Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Barrick Gold Corporation (USA) (ABX): The Incredible Shrinking Mining Sector

Page 1 of 2

Who will be left to mine the world’s metals and minerals? As prices for gold, silver, copper, uranium, and iron ore continue to fall, miners are increasingly turning to layoffs to help meet the need to contain costs.

Barrick Gold Corporation (USA) (NYSE:ABX) just announced it will lay off 30% of its corporate staff in Toronto, or about 100 people, in addition to the 55 miners it recently said it would let go in Utah and Nevada, the 22 at its Kanowna mine in central Western Australia, and the 35 people employed at its Greenfields exploration office that it’s abandoning.

Barrick Gold Corporation (USA) (NYSE:ABX)

Barrick Gold Corporation (USA) (NYSE:ABX) isn’t alone in needing to gain control over costs through workforce reductions. Newmont Mining Corp (NYSE:NEM) announced recently that it will eliminate a third of the positions in Colorado, and Australia’s Newcrest Mining is closing its Brisbane office in a bid to reduce by 20% its overall spending costs following 150 layoffs that included its Melbourne offices earlier this year.

Cliffs Natural Resources Inc (NYSE:CLF) will also initiate a new round of summer layoffs affecting 350 workers at its iron ore operations, uranium miner Uranium One is letting go of 26 workers, and while Vedanta Resources had planned to layoff more than 2,000 miners at its Zambian Konkola copper mines, it thought better of it after the government threatened to seize its operations.

Of course, this is having a ripple effect, leading Caterpillar Inc. (NYSE:CAT) to announce its own round of layoffs. Beginning today, 260 employees of the heavy-equipment manufacturer will be laid off for an indefinite period of time.

Initially the cost-containment programs that miners effected included just cutting back on capital expenditures and selling off underperforming or non-core assets. Even as layoffs are now a bigger part of the plan, those other initiatives are now picking up speed. Analysts at PricewaterhouseCoopers find the top 40 miners anticipating a 21% spending reduction in 2013 to $110 billion, and Barrick Gold Corporation (USA) (NYSE:ABX) alone is cutting its capex budget by as much as 10%. It expects to spend between $5.2 billion and $5.7 billion this year, which is down from its previous anticipated range of $5.7 billion to $6.3 billion. It also tried to sell off its stake in African Barrick Gold earlier this year, but intended buyer China National Gold backed out. It’s still trying to sell three Australian gold mines.

Rio Tinto plc (ADR) (NYSE:RIO) is another miner purging its portfolio of anything that’s not nailed down, putting up for sale its Australian coal assets, hiring advisors for its copper and gold mines there, and having a long-running “for sale” sign hanging on its aluminum mining business. It abandoned its Eagle nickel mine before it even got started and also tried to sell its diamond business but couldn’t find a buyer.

Others selling out include BHP Billiton Limited (ADR) (NYSE:BHP) and Vale SA (ADR) (NYSE:VALE), which is divesting its potash project in Canada while abandoning another one in Argentina.

The sector’s carnage has led to a retrenchment in mining stocks themselves. Barrick Gold Corporation (USA) (NYSE:ABX) is down 60% from its 52-week high, Newmont Mining Corp (NYSE:NEM)’s been nearly cut in half, and Rio Tinto plc (ADR) (NYSE:RIO) has fallen by a third. Yet despite the fire-sale prices, the outlook is so dreary that executives themselves don’t want to engage in any dealmaking. Ernst & Young says M&A activity in mining fell 45% in the first quarter, as deal volumes dropped 35%.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!