China’s state-owned gold mining company is working on potential partnerships with both Barrick Gold Corp. and Newmont Mining Corp., its president said on Tuesday.
If the Asian company is successful, the alliances would bring one or both of the Western miners closer to China, a country that is now the world’s largest consumer and producer of the yellow metal.
“Both sides are making an effort to co-operate in the future,” Xin Song, the president of China National Gold Group Corp., China’s largest gold producer, said in an interview.
For Toronto-based Barrick, the talks represent a step forward, one that could be the beginning of a long-lasting and meaningful union that Barrick’s new chairman John Thornton wants to establish with the Chinese.
When Mr. Thornton was an executive at Goldman Sachs, he started developing relationships with key Chinese policymakers. The investment banker was chosen by Barrick’s founder Peter Munk for his contacts in China to align Barrick more closely with the rapidly growing economy and to further his vision of turning Barrick into a major, diversified miner.
Mr. Song would not provide details on the potential alliances with either North American company, except to say he has had “very good conversations” with Barrick and Newmont.
Some of those conversations took place during a private mining event in Miami in February.
He said discussions ranged from co-operation on projects and joint ventures to an exchange of ideas about how to reduce costs.
Both Barrick and Newmont, which is based in Colorado, declined to comment.
Asked whether he was talking to Mr. Thornton about working with Barrick on the company’s mothballed Pascua Lama gold-and-silver project in the Andes, Mr. Song said there was nothing to announce.
But he said Barrick and any potential partner are facing big problems with the South American mine, including the high elevation, capital expenditures and environmental protection pressures.
Mr. Song first met Mr. Thornton in 2011, when Barrick was trying to sell African Barrick Gold PLC to China National Gold. The deal fell apart early in 2013 over a pricing dispute, but Mr. Song and Mr. Thornton remained in contact.
“We have a good relationship with Mr. Thornton. We often contact each other,” said Mr. Song, who was speaking from Vancouver through a translator, and met Mr. Thornton in Beijing a few weeks ago.
Even though Barrick improved operations at two of the three Tanzanian mines that African Barrick owns, Mr. Song said he was no longer interested.
The seemingly warm relationship between Mr. Song and Mr. Thornton differs from the acrimony observed between Mr. Thornton and Newmont’s chairman, Vincent Calarco. Their rapport soured when Barrick and Newmont’s merger plans fell apart earlier this year.
Mr. Song said he first visited the company’s prized Goldstrike mine in Nevada in the early 1990s, and said he was impressed with Barrick’s management ideas.
Aside from pursuing alliances with Barrick and Newmont, Mr. Song said his company was also looking for acquisitions, and has a “big budget for M&A activity.”
“Financing is not a problem,” he said. “It’s more critical to find a good property.”
China National Gold is looking at projects and mines in the regions surrounding China, as well as in some parts of Africa, Canada, the United States and Mexico.
Mr. Song said he has also had general discussions with Kinross Gold Corp., but not about working with the Canadian company to expand its Tasiast gold mine in West Africa.