Is Barrick Gold on track to double its annual copper production by 2031, or should it have aimed higher and pursued a major merger in the copper industry instead of incremental expansions and a significant project in Pakistan?
The company recently unveiled plans to increase copper output to 450,000 tonnes per year by 2031, in response to the growing demand for renewables. If it successfully executes these plans, it could surpass its rival Newmont, which, with Newcrest on board, will produce only around 175,000-180,000 tonnes of copper annually from 2024.
However, Barrick will still lag behind copper giants like BHP, Rio Tinto, Codelco, Freeport, Glencore, First Quantum, and Zijin Mining. Even with 450,000 tonnes per year, Barrick won't make it to the top 10 in the copper industry by 2031.
BHP currently holds the top position and is set to maintain it with the takeover of Oz Minerals and expansion plans for the West Musgrave nickel-copper project in remote eastern WA. BHP produced more copper in the June 2023 quarter (476,000 tonnes) than Barrick's 2031 target.
Barrick currently produces around 220-240,000 tonnes of copper annually from its primarily gold mining operations. This is roughly the same capacity as BHP's Olympic Dam mine in South Australia.
The majority of Barrick's copper expansion will come from the Lumwana Super Pit Expansion in Zambia, projected to yield 240,000 tonnes of copper per year from a 50 million-tonne process plant expansion over a 36-year mine life. The accelerated Lumwana work program aims to complete a full feasibility study by the end of 2024, with expected production beginning in 2028.
The Reko Diq project in Pakistan is also progressing, with an updated feasibility study expected by the end of 2024. These studies will contribute to potential reserve updates and the transition to construction.
While copper is the primary focus, the expansion will also boost gold output, potentially reaching 6.8 million ounces in 2031, up from 4.18 million in 2022. This may be of greater interest to many investors than Barrick's copper ambitions.
Barrick CEO Mark Bristow emphasised the significant growth in copper production and its positive impact on gold production. He expects the group's attributable production to increase by about 30% to 6.8 million gold-equivalent ounces by 2031, combining the output from Barrick's existing gold portfolio with its growing copper business.
Bristow highlighted the potential for growth in various regions, such as Nevada Gold Mines in Latin America and Papua New Guinea, where exploration efforts aim to extend mine life. He also mentioned exciting growth opportunities in Africa and the Middle East, leveraging partnership models in Tanzania and Saudi Arabia.
The cost estimates for Barrick's projects include well over $10 billion for the first and second phases of the Reko Diq project and approximately $2 billion for the Zambian expansion, extending its life beyond 2060.