https://www.theglobeandmail.com/business/arti...d-veering-aw...
The slow shift of power away from Barrick Gold Corp.'s Canadian head
office has moved into high gear, just days after the company closed its deal
with African operator Randgold Resources Ltd.
The US$6-billion acquisition, which was announced in September and
completed Tuesday, has left Barrick with a hollowed-out head office, almost
no Canadian representation on the board, and few Canadians in top management
positions.
Barrick's retreat in Canada reflects a broader downsizing of Toronto as a
world mining capital, with fewer global players headquartered in the city and
dramatically less mining capital being raised on the Toronto Stock Exchange.
Barrick, the world's largest gold producer, had been one of the last great
Canadian corporate mining champions left standing after a wave of foreign
takeovers of metals giants such as Inco and Falconbridge. With a head office
of about 500 employees, it played a major role in Toronto's financial scene.
But that Toronto office has been shrinking for years as Barrick went
through a series of restructuring moves led by John Thornton, its U.S.-based
executive chairman.
Pierre Lassonde, whose Franco Nevada Corp. has owned a royalty on
Barrick's Goldstrike mine in Nevada since 1985, believes that Peter Munk,
Barrick's late founder, would be aghast at seeing the company's
fast-shrinking presence in Canada.
"I think Mr. Munk is going to roll over in his grave 10 times,"
Mr. Lassonde said. "Peter was Mr. Canada. He wore Canada on his sleeve.
He was so proud to be a Canadian."
Not long after Barrick announced its purchase of Randgold, the company's
new executive team dramatically scaled down its domestic footprint.
Only around 65 people work in Barrick's head office now, compared with 150
as recently as September. A board overhaul announced Wednesday has left only
one Canadian director, Michael Evans, and he lives in New York. Many of the
company's new executives came from Randgold and just two of 14 upper
management roles are held by Canadians.
Mr. Thornton, the executive chair, is American, South African Mark Bristow
is chief executive officer, and another South African, Graham Shuttleworth,
is chief financial officer. The highest-ranking Canadian left is Kevin
Thomson, who serves as senior executive vice-president of strategic matters.
Soon Barrick will likely not have any mines left in Canada either. The
company is planning to sell the Hemlo mine in Ontario, the only Canadian
operation in its portfolio.
"Don't tell me in the Canadian mining industry there's not great
people to run a company like Barrick," Mr. Lassonde said, whose
Franco-Nevada is run entirely by Canadians.
A Hungarian immigrant, Mr. Munk founded Barrick in 1983 and grew it into
the biggest gold company in the world. Around the time Canadian base-metal
companies such as Inco and Falconbridge were being sold to foreign buyers, he
marched into the offices of The Globe and Mail and demanded the newspaper
draw attention to what he saw as the gutting of Canada.
When Mr. Munk tried to merge Barrick with U.S. competitor Newmont Mining
in 2014, the deal was called off at the 11th hour amid a clash among chairmen
and Newmont's plan to move Barrick's head office to the United States. That
was a deal-breaker for Mr. Munk, who demanded it stay in Toronto.
In November, when asked if he thought the lack of Canadian influence at
the top and its shrinking footprint in Canada was an issue people should care
about, Mr. Thornton said, "The single most important thing that anyone
should be focused on about any company is: Is it healthy and successful?
"The issue shouldn't be what's the nationality of the people running
anything in any world-leading company," the Barrick executive chairman
said. "The issue should be: Are they doing a good job or are they not
doing a good job? That's all."
Mr. Thornton, who spent much of his career as an investment banker with
Goldman Sachs, lives in Palm Beach, Fla., only occasionally visiting Toronto.
Mr. Bristow, the CEO, plans to spend much of his time abroad, visiting the
company's international mines. He doesn't even like the term "head
office" and doesn't really believe in them, he said. At Randgold, Mr.
Bristow, who was both the CEO and founder, was known for running a highly efficient
gold miner with little or no ties to any specific country. Randgold's head
office in Jersey in the Channel Islands housed only a handful of people.
But Mr. Lassonde says while he's broadly in favor of Barrick's new
decentralized management structure, there's still a need for a vibrant head
office at any mining company, with the main decision makers working on site.
"The head office should be where the CEO is, where the chairman is,
and where the CFO resides," Mr. Lassonde said. "This is going to be
a phantom head office until the company is either sold or dismantled and then
it's going to disappear. It cannot stay like this."
The cuts at Barrick's head office will likely have broad knock-on effects
for Toronto's financial ecosystem that will mean less work for bankers,
consultants, and legal professionals. Under Mr. Munk, Barrick regularly used
RBC as one of its investment bankers. Although Barrick tapped Canadian banks
for some of its smaller asset sales in recent years, the miner did not hire a
domestic bank for the Randgold purchase.
Mark Selby, a former Inco executive and now president of junior nickel
miner RNC Minerals, said what's happening at Barrick is part of a retreat
from mining in Canada. The retreat kicked off with the gutting of the large
base-metal companies in the mid-2000s and a shift of large mining
headquarters away from Toronto toward London, such as Rio Tinto's acquisition
of Alcan.
"Before, Toronto made sense to be there because you had this cluster
of large companies, a cluster of capital providers and fund managers and
investment analysts who helped allocate that capital. Those have all shrunk
dramatically," Mr. Selby said. "There is less of a need to be in
Toronto today."
Derek White, former executive with Billiton and now CEO of junior miner
Ascot Resources Ltd., called it "a bit of a setback to our ability to
remain as the center for global gold companies."
"It means that newer, smaller companies will have to come together to
build up critical mass inside of Canada," he said. "If we want to
be the bigger players, some of our players are going to have to come together
to step up to the plate to make that happen."
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