At Midyear Degree Convocation on December 16, Colorado School of Mines conferred 174 bachelor’s, 162 master’s and 31 doctoral degrees during ceremonies held in the Lockridge Arena. Central to the program was guest speaker Richard O’Brien, president and CEO of Newmont Mining, who spoke on leadership and integrity, invoking recent events such as the Arab spring and the Occupy Wall Street movement to illustrate what happens when leaders lose the confidence of those they represent. “You are more defined by what you do than what you say,” he reminded the group.
After graduation, Mines had the opportunity to question O’Brien about his thoughts on leadership and other subjects.
Mines: You spoke about leadership in your address. How do you characterize your own leadership?
O’Brien: I’m naturally an introvert, so I’d say my leadership style is more quiet and determined than loud and brash. I tend to set goals and try to meet them. It doesn’t mean I can’t be an extrovert, in this job you pretty much have to learn how to do that, so I’ve taught myself.
Mines: What qualities do you look for in those you appoint to leadership positions?
O’Brien: The first thing is, I try to hire people who are smarter than I am. I want somebody who’s got the natural raw intelligence and inquiring attitude to think about and address things differently than I might. Complementary leadership styles are really important. Also, more and more I look for the willingness and the emotional intelligence to be able to figure out how to collaborate with people. It takes more than just skills, and it takes more than just honesty and integrity, too; it takes a desire to want to work with others. Most importantly, I look for people who are as committed as I am to company first, team second, individual last.
Mines: Was there a time in your life when you began thinking of yourself as a leader?
O’Brien: I don’t tell a lot of people this, but when I was in fifth grade I went to a Catholic school, and there was a nun who was teaching class. One day she pulled me into the cloakroom to lecture me and said, ‘There are a lot of children in this class who follow you. You’re going to lead them all to hell.’ I had a lot of friends, but at the time I didn’t really think of myself as a leader of my friends. What she was pointing out to me is that people listen to me and follow me and I think it’s because she had identified something in me that became very important to me. So I would check myself and say, if other people are following me, is this what I want to do?
Although that wasn’t a leadership moment, I mean, who are you leading in fifth grade, it was something that stuck with me, and particularly with the last comment, which is, you’re going to go to hell. That’s not where I wanted to go. It got me thinking, and as I went through high school and then into college, I had many occasions to lead. Starting from being on the playground, you know, I’m the team captain and picking sides, and trying to do it responsibly and not make people feel bad, you begin to think, how can I do this better? I examined my life along the way, and when I wasn’t leading I was trying to learn leadership from people who led me.
Mines: Is there one book in particular that has resonated for you?
O’Brien: A book that builds a little bit on what we talked about today is called ‘Crucial Conversations: Tools for Talking When Stakes Are High.’ It’s about taking on those hard conversations with people, and how you can do it in a respectful and insightful way, gain alignment, and put people in a place where they know what’s expected of them, but they know if they do well, they’ll do well in their careers. We have a lot of those sorts of conversations, and not just with employees. I sit down with politicians regularly and those are sometimes difficult conversations.
Being able to talk with people about tough issues in honest ways, I think that’s a good book for people to think about that, and helps me remember that not telling people the truth because it’s difficult is a losing proposition for you and for them. You owe them the honesty about what they can do and what their career could be, and about what they’re doing right and what they can improve on. If you don’t tell them, how do they know? Particularly with the tools that we have today, people want instant feedback: How am I doing? Feedback in big corporations is still batch processing. A couple of times a year we sit down and tell you about your performance, you should be doing this, or you did that, or great work, you’re on track, and that’s not good enough anymore. So being able to have those conversations routinely is something that I aspire to do.
Mines: Given your insight into macro trends in your industry, what skills do you think are most critical to success in mining for this generation?
O’Brien: I was saying to one of the professors earlier that if I could describe one thing that I would like more of from the School of Mines, it’s to get people to think about not just their thing in their job or their project, but how does their thing fit with the company thing? You’d be surprised how critical that is to people’s thinking.
Mines: A legal career to a mineral extraction career is not the typical path. How did you make that transition?
