As the world transitions to renewable energy and electric vehicles and supply shrinks, demand for copper will increase significantly, according to experts. “I am very excited that copper is going to start a very long and good run and we are going to benefit from it organically,” says Tom Palmer, CEO of Newmont. Celebrating its 100th anniversary earlier this year, Newmont is the only gold mining company listed in the S&P 500. Reviews of Tom Palmer, who gave an interview at the Denver Gold Forum. Cryptocoin. com we have compiled for you.
“We will be moving towards renewable energy by 2030”
Metals experts say most clean technologies, including renewable energy systems such as solar, hydro or wind twin-cycles, require much more copper than is currently used in our non-renewable energy systems. Tom Palmer talks about how Newmont has boosted its line of copper businessdollars:
We have designed a portfolio in our organic project pipeline that includes a number of copper projects. As we enter the second half of this decade, into the 2030s and 2040s, without doing anything more than advancing our organic project pipeline through our investment system, we will increase our copper activitydollars because we have so many gold/copper projects.
Newmont also acquired GT Gold earlier this year, which includes the Tatogga project, a copper/gold mine in British Columbia. A report by Goldman Sachs earlier this year referred to copper as the “new oil.” Last November, Newmont set ambitious targets to reduce greenhouse gas emissions by 30 percent by 2030 and reach net zero by 2050. Tom Palmer comments:
We are currently actively working to identify projects where we can reduce the greenhouse gas emission levels used. By 2030, we will be moving towards renewable energy, whether it’s hydro, wind or solar power. This will require us to switch to different forms of energy to drive our trucks, such as electric batteries or hydrogen.
“What sets us apart from our competitors in the gold industry is our capital allocation policy”
The price of gold has dropped nearly 7% year-over-year, while Newmont’s stock price is down 9% to date and 22% from its peak in May. Tom Palmer continues his explanations as follows:
Gold prices have not moved much since May. We are making a very good purchase. If people want to make a good long-term investment, I think gold stocks are a good opportunity. What separates us from our competitors in the gold industry is our capital allocation policy. We have a very clear dividend framework. We pay dividends of 55 cents per share each quarter. This represents a 4% return with our current share price.
Newmont CEO explains how he determined a sustainable basic dividend payment at a gold price of $1,200 that allows Newmont to return this cash to shareholders:
We create business plans that create a margin of up to $1,200. Then, we pay a sustainable fundamental dividend of $1 per share at a gold price of $1,200. When all these parts are in place, we strongly leverage the gold price. For every $100 increase in the price of gold above $1,200, we generate $400 million of free cash flow each year. In current gold prices, the $2.4 billion we generate each year with free cash flow above this baseline.
Tom Palmer: We took advantage of very good gold prices due to the pandemic
The Newmont CEO says Newmont’s current projects in Tanami, Australia, and the Ahafo North project in Ghana are important to production:
Tanami is a world standard asset that we have sunk a production well for the first time. It is a cornerstone asset that has truly determined our position there for many years to come. Ahafo North is just 30 kilometers from our Ahafo mine. Ahafo has a really long life, with multiple open pits and an underground mine. As part of this complex, Ahafo North further extends life and increases Ahafo production.
Tom Palmer talks about the opportunity to rise in six prices during the pandemic and how difficult it is for the gold industry to operate during the pandemic:
The pandemic continues to have a significant impact on our workforce and communities, particularly through Latin America. Due to the pandemic, we benefited from very good gold prices, but it was still a difficult time. From our emergency response to the pandemic it has become a chronic problem that we have been managing for 18 months.