Munk's well-connected successor looks to fix Barrick

Tue Dec 3, 2013 9:51am EST
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By Nicole Mordant and Allison Martell

(Reuters) - Soon after he joined Barrick Gold Corp's (ABX.TO: Quote) board last year, John Thornton, the designated successor to founder and chairman Peter Munk, took a company team to visit Ford Motor Co (F.N: Quote) and learn about the automaker's turnaround story.

Ford, where Thornton has been a director since 1996, and its Detroit peers were on the skids just four years ago. But now the automaker is posting record earnings after a major overhaul of its costs and products.

The expedition to Ford may offer a glimpse into what the former Goldman Sachs Inc (GS.N: Quote) second-in-command thinks is needed at Barrick, the world's biggest gold producer, as it faces a host of challenges amid a diminished outlook for the mining industry.

The 59-year-old American, a China hand who is expected to become sole chairman at Toronto-based Barrick by next spring, takes charge at a time when sentiment has soured on the mining sector after cost overruns and a sinking gold price. Observers say he could shore up Barrick by allying it with powerful investors in China.

Munk, a controversial figure who many say holds too much sway in the Barrick boardroom, picked Thornton as his co-chairman and successor, and the pair have worked closely for more than a year.

Barrick has underperformed many of its peers so far this year. Its shares are languishing near 21-year lows, hurt also by market dissatisfaction with the company's governance and corporate missteps that include ballooning costs at its Pascua-Lama project in the Andes and a disappointing copper mine purchase in 2011.

"The whole industry is going through a pretty radical rethink about their strategy," said Goldman Sachs Vice-Chairman Michael Evans. He said China is the key strategic consideration not just for Barrick but for the entire industry.

"I think John will use that seat as chairman to think about transformational change in people, strategy, culture, whatever. It's the way he thinks," said Evans, who has known Thornton for 20 years and witnessed his ascent at Goldman.   Continued...

Barrick Gold Corporation Chairman Peter Munk leaves the annual general meeting of shareholders in Toronto May 2, 2012. REUTERS/Mike Cassese