O’Brien: I graduated from college and I wasn’t certain what I wanted to do, so as I said [in the commencement address], I just went to work. I ended up going to work for an oil and gas company. It was a very small company based in Portland, Ore., we had maybe 100 employees. The guy who was the CO was a lawyer, SEC background, became CO of the company, and he pulled me aside one day and said, “I think you’ve got a lot of potential. I’d like to have the company pay for you to go to law school.” How do you turn that down? His requirement, though, was that I had to go at night and that I had to continue to work. He got me started. Unfortunately, oil and gas prices went down and the company wasn’t doing that well, and I got snagged by another company in town in the coal business. I told them that I was in this program, and they already had an education program, which is, they were going to pay for 80% of my education. Not only could I, but I was provided the resources.
I say I never practiced a day in my life, that’s not exactly correct; I have practiced for a week. I’ve never been a laywer. That practicing for a week was because I didn’t have another job between another event in my life, but I really went to law school again much like I went to the University of Chicago: I went to learn how to learn. The great thing about law school is they teach you that while there’s black and white, most of the world is gray, requiring interpretation of both sides. The whole ethical component of being a lawyer appealed to me. I always went [to law school] knowing that I was going to be a business person, so I studied those things a lot of people don’t study, like tax law. Lewis & Clark (the law school) is known for its environmental law, so I took a number of environmental programs as well, just to try to broaden my horizon a bit. It was about learning, it was about trying to investigate a little bit more about what my capabilities were. Actually, the law came pretty easy to me. I don’t say that in any way other than it appealed to me, I seemed to have the logic down. It was not that difficult to go four years at night, work full time, and get through and graduate.
Mines: During your speech, you said Newmont is not the Peace Corps, but that you’re very proud of what the company does. What would you particularly point to?
O’Brien: The first thing about the gold business is we produce a product that is not like copper, iron ore, or metallurgical coal. It’s not an integral part of the foundation of society in terms of building cities, making people’s lives better by providing electricity through copper or air conditioning, electric cars. It’s not what we do, although we do produce some copper. We produce gold, which, in a lot of ways, is a luxury item. One of the things I check myself with continually is, we’re producing something that people place value on because of its nature, not because of its utilization.
Every ounce of gold we’ve ever produced in the world is still with us. It’s one of the most recycled products that you can possibly have. We like to tell people that all that gold fills up two Olympic-sized swimming pools. That’s it. It’s a very rare commodity. So as long as the world places value on gold, I think our responsibility is to be the best miner of gold in the world. At some point people may wake up and decide gold has no more inherent value. Warren Buffet would tell you he thinks it’s just a big slag of metal and we shouldn’t be doing all this stuff to generate it. But other people have different opinions.
As long as we’re going to do it, we should do it well. Doing well for us means we’re environmentally responsible, we’re socially responsible, and we commit to those local communities who host us. As I said [in the address], we’re not perfect, we have a situation going on down in Peru right now that is causing a lot of anxiousness in the community, in the government, with our employees, our contractors.
What am I proud of? If you look at our operation in Batu Hijau, Indonesia, it’s a very good example of what this company can do. We started with an exploration program there, and at the time, there were fishermen on the island, rice growers, no industry. There was a high incidence of malaria. Children would die of malaria. About 90 percent of the population had been impacted by malaria at the time. We sent our explorationists into the jungle and built a mine. Connected to that, we have almost eradicated malaria because it’s an island, so it’s a little easier than it is in Africa to commit resources to eradicate malaria. The incidence of malaria is less than half a percent per year now there.
We did that through resources. We used other people’s ideas to help us with that, so it’s not like we created it all ourselves, but we put it to work. We created a school for both Indonesians and expats, and in the last five years we’ve actually merged those two schools. There are probably about 200 families that live on the island, and we have a school for them. When those kids graduate, they go somewhere else. We helped fund that school and get them going.
