Newmont’s decision to acquire Newcrest was a strategy designed to ensure that it not only retains its leadership position in the gold industry but also opens the door to copper optionality.
President and CEO of Newmont Corporation, Tom Palmer, outlined this when discussing ‘The Newmont Perspective’ at the 17th PNG Resources and Energy Investment Conference at the Sydney International Convention Centre on Monday.
Palmer explained the global megatrends that impact the world and the industry, saying they fall into three categories: Society, Technology and Geopolitics.
“When we take into consideration the megatrends I have been discussing today and map them against a comprehensive understanding of Newmont’s core strengths, our unique capabilities, and the potential gaps we need to close, it becomes clear why this acquisition made strategic sense,” he stated.
“First, the acquisition presented an opportunity to assemble the best possible collection of tier 1 gold and copper assets in the industry under one umbrella, benefiting from Newmont’s existing portfolio, operating model, sustainability practices, and disciplined capital allocation process.
“Second, the addition of the Newcrest assets to the Newmont portfolio allows us to consolidate in the world-class gold and copper mining districts of Australia, Canada and Papua New Guinea, unlocking compelling strategic, operational and sustainability-driven synergies, that are unique to this transaction.
“And finally, as I mentioned before, the combination complements Newmont’s existing copper production and project pipeline with world-class growth optionality.
“Newmont is now the biggest, but most importantly, the best gold company in the world with industry-leading assets, projects, people and operating jurisdictions.
“Given the commodity cycle, the assets we have acquired as part of the Newcrest transaction will help to maximise margins and generate robust free cash flow, allowing us to be disciplined in funding growth, delivering industry-leading returns and allocating resources to our sustainability commitments.”
Palmer, who has over a 20-year career history with Rio Tinto, said this will justify their position as the benchmark gold equity.
“With copper being essential to the energy transition, there will undoubtedly be a supply/demand shortfall and Newmont, strengthened through our acquisition of Newcrest, we will be naturally poised to help fill that gap.”
Palmer joined the Newmont board of directors on October 1st, 2019. He served as president since June 2019, and as president and chief operating officer from November 2018 until June 2019.