Barrick Gold Corporation (USA) (NYSE:ABX), billed as the world’s leading gold producer, is up to something big: digitizing companywide operations. To achieve that goal, the company is partnering with networking giant Cisco Systems, Inc. (NASDAQ:CSCO).
With the help of Cisco, Barrick plans to digitize nearly all aspects of its operations, including the running of mines, with the hope of boosting productivity and cutting costs.
A $100 million investment
It will cost Barrick nearly $100 million between 2016 and 2017 to modernize its operations as envisioned with the help of Cisco. In its mining business, Barrick is looking forward to technology to help it to achieve faster, safer and better mining operations such as real-time tracking of underground mining activities.
The mining sector has seen little technological innovation and this has denied many players the opportunity to operate more efficiently to improve returns to shareholders.
A new Barrick in the making
Commenting on the partnership with Cisco, Barrick’s COO Richard Williams hinted at a new Barrick in the making. He said that the Barrick that will emerge post the digitization work will be significantly different on the upside from the Barrick of past years.
Barrick said its Cortez mine in Nevada will be the first beneficiary of digitized operations as the company rolls out the multi-million dollar technology initiative.
The digitization of operations is expected to give Barrick a competitive edge in its industry. Mr. Williams said that all mining companies will at some point have to do what Barrick has started otherwise they might not have a long life in the business otherwise.
Barrick has been rattled in recent years with depressed commodity prices and especially metals prices, expensive acquisitions and runaway operating costs. Chairman John Thornton has been working to transform the company through measures aimed at cutting costs and improving profitability. As such, the digitization project joins the list of actions Mr. Thornton is taking to steady the Barrick ship.
When it comes to efficient operations, Barrick has its focus on cutting its production costs to less than $700 an ounce of gold. The company is gearing up to achieve that production efficiency target by 2019.