Most importantly, what we do is we try to offer people who want to improve their lives as a local community. Instead of generations of fishermen, we can allow generations of fishermen to exist, so we try to co-exist, we can also take their sons and daughters and put them to work. When you go to our mine site in Indonesia, you see the diversity that Newmont has, which is one of the other things I’m really proud of, we have Muslim women driving trucks, Muslim men working in the pits. We have people from Peru speaking Spanish while they’re working around the mill or in the operation. Americans, South Africans, Australians, all blending together, much like this school, in ways that are so global that you really do figure out it’s a very small world, and how you act every day shows up in the Internet and the press, positively and negatively.
Mines: You’re in an enviable role, but also a stressful role. How do you manage your own stress? I see you have an Ironman watch. Do you work out regularly?
O’Brien: I try to. You’ll notice that I don’t have any gold adornment. It doesn’t mean that I don’t like it; it’s just not me. I like to cycle quite a bit. I played rugby in college, I played college football, division III, we were awful. Team sports appeal to me a lot. It’s been difficult for me to figure out to keep myself going. When I turned 50, I did my first triathlon, so I’ve done 10-15 triathlons (shorter distance, not the big ironman, even though I have the watch). I’m a lousy swimmer but I seem to be able to make it through it. When I travel I try to run as much as I can, either on a treadmill if I’m someplace that’s not so user-friendly, or I travel to a lot of great cities in the world and so that’s one way I get out to tour them.
Mines: You also mentioned lifelong learning. Do you have something you’ve built into your routine that ensures that you’re learning something?
O’Brien: Couple of things, first, and this is on my mind because I’m in the middle of it right now, I have kept my law license alive, so that means I do continuing legal education every year. I have to register for that and keep my license, and even though I don’t practice, it’s like having a great car, you want to be able to drive it when you want to.
But that’s very small. I’m a pretty voracious reader. I carry around my iPad, Kindle, whatever. I like fiction, but I also realize that a steady diet of fiction only gives you one world to look into. I do have a program where every week I read a professional book to try to improve myself. Most recently, because of my job and because of how corporate governance is changing, I’ve read four or five books on corporate governance. I’ll select a subject and get a bunch of different viewpoints from it, and then try to incorporate it into what I do going forward.
The gold business is very interesting because it’s impacted by economics, so there is a lot of economic press that I get every day that I read and try to absorb. Sometimes I even get it right. A lot of times I get it wrong, but it’s the two-handed economist, so there are always two sides.
When I visit a site, I always do a safety inspection. I try to get out and engage employees, talk with them about safety. We have some hints that we can use as executives for the kind of conversation you want to engage people in. I can learn from those people every day about what it is that we’re doing right, what it is that we could still improve on and what their concerns are, or what we can build on because they really get it. We’re going through a big safety program in the company, so that’s a big part of what I do.
The other thing that I try to do is sit down with our mine planners: Why are you doing it this way? Did you think about doing it differently? I’m not a mine planner, but it’s the fundamental device upon which almost everything else we do in the company is set. I like to say that most of these kids are in their early 30s and they’re really running the company, not me. In every region this year I’ve had probably four or five really great conversations with line engineers. From those conversations, I walk away with an ability to assess somebody who’s probably going to be a rising star in the company. They help me gain an understanding of what challenges we’re facing out in the field.
Lastly, I do read a bit a fiction, because I go on long plane rides around the world.
Mines: Given your insight into macro trends in your industry, what skills do you think are most critical to success in mining for this generation?
O’Brien: GDP in China and Southeast Asia are growing, yet are also being constrained by ownership of the kind of base natural resources. They’ve got a great suite of all of those premium-priced materials, rare earth commodities, but they don’t have a lot of base metal, which is why they’re straining Australia to get all the iron ore that they need and straining Europe, America and South America to get all the met coal that they need. As long as our growth goes on, the skills that come out of this university are going to be required.
The other thing that’s important to remember in that context is, when I look around Newmont and when I talk to other CEOs, we have a lot of very experienced, very capable people in our industry today, but most of them are over 50 or under 30. That 30- to 50-year-old crowd is one we missed in mining. One, the mining boom wasn’t booming. Two, people thought it would be much more interesting to get into finance, Wall Street, Internet companies. We got into 2000 and there was nothing better than being a dotcom company. Sometimes people look at mining as kind of a base place, who wants to go do that? So I look around and ask those people [who chose finance], how’s that going for you today?
