By ERIC REGULY
Saturday, April 6, 2019
LONDON -- Kelvin Dushnisky, the new CEO of AngloGold Ashanti and the former president of Barrick Gold, is so politely Canadian that I wonder if he's too polite to run the world's third-biggest gold company.
Mining bosses tend to be egocentric Type-A personalities who would happily dive into a tank of great white sharks if they knew a treasure box were at the bottom.
Mr. Dushnisky - an "honourable man" according to a former senior Barrick employee I know - seems like the anti-mining boss. He is unfailingly courteous, answers e-mails almost immediately, doesn't swear and doesn't have a bad word to say about anyone; he will admit only that some personalities he has worked with were "challenging."
He is pleasantly self-deprecating, wondering, for instance, if even The Globe and Mail's best photographer can make him look like anything but the "Jackie Gleason" of gold mining (in truth, Mr.
Dushnisky, slim and modest, is the polar opposite of the chubby, bellowing star of the 1950s sitcom The Honeymooners).
If he has a ruthless side, I fail to detect it during a two-hour-plus breakfast in London in late March.
But it must be there, somewhere, even in small doses.
How else could he go from effectively running Barrick, the top gold producer, to actually running one of its main rivals, AngloGold?
Mr. Dushnisky, a Manitoba boy who considers Oakville, Ont., his home, spent 16 years at Barrick, when the company, largely under the chairmanship of the late Peter Munk, emerged as Canada's sole world-scale mining company, albeit one with severe pockets of trouble in Latin America and Africa. After three years as president, he jumped ship last summer and sailed off to AngloGold's headquarters in Johannesburg.
His departure came as little surprise because he and everyone else in the gold industry knew that he would never become CEO.
John Thornton, a former Goldman Sachs president who became Barrick's executive chairman in 2014, consolidated his power at the top by eliminating the CEO's position. That meant his second-in-command would have almost zero say on strategy.
"John made it clear that he was a hands-on chairman and I respected that," Mr. Dushnisky says.
Mr. Thornton at the time was holding secret negotiations with Mark Bristow, CEO of Randgold Resources, for what would be the blockbuster mining transaction of the year. Last September - two months after Mr. Dushnisky told Mr. Thornton that he was resigning - Barrick bought Randgold for US$6-billion in shares, though the deal looked like a reverse takeover. Mr. Bristow became CEO of the enlarged company, brought in Randgold's executive team to fill most of the key positions and downgraded the Toronto office.
Mr. Dushnisky's timing was brilliant. If he had stayed at Barrick, he would have been shunted down to third place on the executive ladder, after Mr. Thornton and Mr. Bristow, assuming that Mr. Bristow had invited him to stay.
Mr. Dushnisky, at 55, is finally running his own show and it's a biggie. AngloGold is Africa's top gold miner. It has 14 operating mines and three projects in 10 countries. It produced 3.4 million ounces in 2018, when its gold reserves were listed at 44.1 million ounces. Its best-known hole in the ground is Mponeng, just southwest of Johannesburg, whose shaft is almost four kilometres deep, making it the deepest mine of any kind. It can take workers almost two hours to travel from the surface to the mining face and its temperature would be an unbearable 57 C if a refreshing ice-slurry mixed with salt were not pumped down from the surface.
Over all, AngloGold is about one-third smaller than Barrick, which still makes it a giant. The company was formed in 1998, when Anglo American of South Africa, the diversified miner that competes with industry heavyweights BHP Billiton, Glencore and Rio Tinto, spun out its gold interests. The company, whose primary listing is on the Johannesburg Stock Exchange, grew rapidly but ran into trouble in recent years as costs and debt climbed and production fell, cratering the share price.
I ask Mr. Dushnisky why he was so keen to take control of such a faded company. "It was the thirdlargest producer but 14th in market cap, which I thought presented a real opportunity," he says.
"What you don't want to do is go into a company that was third in market cap and the 14th-largest producer - all you would have is downside."
So far, AngloGold's long-suffering shareholders are evidently pleased by the direction the newbie outsider is taking the company. The shares, partly propelled by the rising gold and merger mania in the industry, have climbed more than 60 per cent since Mr.
Dushnisky took the job. Still, AngloGold is a dog compared with its competitors. Its market value is only US$5.3-billion; Barrick's is US$24-billion.
Pierre Lassonde, chairman of Toronto gold royalty company Franco-Nevada, says Mr. Dushnisky has taken on one of the great turnaround challenges in the mining industry. "I think that Kelvin has a unique opportunity to make his mark over the next three years and make a lot of money for the shareholders," he says.
The meeting I have with Mr.
Dushnisky could not be more informal. We share breakfast in the windowless restaurant in the bowels of the otherwise luxurious Sofitel St. James Hotel near Piccadilly Circus. The buffet offers endless choice but we both go with standard Canadian fare - eggs, bacon and sausage. He decides to live dangerously: "My wife's not here - I can sneak a sausage in."
