New York, New York
Richard O'Brien, Newmont president and CEO, was featured in the "2010 CEO Report" edition of NYSE Magazine, discussing how the company manages global risk. Following is a reprint of the interview.
Global risk-management strategy
"Gold is distributed where God put it," says Richard O'Brien, president and CEO of Newmont Mining Corp., a gold producer with 2008 revenues of $6.2 billion and operations on five continents. "We don't get to control where it is."
What the company, headquartered in Greenwood Village, Colo., can help control, says O'Brien, are the risks associated with finding that gold. To do that, Newmont employs a global risk-management strategy that views the company as "a portfolio of assets and opportunities, not just one-off opportunities," he explains. "Our approach with all of our projects is that they are globally aligned, regionally owned and locally run."
The global-alignment element, he says, comes from transporting what the company learns in one region of the world to another, and he urges communication. When Newmont began a mining project in Ghana in 2006, for example, O'Brien had Ghanaian community leaders and government officials speak with their counterparts in Peru, where Newmont also had a gold mill under construction.
Keep on time, on budget
Having strict timetables and budgets for each new project is also imperative, because "if we don't get it done on time, every extra month adds additional cost and additional risk," O'Brien says. "We don't want to shortcut things because we're running out of time and money."
O'Brien went on to say "We don't reinvent our standards with each new project. The elements and challenges may be different, but the standards of our work don't change."
Stay safe
O'Brien says part of Newmont's risk-management strategy dictates strict safety standards - such as wearing a seatbelt or a helmet - regardless of the local customs where a project is based.
"We invest in safety training at those sites," he says. In addition to minimizing safety risks, the CEO also emphasizes the importance of minimizing capital risk, especially in an uncertain global economy. "The best way to make the business sustainable is to put all the costs in at the beginning," he says.
For instance, if the long-term success of a project dictates that a community needs a hospital, school or new roads, Newmont factors those costs in up-front.
"These are not things that we are required to do," he says, "but if we want to live and be part of the community where the operation is located, it makes sense."
December 1, 2009
