In Conversation with Barrick CEO Jamie Sokalsky
After serving as Barrick’s Chief Financial Officer for more than 13 years, Jamie Sokalsky was appointed President and CEO in June 2012. He quickly set the company on a new course that stresses disciplined capital allocation. At the same time, he has indicated Barrick remains steadfast in its commitment to corporate social responsibility (CSR) and sharing the benefits of mining with host communities. In a wide-ranging interview, Sokalsky talked about his new role and CSR at Barrick.
How are you enjoying your new role as CEO?
Very much. I’m proud to be the CEO of a company that’s an icon in Canada and a world leader in its industry. I’ve been with this company a long time and I know what great assets, people, and opportunities we have. Our goal is to set the bar in terms of responsible mining, where we consistently hit our financial targets while operating in a way that provides benefits to the communities where we operate. It’s exciting, and we have a great future head of us.
You have been with Barrick since its early days. In your view, is it the same company today?
I think the fundamental values of the company are very similar, even though we have grown and evolved and are a much more global company today. The ethics of the company — and the desire for people to conduct themselves with honesty and integrity — have always been there. I’d say the desire to do things the right way has been in Barrick’s DNA since the founding of the company by Peter Munk. Those fundamental core values remain the same.
The financial strategy you have laid out as CEO is one of disciplined capital allocation. Your message is that returns will drive production, rather than production driving returns. Will we be seeing major cost containment in terms of community and environmental investments?
When we talk about disciplined capital allocation it doesn’t mean that we should look to just reduce costs or make less investments. It means making the right investments and allocating capital in a disciplined way.
While I’m sure we can do things more efficiently and effectively throughout the company in different areas, there are critical areas where we cannot cut corners or take shortcuts. Here I mean our partnerships with local communities and promises to our stakeholders, as well as our commitment to protect the environment. In fact, these areas may require further investment. By doing so, we can significantly increase our returns overall because doing the right things for the community and the environment is also good business.
What is the connection between responsible mining practices and the company’s rate of returns?
If we run our business in the best possible way — in partnership with local communities and our stakeholders — our returns should be even higher. So disciplined capital allocation is about focusing on returns and free cash flow, but we can’t be penny-wise and pound-foolish. Investments that protect our license to operate are critical to earning returns on our investments and protecting our reputation. This is very important in terms of the cost of capital and our share price, which allows us to make further investments and, ultimately, do an even better job for our stakeholders.
Over the past five years, Barrick has placed significant emphasis on strengthening its CSR practices. How far do you think we’ve come?
I’ve been pleased to see how much we have strengthened and improved our approach to CSR over the years. Through a range of partnerships, we are contributing to health care, education, law and order and other critical aspects of daily life in local communities.
At the same time, we have worked hard to develop strong internal systems in areas like security, human rights, community relations, the environment and safety.
That’s not to say we haven’t had challenges over the years. We have. But we’ve faced up to them and dealt with them in a transparent way. We accepted ownership and implemented strategies to deal with them.
We operate in so many diverse countries and cultures today. We’ve had to sharpen our focus in certain areas so that we continue to demonstrate our values across Barrick. But I’m proud of the way we pulled together to deal with the complex challenges we’ve faced. There’s always room for improvement, but I do feel we have the commitment, the people, the culture and the DNA to continue to learn and make further improvements.