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Company cuts 30 per cent of head office jobs as gold prices sinks.
As the price of gold continues to lose its lustre, some of the biggest miners in the world are feeling the strain. Barrick Gold Inc. is cutting about 100 jobs, mostly at its Toronto headquarters, the company confirmed Monday.
Meanwhile, Newcrest Mining Ltd., in Australia, wrote down the value of its mines by as much as $5.5 billion (U.S.), the biggest one-time charge in gold mining history. Global miners spent $195 billion buying new assets in the past decade as gold prices soared. But the precious metal has been sinking on talk of the end of low interest rates.
Goldman Sachs Inc. has cut its year-end price forecast for gold to $1,300 (U.S.) an ounce from $1,435. The spot price of gold slipped $12 to trade at $1,287 in New York Monday.
Gold is down 33 per cent from its peak of $1,921 in September 2011, with much of the losses coming since January. That’s been bad new for gold miners.
“We expect to see a significant decline in earnings and cash flow,” Stephen Walker, analyst at RBC Capital Markets, wrote in a note to clients on Monday. Fully diluted earnings per share could fall as much as 35 per cent, he estimated.
At Barrick, the job cuts represent about 30 per cent of its corporate staff, the company confirmed in an email.
“As part of ongoing efforts to streamline the organization and manage costs in a challenging business environment, Barrick is eliminating approximately 100 corporate office positions,” the email said.
Barrick is also making reductions at a number of its regional offices as part of a company-wide effort, the company said.
Impacted employees will receive severance packages and access to career placement services, the company said. Barrick employs about 25,000 people worldwide.
Closely tied to currency and inflation expectations, the price of gold has been in freefall since January, when speculation began that the U.S. Federal Reserve’s massive bond-buying program could soon end, said Patricia Mohr, commodities market specialist with Scotiabank in Toronto.
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