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Mining executives expect more consolidation, ESG issues in 2020

Executives from mining companies including Barrick Gold Corp., Freeport-McMoRan Inc., Newmont Goldcorp Corp. and First Quantum Minerals Ltd. are expecting a significant focus on environmental, social and governance issues as well as more consolidation in 2020, according to interviews with Bloomberg News.

Barrick CEO Mark Bristow, Newmont Goldcorp President and CEO Tom Palmer, Freeport President and CEO Richard Adkerson and First Quantum President Clive Newall all agreed that their companies are gripped by ESG issues, with Bristow saying the industry is "oversold" due to those concerns.

"Just look out your window. If you took away everything that was mined you would just have a heap of rubble." Bristow said, adding that miners need to be more accountable and highlight responsible development. Agnico Eagle Mines Ltd. CEO Sean Boyd chimed in, noting that it started an advocacy campaign that highlighted the benefits of mining.

Freeport's Adkerson, who said the public discourse is rising over ESG concerns, said, "Those sorts of issues are many times more challenging than the really challenging technical issues we face," adding that resource nationalism remains a challenge.

However, Newmont Goldcorp's Palmer does not think ESG ratings correlate with stock liquidity but believes that things are moving in that direction. "It's a topic of conversation at just about every meeting we have," Palmer said.

On the topic of mergers and acquisitions, Bristow said the gold sector needs more consolidations. "Gold has never, since the Bretton Woods agreement, been in such a good place," the CEO said in the Dec. 19 report.

Further, Palmer forecasts that more single-asset gold producers will combine businesses in 2020 but said megamergers similar to those that occurred in the first half of 2019 are unlikely to occur.

In the copper market, Adkerson said tariffs imposed by the U.S. on China had set back commodity prices since June 2018, with additional headwinds coming in the form of uncertainty over Brexit and weak U.S. manufacturing. Adkerson added that higher prices for the red metal are likely, should there be a resolution of trade tensions.

First Quantum's Newall added that the physical copper market has been strong, and he expects prices for 2020 to range from US$2.50 to US$3.00 per pound.