Though both companies face stiff competition from each other and other players, Newmont is expected to be the larger entity in terms of revenues and production.
Barrick’s margin (8%) is expected to be higher than NEM’s (5%) in 2019.
However, assuming similar impairment cost, Barrick could be at a greater advantage following the NEM-GOLD Nevada JV, especially due to its higher-grade assets in Nevada being further benefited by use of NEM’s superior and low-cost processing infrastructure in the region.
Both companies have seen a lot of volatility in profitability over recent years, mainly due to fluctuation in global commodity price trends, a volatile industry, and frequent and significant impairment charges.
Barrick can be found in our detailed interactive dashboard.
However, Barrick has enjoyed an advantage due to its successful hedging strategies, whereas NEM sells all of its output at market prices, which exposes it to higher market risk.Īctual historical data highlighting trends in production and price realization for copper as well as gold for the Newmont vs.
Similar to gold prices, copper price realization also moves in tandem with global price levels for both companies.
Both companies are expected to see a reversal in trends in 2019, with production and shipments increasing with improving grades and key mines.
Barrick’s copper shipments are significantly higher than NEM’s.
In line with production trends, both companies have seen a reduction in copper shipments.
As of 2018, Barrick’s copper reserves were 10.6 billion pounds as against 2.9 billion pounds for Newmont.
This is mainly due to Barrick having a much larger copper reserve base.
However, Barrick’s copper production has been consistently higher than Newmont’s, with it being 3.5x that of NEM’s production in 2018.
Copper production has been declining for both the companies over recent years (though Barrick saw a sharp drop in 2016 due to divestment at Zalvidar mine), mainly due to operational issues, crusher availability problems, and grade quality.
Though segment revenue is expected to improve for both companies, Barrick is likely to maintain its lead over NEM in the near term.
However, Barrick’s copper revenues have consistently been much higher than Newmont’s, mainly due to significantly higher production and shipments, along with better price realization.
Barrick’s copper revenue saw a sharp decline in 2016 due to significant drop in production and shipments, driven by divestment of 50% of its ownership in the Zalvidar mine.
all of its gold output is sold at market price.
Newmont adopts a zero-hedging strategy, i.e.
This was mainly due to higher grade output in the US and successful hedging strategies.
However, Barrick has been able to realize a better price for its output, compared to Newmont.
Gold price realization has moved in tandem with global gold price levels.
Newmont-Goldcorp and Barrick-Randgold deals are expected to drive volume growth in 2019.
Though Barrick has some high-quality gold mines in the Nevada region (U.S.), low grade quality in Africa has hampered volume growth.
Similar to production trends, Newmont has largely seen an increase in gold shipments over the years, whereas Barrick has witnessed a significant drop.
Though both companies are expected to see a rise in gold production in 2019, mainly due to major acquisitions during the year, NEM would likely maintain its lead over Barrick.
NEM surpassed Barrick in 2017 and its gold production levels have been higher since then, mainly due to higher reserve base.
During the same period, Newmont successfully increased its production capacity, with gold production increasing by a net of 0.5 million ounces.
Barrick has seen a decline of 1.6 million ounces in gold production in three years.
Increased volume and better grades attributable due to the Goldcorp merger is expected to help Newmont increase its gold revenue lead over Barrick to $0.9 billion in 2019.
However, in 2018, NEM’s gold revenues were $0.4 billion higher than Barrick due to higher shipments, partially ofset by lower price realization.
Barrick’s gold revenues were higher than Newmont until 2017 due to better price realization and higher shipments in most of the years.