Barrick cuts copper output forecast due to Saudi Arabia delays

Wed Sep 12, 2012 12:03am IST

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* Barrick sees 2013 copper output of 500 mln to 550 mln lbs

* Says lower forecast due to delay at Jabal Sayid project

* Reaffirms plan to shelve or sell non-core assets

Sept 11 (Reuters) - Barrick Gold Corp has cut its forecast for copper production next year due to delays at its Jabal Sayid project in Saudi Arabia, Chief Executive Jamie Sokalsky said on Tuesday.

Sokalsky said Barrick, the world's biggest gold miner, now expects its total 2013 copper output to be in the range of about 500 million to 550 million pounds, down from a previous forecast of 600 million pounds.

The company acquired Jabal Sayid as part of its C$7.3 billion ($7.5 billion) acquisition of Equinox Minerals in 2011.

"The safety and security standards of the mine were originally designed by Equinox to Western Australian standards, which differ to Saudi Arabia's standards," Sokalsky told the Denver Gold Forum, adding that the company was recently notified of the discrepancy by the Saudi government.

Because the mine does not comply with Saudi standards for safety and security, the company is restricted in its use of explosives and that will hinder its ability to mine the deposit, Sokalsky said.

"We expect to be in full compliance by 2014, but are working hard to achieve this earlier," he said.

By 2015, Barrick's copper output will be at about 650 million pounds, Sokalsky said.

He also reaffirmed the company's plans to shelve, sell or defer development of any assets that don't generate returns that meet the company's expectations. He said Barrick is still conducting a thorough review of its portfolio as part of this process.

"We've already identified some projects that don't meet the criteria of further investment. One of those is African Barrick Gold," said Sokalsky, who was Barrick's chief financial officer for years before recently moving into the CEO role.

Last month, Barrick said it was in talks to sell all or a part of an interest in subsidiary African Barrick Gold to China National Gold Group.

Sokalsky stressed on Tuesday that the talks regarding a sale of the stake are at a very early stage.

The company has also decided to shelve two of its largest development projects - Donlin Gold in Alaska and Cerro Casale in Chile.

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Comments (1)
Mining.Brenda wrote:
Yeah,
Barrick breached a number of regulations, namely:
1)…They were storing explosives in a flimsy, temporary magazine, in a
politically sensitive country.
2)…The fence around the property was made of wire mesh. The border
with Yemen is not far away. Yemen is the epicentre for Islamic
militants.
3)…Six million Muslim Pilgrims visit the Kingdom every year for the
Hajj ritual. An integral part of the Hajj is to go to Medina and
pray after visiting Mecca. On average, one coach load of Pilgrims
in on the highway every two minutes. Jabal Sayid’s mining
chemicals, mill balls and product would have been flowing contra
to the flow of pilgrims.
IN SUMMARY, THE ARROGANCE OF THE EXPATRIATE WORKFORCE AT THE MINE, AND THEIR DISDAIN FOR THE SAUDI AUTHORITIES PRECIPITATED THIS PROBLEM. I THINK THAT JABAL SAYID WILL BECOME A TOXIC ASSET FOR BARRICK GOLD.

Sep 11, 2012 6:59am IST  --  Report as abuse
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