The head of Australia’s largest gold miner, Newcrest’s Sandeep Biswas, will be watching this week’s presidential election closely. “Gold reacts to uncertainty and it reacts to monetary policy,” explains Biswas.
In the final days before the November 3 vote, both issues are looming large for stockmarket investors as a resurgence of coronavirus infections rips through the United States and future stimulus plans to cushion the economic impact could vary depending on the election result.
Then there’s the threat of a close contest and a delayed result due to this year’s rise in mail-in ballots, and Donald Trump’s threat that he may not accept a peaceful transfer of power if he loses, which could escalate uncertainty even further.
But after the virus-induced global recession sent gold prices soaring 30 per cent this year, surpassing $US2000 an ounce for the first time in history, Biswas is not alone in predicting that the yellow metal’s rally is likely to continue regardless of who wins the White House.
“There is so much money being printed by the US and around the world already, I think that in itself bodes well for gold in the medium and the longer term,” he tells The Age and The Sydney Morning Herald.
“Whether there are spikes up or down as a result of whatever machinations may or may not occur in the presidential election that remains to be seen, and depends on their inflation targets and various other things … but the fundamentals are strong for a long time.”
Gold – a metal prized for thousands of years for its rarity and use in jewellery – is most sought after these days by investors as a hard asset to store wealth during periods of uncertainty. Amid the chaos of 2020, and central banks worldwide unleashing trillions of dollars of stimulus to revive battered economies, investors have rushed to gold as a hedge against inflation, sealing the metal’s spot as one of the year’s best-performing commodities.
It’s been good news for gold miners, which have been encouraged to spend more on exploration, expand mines, dig deeper and re-examine ore bodies previously written off impossible to extract profitably when gold prices were lower.
But it’s even better news for Newcrest, declares Biswas, who kickstarted the company’s growth phase with new projects and acquisitions long before the gold price spikes of the past two years. That means Newcrest’s projects were already “economic at much lower gold prices than today” and had now become even more robust. All of Newcrest’s assets fit the criteria of being low-cost and long-life, Biswas says, which means the company is able to achieve strong margins at the lower end of prices.
“The gold price is high now but it may not be high forever,” he says.
Under Biswas, ASX-listed Newcrest has been targeting a major growth push into the Americas. In recent years, the Melbourne-based miner has invested in Ecuador-focused gold and copper explorer SolGold, acquired finance facilities with Lundin Gold’s Fruta del Norte mine and bought a majority stake in Canadian gold mine Red Chris. It is also focused on pursuing exploration in the US, Mexico and Chile.
In the early hours of Tuesday, October 13, Newcrest’s shares listed on the Toronto stock exchange, aiming to capitalise on this year’s renewed interest in gold by lifting its presence in the Americas and giving North American investors greater ability to invest. “We are putting a lot of runs on the boards in the Americas,” Biswas says. “It’s all part of our long-term vision of pursuing Newcrest in the Americas and in the Asia-Pacific Australia region.”
Closer to home, Newcrest signed off last month on an expansion of its Cadia mine in New South Wales, the biggest gold mine in Australia. The project is hoped to increase plant capacity from 33 million tonnes to 35 million tonnes a year, and boost gold and copper recoveries by 3.5 per cent and 2.7 per cent respectively over the life of the mine. At Telfer in Western Australia, higher gold prices are allowing Newcrest to “very closely” examine the potential to extend its life by extracting ore that would not have been previously economically viable.
Biswas, who has been at the helm of the $23 billion mining company since 2014, has recently been suggested as a potential candidate to take the top job at global miner Rio Tinto after its CEO resigned over the ill-fated decision to blow up an ancient and culturally significant Aboriginal rock shelter site earlier this year.
However, Biswas dismisses this as the usual “speculation” during high-profile CEO searches, saying he is very happy at Newcrest and has work to continue on the legacy he hopes to leave. One is continuously improving safety across the miner’s operations. Another is to deliver on more of the company’s growth phase. After turning the business around from its struggles in 2013 during lower gold prices and problems at Papua New Guinea’s Lihir mine, Biswas believes his plan could position Newcrest for strong growth for decades to come.
“I’m working hard on it, we are all working hard on it at Newcrest,” he says. “That would be a great legacy to leave.”
Source: Thanks smh.com