry’s top management. Not surprisingly, he painted a grim picture of the gold mining industry. He pointed out that when he created Randgold back in 1995, South Africa was still the world’s top gold producer, producing nearly a quarter of global output, whereas today it ranked a lowly seventh and was responsible for just 5 % of world produc- tion. He said gold mining generally, and not just in South Africa, was in a bad state and in need of major restructuring. “It will not look the same in two years’ time as it does today,” he predicted. “It’s definitely an industry that has to have something done to it.” He noted that collectively the world’s top gold producers had not increased production over the past ten years despite raising US$150 billion in debt and equity, which – as he put it – was a huge investment to make just to tread water. Randgold – which reported record gold pro- duction in the second (June) quarter of this year – was one of the few exceptions to global trends in gold mining, he said. The group was debt free, had never in its history reported a single impairment and was continuing to invest heavily in exploration – to the tune of US$50 million a year – at a time when most explora- tion budgets were being slashed. On the outlook for resources generally, Bristow said commodity prices were unlikely to recover to the levels seen during the ‘super- cycle’ boom. “We’re not going to get back to where we’ve come from,” he said, adding that oil storage facilities around the world were full while China had enough iron ore stockpiled to last six years. On the subject of social responsibility, he claimed that most mining companies had no ‘social licence’ to mine. He said that obtaining such a licence involved more than just upgrad- ing the local clinic and was a task that had

to be worked on continuously. He noted that Randgold in Mali, apart from all its commu- nity initiatives, had contributed over a billion dollars to the Malian treasury over the years and that its operations currently accounted for 12 % of the country’s GDP. “Our taxes pay the salaries of all the country’s civil servants,” he stated. Perhaps Bristow’s most interesting com- ments were on Obuasi in Ghana and Randgold’s planned collaboration with AngloGold Ashanti to revive the more-than-100-year-old mine, which over the past ten years has consumed around US$1 billion in new investment with little to show for it. Operations at Obuasi are currently curtailed – the only production is from tailings processing – while its future is being determined. Bristow didn’t mince his words about the state of Obuasi, saying it had no social licence to mine, was in conflict with virtually every- one and was hampered by a range of legacy problems. He stressed, however, that it had significant reserves (probably far more than had been declared). “The question is whether we can convert this world-class orebody into a world-class mine,” he said. In terms of its agreement with AngloGold Ashanti, Randgold has till the end of January next year to come up with a realistic, viable plan to convert the mine into a modern mecha- nised operation. Bristow said Randgold had made a start on this task, having just transferred the team that had worked on the Kibali under- ground mine in the DRC to the Obuasi site. I can’t help thinking that the revival of Obuasi will be the biggest test ever for Bristow. Even for a man with his abilities, the mine presents a huge challenge, as it has steadfastly defied the efforts of a succession of managers to get it right. Randgold has a proven success record with underground mining, with its opera- tions in Mali (and now Kibali as well) ranking as amongst the most efficient in Africa. But these are new mines, designed from the start for mechanisation. Can the same methods be ‘retrofitted’ to the maze of underground work- ings at Obuasi, which extend down to about a kilometre-and-a-half below surface? Certainly, if Randgold can chart a new course for Obuasi – and successfully implement it – then it would rank as a stunning achievement and confirm Bristow’s reputation as one of the world’s sav- viest gold miners. Arthur Tassell

Bristow noted that collectively the world’s top gold producers had not increased production over the past ten years despite raising US$150 billion in debt and equity, which – as he put it – was a huge investment to make just to tread water.

October 2015  MODERN MINING  3