Barrick Gold is stipulating that in the next 10 to 15 years, China has the potential of becoming the largest economy in the world. If it does, it will be the first time in 150 years that a country other than the United States holds the coveted position.


Image courtesy ©Barrick Gold. Touring the underground operations of China’s largest gold mine by production

Recognising the need for strong relationships with the emerging economic power, Barrick Gold is forging ahead in the space it knows and understands best: gold.

China is both the largest producer and consumer of the metal. The country also possesses distinctive advantages as a potential source of low-cost capital, technology, supplies and geopolitical leverage for any global mining firm. And the country’s own gold producers, ambitious and actively in search of opportunities around the world, offer the prospect of uniquely strategic and long-term partnerships.

According to Barrick Gold, its focus on China is real and deliberate. In 2014, the company created the position of President for Barrick China to manage its interests there. In 2015, Barrick Gold sold half of its ownership in the Porgera gold mine in Papua New Guinea and began joint operations with the buyer, Zijin. In 2017, Barrick Gold formed a 50-50 joint venture with Shandong Gold at the Veladero mine in Argentina.

In 2018, Barrick Gold is strengthening its relationship with Shandong Gold by entering into a mutual investment agreement for up to US$300 million.

Under the Agreement, Shandong Gold will purchase Barrick shares, with Barrick investing an equivalent amount in shares of Shandong Gold Mining – a publicly listed company controlled by Shandong Gold.

“This mutual investment is another reflection of the deepening partnership between our two companies,” said Barrick Executive Chairman John L Thornton. “Barrick and Shandong both believe that by working in partnership, we can leverage our collective strengths to unlock long-term value for our respective shareholders.”

Yumin Chen, Chairman of Shandong Gold Group echoed the sentiment.

“Through this mutual investment and cross shareholding initiative, we will be able to capitalise on respective strengths and realise long-term synergies and unlock long-term value for the respective shareholders. Building on the excellent partnership at Veladero today, we believe additional long-term strategic value can be created by working closely together on other projects including Lama and El Indio Belt projects in the future.”

Shandong Gold is currently carrying out an independent evaluation of Barrick’s Lama project, including an analysis of potential synergies between Lama and the nearby Veladero operation.

Barrick and Shandong Gold have also created internal working groups that are sharing technical expertise and best practices focused on best-in-class mining practices and innovation.

On September 28, SD-Gold was successfully listed on the main board of The Stock Exchange of Hong Kong Limited, with the stock abbreviation of “SD-Gold” and the stock code of 1787.HK.

In his speech, Yumin Chen stated that the listing in Hong Kong is the first step for SD-Gold to successfully enter the international capital market, and is also an important milestone in the development history of SD-Gold.

The company is offering 327.7 million H-shares at between HK$14.7 and HK$18.4 (US$1.87-2.34), according to its filing to the Hong Kong stock exchange.

The state-owned domestic holding company of Shandong Gold is also listed in Shanghai with a market capitalisation of 43.6 billion yuan (US$6.3 billion).

The firm controls and operates 12 domestic gold mines, and accounted for 6.6 per cent of China’s gold output in 2016. The country the world’s largest producer of the yellow metal.

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