This week’s Interview of the Week is with Ian Telfer, Chairman of the Board at Goldcorp. We discussed Goldcorp’s growth strategy, Mexico’s place and potential in the global mining industry and mining’s transition to cleaner energy.
Q: What is your perception of the global mining industry and what role does Mexico play in this context?
A: The global mining industry is in pretty good shape, particularly when it comes to costs and finance. Most mining companies are able to make a profit thanks to positive metal prices. But the biggest challenge for the gold industry is finding more gold. This is a global issue as production at major gold-mining companies is either flat or declining. The context is causing speculation about whether all the gold has already been found or whether insufficient investment has been made to find it. It is becoming increasingly harder to find high-grade ore mines. The price of gold will have to go a lot higher to catalyze the next big round of gold discoveries.
Q: As the eighth-largest gold producer in the world, what does Mexico need to do to strengthen its position and place itself among the Top 3?
A: Many of the problems that Mexico faces are common to gold-rich jurisdictions around the world, including security issues and land ownership uncertainties and conflicts. These conditions have the ability to slow down Mexico’s growth as a gold mining country. That being said, companies like Goldcorp have found great success in Mexico. In general, the situation is not bad and miners can continue to search for gold, build mines, operate and find human capital in the country.
Q: What is Goldcorp’s growth strategy?
A: When a company becomes increasingly larger, as Goldcorp has, the size of the mines required to really make a difference to shareholders becomes equally as big. We had five mines in Mexico, but as we grew, we had to sell the mines that were growing at slower rates. We are focusing on Penasquito given its scale and the shareholder value it generates for Goldcorp. We would like to grow by finding two or three additional mines that have characteristics similar to those of Penasquito.
Q: How can the industry take advantage of alternative sources of energy to increase sustainability?
A: The sector is working hard to reduce energy and water use as part of its ongoing improvement, partially to keep costs down and for the benefit of the environment. Improvements in these areas can also have significant positive impacts on the communities where we operate. For example, some plants in Mexico recycle tires, turning them into diesel fuel.