We both drink copious amounts of vile coffee. He speaks easily, but with nervous intensity.
He was born in Port Arthur (now Thunder Bay), on the north shore of Lake Superior, where his father worked in a paper mill before moving back to Manitoba while Kelvin was still small. The Dushnisky family grew up on a farm in Birtle, a small town in the southwestern corner of the province where hockey talent was your best ticket out of town (in fact, Birtle has produced a few NHL players). "I played hockey badly," Mr. Dushnisky says.
Still, he escaped. After graduating from the University of Manitoba and University of British Columbia with science degrees, he landed at a mining consultancy in Calgary while he banged away on a law degree from UBC. In 1996, he joined Sutton Resources, an exploration company with a gold project in Tanzania, as vicepresident of corporate affairs.
Sutton was later bought by Barrick and Barrick offered him a job in the regulatory-affairs department.
That was in 2002, which put him in the thick of the Peter Munk years. "In the first five years, I suspect he thought I was the copy-machine repair guy," Mr.Dushnisky says.
Mr. Munk and Mr. Dushnisky would go on to form close bonds.
Mr. Dushnisky rose through the ranks of legal and regulatory affairs and was appointed president in 2015. Along the way, he became chairman of Acacia Mining, Barrick's 64-per-cent-owned African investment. It was a thankless job.
Acacia was, and still is, embroiled in a dispute over wealth sharing with the Tanzanian government. Acacia has never paid corporate income taxes in Tanzania (royalties, yes). To gain leverage in negotiating a new wealthsharing deal, the government banned the export of gold concentrates. In September, just before he announced the Randgold purchase, Mr. Thornton was trying to unload the Tanzanian assets, insisting in an interview with The Globe and Mail that there was "almost 100-per-cent chance" that the Chinese would be recruited as partners.
Mr. Dushnisky won't go into detail about the miscalculations Acacia made in Tanzania. "Would I have liked it to have gone differently? Of course," he says.
He admits that working with Mr. Thornton was not always easy, given how demanding he was, although he insists they never had a blow up and that his departure had nothing to do with management friction. "John set a very high bar and it was pretty clear what his expectations were, like fast debt reduction," he says.
"He used the expression that he was perpetually dissatisfied.
What he meant was that he wanted continuous improvement." At AngloGold, Mr. Dushnisky will have to spend time being perpetually dissatisfied.
He took up residence in Johannesburg at the start of the year.
His wife, Lidia, divides her time between Oakville and the couple's new apartment in Johannesburg's posh Houghton suburb.
Their daughter, Ciara, and son, Nathan, both young adults, are in Ontario.
As Mr. Dushnisky was getting a crash course in South African mining and culture, including the shock of being called "Sir" by his employees, the gold industry burst to life with deals. Barrick's purchase of Randgold was quickly followed by Newmont Mining's offer for Vancouver's Goldcorp.
Barrick came in as the wannabe spoiler, making an offer for Newmont, which, if successful, would have cut Goldcorp adrift. In the end, Barrick brokered a peace agreement with Newmont by agreeing to merge the two companies' vast Nevada operations.
There were rumours that AngloGold would get caught up in the merger frenzy but Mr.Dushnisky says the company was never approached with a deal.
Nor does he covet a merger, he says. Instead, he wants to fix AngloGold, whose main problem was high costs, especially in its labour-intensive South African division, where the unions are confrontational and prone to strikes.
The previous CEO left the once-strained balance sheet in decent shape and the troubled and highly expensive South African portfolio had been shrunk, to the point the country represents only 13 per cent of total production, down from 43 per cent a decade ago. He says he has to keep trimming the portfolio - there are too many mines in too many countries - crunch the average production costs, which still are somewhat above the industry average, and push new, low-cost developments into the production pipeline.
On that front, the priority in the next year is to get the enormous Obuasi mine in Ghana going. Obuasi was a nightmare for AngloGold. The company fired most of the mine's workers in 2014, only to see thousands of illegal miners occupy the site in 2016.
Its successful opening is the key to bringing down AngloGold's overall costs and boost output.
The company has been under pressure to move the primary exchange listing outside of South Africa, so the stock can build more investor attention and liquidity. But Mr. Dushnisky says a new listing is not an immediate priority even if "any idea that will improve shareholder value will be on the table."
At the end of our breakfast, I ask whether his reputation as being a nice Canadian has helped or hurt his effort to polish AngloGold's tarnished reputation. "I don't know if I'm a nice Canadian," he says, smiling like a nice Canadian. "I'm just a Canadian."
So far, long-suffering AngloGold investors are likely pleased with the direction Kelvin Dushnisky is taking the company. The shares have climbed more than 60 per cent since he took over.