Particularly in this environment, mining offers attractive opportunities not only for people who are just graduating, but also for those people who have graduated and gained some skills over the last five to 10 years. I think there will be a lot of retirements, and in this category, we don’t want people to retire. It’s requiring us to figure out new ways of having people work, innovative ways of satisfying their end-of-career desires to spend more time doing what they want to do. We don’t want to end their careers, because they’ve got an intense knowledge, not just of the industry, but of our company.
I’m trying to meet the dual needs of a retirement workforce and skills in a very macroeconomic environment, which is positive. Why do I think that? China, for one. What could go wrong with that is that two-speed economy, where the U.S. and Europe go into a long recession, which would reduce the demands that the United States and Europe have for products coming out of China. I think that’s less of a problem than it used to be, though, because China is generating its own demand. We see it in gold. All the gold produced in China never leaves China. Why is that? One, they’re trying to diversify their dollar holdings, but two, the Chinese have just in the last five years been able to buy gold. They’ve just now been able to put investments in gold, yet it is the largest demand in terms of investment, other than the exchange-traded fund, of gold in the world. They’re generating their own demand now. I’m positive about that over the long run.
It’s great to have an engineering degree, whatever your passion is, whether it’s environmental, structural, civil engineering. I think the critical skills come on top of that. How do you take your knowledge and put it to work? One, you have to evidence that you’ve got the knowledge, and two, that you have the desire to put it to work. Those critical skills come from being able to tell people about what you do and ask people about what they’re doing. You need to do both, because then you can find opportunities for yourself.
I’ve found often in my career that the times I was most effective as a leader was when the people I was working with didn’t report to me. I had no authority, no ability to really tell them to show up and do things, but we aligned ourselves because we found we had a similar passion to try to get something done and were willing to commit the time outside of our own vertical silo of work. A critical skill for people, then, is beyond collaboration. It’s identification of things you’re really interested in, passionate about, and that you’re going to go for, and you’re going to go for in ways that invite people to join you.
Sometimes I see in our company that we have people who are really focused on their project. I was saying something to one of the professors earlier that if I could describe one thing that I would like more of from the School of Mines, it’s to get people to think about not just their thing in their job or their project, but how does their thing fit with the company thing? You’d be surprised how critical that is to people’s thinking.
We found in the last couple employee surveys we’ve done that there are two things that impact employee satisfaction at work. One is, do they have a good supervisor? Supervisors don’t get trained in engineering programs; in fact, sometimes it trains them out of it. So we’ve learned how to get better supervisors. The second most critical thing that we need to do to keep our employees is keep them engaged, and engagement for them is, how does the work that I do connect with the work of the company? Nobody wants to be out on an island unless they know that island is a critical focus for the company, that we’re paying attention to it, and to them, by the way, and that their results matter.
One of the things that we have really tried to do is to let people know what is the work of the company and how they can fit in with that, so that when they come to work, they feel more powerful, like they’re working on the right things. And if they’re not, they have a supervisor they I can talk to, who will tell them, OK, don’t work on that any more, work on this. Those are two really critical skills: how people connect to the company, and how people connect through their supervisor to other people in the company.
The last thing is taking the passion for your own life. Don’t let us run your life. I think a lot of times people become victim of companies, and they look up and say, well, the company’s not taking care of me. But this is the big thing about integrity. If you don’t like working somewhere, only you can change that. You have to recognize that, you have to change it. If you really like working somewhere, tell people that. Tell them why, and tell them what you’re going to do about it.
Mines: I think for a lot of our alumni, the stigma associated with mining is kind of painful. How do you deal with that?
