Despite a steady, two-year slide in gold prices, generally miserable market conditions for the mining sector as a whole and a strengthening U.S. dollar - which is typically negative for gold prices - Chuck Jeannes, Goldcorp Inc. CEO, is being bullish on gold. The world, in his view, is entering the gold peak era.
“Our industry is never going to mine as much gold as this year,” said the head of the Vancouver-based miner. “I hope I’m wrong. I hope there’s some magical technological breakthrough that changes this, but if it happens, it’s not going to happen for a long time.”
In his view, mining companies must shoulder some of the blame for their current predicament, because, despite a period of record high gold prices, many gold miners still couldn’t provide a good return to shareholders.
“We have to accept a lot of the blame for costs going up because we allowed the grade to go down,” he said. “We lowered our cutoff grades, we chased marginal ounces and, as a result, we saw higher costs. We allowed the costs to go up at exactly the same rate as the gold price and so the margins never grew. We were making the same profit margin at $600 gold as we did $1,200 gold.”
Recently, Goldcorp has jumped to the top to become the world’s largest gold mining company, based on market capitalization ($24 billion), says Business in Vancouver. It has reached it through a strategy of acquisition, financed in part through the sale of none-core assets.
The company now owns 10 operating gold mines, has several projects in development and employs 19,000 people worldwide, about 150 of whom work out of Goldcorp’s head office in Vancouver.
“And in order to achieve that, as you add new high-quality projects, you have to be willing to sell off your non-core things, and I think we’ve been better at that than any other gold company, so I’m quite proud of that. And that’s allowed us to finance our growth without having to take on a whole bunch of debt.”
