Newmont CFO on building the world’s biggest gold miner

Traditionally, periods of uncertainty have seen gold prices spike as investors look for safe bets.

It is no surprise then that the world’s biggest gold miner Newmont Mining Corporation has seen its market value shoot up in the year of the coronavirus – as the commodity’s value has increased by over 25 percent in the last year.

But the doubling of the US giant’s share price in the last 12 months – giving it a market cap of around $50bn by the end of September- is also down to effective strategic management.

When Newmont reported in May a nine-fold increase in quarterly earnings to $822m compared to the same period in the previous year on revenue up 43 percent, it also revealed it had stepped up gold production 20 percent in the quarter to 1.3 million ounces.

Another critical factor in the group’s rapid ascent to the number one spot was the  acquisition of Canadian rival Goldcorp in a $12bn transaction last year. The transformational deal, that Buese played a key role in, was undertaken when the gold price was in a relative dip.

The deal was intended to bring an estimated $365m in annual pre-tax synergies, supply chain efficiencies and other improvements. At the time, outgoing CEO Gary Goldberg said: “We’ve met our goal to become the world’s leading gold business.”

Although the deal can be seen in hindsight as a masterpiece of timing, Buese is keen to play her vital contribution in the merger, describing is as “much like any other deal,” reflecting her no-nonsense approach that has defined her career so far.

Although the acquisition of Goldcorp has created a global behemoth across four continents and employing over 30,000 workers and contractors, the relentless pursuit of value meant a trimming of less profitable mines. A plan to dispose of between $1bn and $1.5bn of assets after the Goldcorp deal has been completed, generating cash proceeds of more than $1.4bn.

Having developed her career in the energy sector Buese says she arrived at Newmont in October 2016 at a time she describes as “a pretty slim margin environment”. She says the goal on arrival was to create a develop a finance function that could help the group create value in a period of tight margins.

“What we had was a kind of messy and inefficient financial organization structure and what I wanted was a finance function that conformed to an operating model that was efficient and effective. It would mean we could support the organisation by providing the information we needed to make good decisions,” she says.

Describing herself as a “very operationally focused CFO”, Buese says: “I believe our primary job is to support operations and provide them with the data in a usable form so that the CEO and others can make very well informed very appropriate decisions because we’ve given them the right information.

“It took a very long time to steer Newmont in that direction. When I joined finance was not necessarily as highly regarded. So we really turned the tide, to create an environment where finance was seen as very customer service-focused and supportive of other functions and certainly of operations,” she says.

Core to the changes made to turn finance into a value driver for the group, was streamlining some processes that finance was engaged in “so that we weren’t doing things that weren’t necessary and we took out a lot of churn,” says Buese. “We sort of broke things down to what we were trying to get to, in their simplest form and identifed what was the most efficient and effective way to get there,” she says.

A critical aspect of that evolution was building a team of finance professionals that understood what was required of them to deliver the right outcomes and who could work well together. “We’ve spent a lot of time really focusing on how to be a team and how to build and how to agree upon our service delivery levels,” says Buese.

Another crucial element to finessing finance was bringing the global finance functions, led by 14 of Buese’s direct reports,  closer together to deliver “a consistent level of service delivery and a consistent set of our understanding amongst us [the finance leaders] of how we were going to deliver and against what backdrop. Getting that consistency in our operating model was really key,” she adds.

From the group’s headquarters in Colorado, Buese says she is looking to ensure a globally focused culture across the regions that are located across North America, South America, Africa and Australia. “Having a global acumen and skill set is important for how we can be successful in any jurisdiction. There’s a lot of cultural awareness of what we’re asking for and the expectations that we set,” she explains.

Building blocks

After studying accounting and business administration at the University of Kansas, Buese joined accountancy giant Arthur Andersen before switching to rival EY, where she stayed for 10 years. She describes the decade there as “a great opportunity to get a view of many, many different companies, on how they work broadly and specifically how the boardroom works,” she says.

But in time there came a yearning to take a leadership role within a corporate, and so she joined private equity-owned lifestyle and nutrition group Natural Supplement Association as CFO, a business that was soon taken over by listed pharma giant Abbott Laboratories.

Given the choice between private equity and public shareholder ownership, Buese says she preferred the latter. “The experience taught me that I appreciate more the public realm and that’s where I wanted my career path to go.

“I also realised I wanted to be somewhere that I could stay for a while, working on something that I could build for the long term,” she says. As a result, Buese moved to energy sector start-up MarkWest Energy Partners, that had just completed its IPO, and was worth about $50m.

The 11 years she spent at MarkWest, Buese describes as “an opportunity to build something, to be part of really driving something, and truly understanding the needs and desires of managing very different types of stakeholders.”

She says it was also a time when she learned the value of developing relationships not only with shareholders and customers, but also with communities in the locations MarkWest operated in.

Key to managing those relationships effectively is being honest about the challenges being faced. “So if you’re in a community, I understand you want all these things but we also have to have economics that support these concerns and with customers

“It might be that as a company we’re facing headwinds, so it’s just about managing expectations, and not saying something up that we can’t deliver. So I think it’s truly about that whole concept of managing expectations and doing things in a very honourable and virtuous way,” she says.

Buese says she also learned in that time that shareholders and many other stakeholders considered their investments based on management credibility. “As my role developed and grew what was really important was having people say I trust and believe what she says,” she adds.

“People would say I will buy the stock because she’s never steered me wrong, or I trust her jusgement,” says Buese. All those effirts paid off as MarkWast was sold for $15bn in 2015 to MPLX, a business owned by oil giant Marathon Petroleum.

 Stakeholder support

Being able to establish credibility with shareholders and other stakeholders early on was something Buese says was vital when joining Newmont in order to drive strategy at the group.

“That for me is, where you want to get to- where your shareholders and other stakeholders believe what you’re saying and believe you’re driven by the right values, and they’re comfortable aligning with that.

“Carrying forward that across financial judgments or ESG decisions that we make is a really key part of my role, and others who interface with external stakeholders. It’s about listening, and guiding,” says Buese.

Earlier this year, Newmont temporarily shut down a number of mines around the world in order to protect local communities from the spread of coronavirus, reflecting that values-based approach.

“A part of my DNA and the companies that I’ve worked for is getting that all right and I, what’s interesting is I don’t think they’re mutually exclusive. I think we can be an outstanding miner and an outstanding operator and provide great value to our shareholders and our other stakeholders at the same time.

“I don’t think that doing the right thing, or being an excellent provider of ESG is at all inconsistent with delivering exceptional returns to our holders and making the places where we operate a better place to live,” says Buese.

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