O’Brien: When I tell people what I do, I generally just tell them I’m in the mining business, I don’t tell them what I do in the mining business, I don’t tell them I’m an executive, I just tell them I’m in the mining business because I’m proud of it. The world creates a lot of products, but most of them depend on what we do. It’s dirty work some days, and it’s difficult work. The people in this business oftentimes don’t get recognized for what they do. But what I say in particular about the gold business is, look, I get it, gold is adornment. People see it as precious. The day they don’t, we’ll stop gold mining. It’s a societal thing. It’s a need that people have we’re trying to satisfy.
Importantly, as long as gold is in that quality and has that value and that perception of value, if you’re going to be in the gold mining business at all, you should want us to do it, because our standards are higher, and because we truly value the things that we talk about, safety, environment, doing our business in a sustainable way, which means not just green (because we’re not green, we leave a big, deep hole in the ground, but we can leave that hole in the ground a lot better). Here in Colorado, some of the legacy mines have left scars on the earth, which, beyond scars, produce acid water and a lot of deleterious minerals. We can do a better job than that, and we are. So we try to figure out how to minimize how we impact the earth while satisfying a demand in the marketplace.
I love the enthusiasm that people have about their careers here: PhD candidates, the first graduates out of college, but importantly, all those in-between, 150-plus people with advanced degrees. Those people can have an impact particularly on areas of water usage, which I think is going to be the most critical natural resource we have in the world.
How we impact the environment differently and, importantly, how we engage with communities to let them know about it [is critical]. Community response can go from the ‘Oh no, there’s a mine in my community, not in my backyard’ all the way to, and we see this in Peru, ‘Wow, mining’s going to be here! I can get a job, my kids can have a job, and I can have a fundamental life change.’ Too much enthusiasm, where everybody thinks they have a job because they’re close to a mine’ not the right answer. No enthusiasm or rejection, not the right answer.
When I talk about collaboration, it starts right there, getting people to visualize what could be the benefits, and then we need to stand up and deliver those benefits, not just mining, but investments in the community, helping so that when we close a mine, we leave behind trained people who can take on other careers, or gold mine somewhere else in the world because they’ve got skills, they’ve been trained in how to manage people. That’s the legacy we hope to leave behind. As long as people want gold, we’re going to do it better than anybody else.
Mines: This is probably a question you get asked five times a day: What’s your prediction for the price of gold this time next year?
O?Brien: It’s all in timing. First, what do I expect? Very volatile. I can give you some price corridors. We’ve seen more volatility in gold prices here this year than we have for quite some time. As you reach a $1900 [per ounce] gold price, there’s a certain downdraft that comes with that, and we’ve seen some of it. The instability of the economic environment is probably the number one impact on what’s going to happen with gold prices. I think it’s unlikely that we’re going to see gold fall below $1500. Just this week we were below $1600, it’s now started to come back up a little bit.
I do believe that over the next several years, we are going to see gold in that $2250-$2500 range because at some point, the U.S. economy is going to pick up in a more persistent and sustainable way. When it does, all of the money that has been put into the system to charge it up is going to lead to inflation. Gold does very well in times of inflation. Even if Europe doesn’t come along now, it will, because the only way Europe is going to stabilize is for them to inject new currency into the European commodity. I know they’re going for austerity, but austerity is too bitter a pill for politicians to swallow for very long.
The only other way the politicians have successfully figured this out is to raise taxes. We can see in our own country a fine example, maybe not so fine example, of how not to get anything done. Let’s talk about increasing taxes in a responsible way. People won’t hear that. We’ve talked about decreasing taxes in a responsible way. I think that’s absurd at the moment, but combining that with a policy of austerity, that’s a good start, but you still have currency embedded in the system. What could derail that $1500-$2250 range, which admittedly is pretty broad, is a recession in Southeast Asia. If China doesn’t do well, gold does lousy in recessions. With current production costs, I think we probably will not see $300 gold again for decades unless we figure out a new, innovative way to produce it. My point estimate for next year is we’re probably going to be looking at $1800 on a sustainable level, which is still, by the way, below the historical high of $800, if you just inflate it to today, you’re about $2300, so we’re still below the historical high at times when we have more historical embedded growth in currency than we’ve ever had in the world.