By Lawrence Roulston
Resource Opportunities
Mining industry news of late has been dominated by massive write-downs: $6.5 billion for Barrick; Kinross added $3.2 billion to the $2.5 billion written off last year on its West Africa operations; in total, the mining industry wrote off $50 billion last year.
The write-offs follow a shopping spree over the past few years that saw all of the top-tier majors making aggressive acquisition aimed at growing the size of their businesses. Higher operating expenses in the face of softening metal prices slashed operating margins, emphasizing that the companies had grossly overpaid for those acquisitions. Those deals were done by management teams who were committed to growing for the sake of growth.
Barrick has stated that it has no further mine development plans in the works and the other top-tier majors also assured their shareholders that they have shifted their focus from growth to maximizing return on capital.