Newmont Mining said Wednesday that it would cut its Colorado workforce by a third over the next 90 days in one of the most tangible hits to the state from weaker gold prices.
The company called the move part of an effort to streamline its operations and improve efficiency by shifting more focus on production and profitability to operational teams closer to its mines.
"Rising costs across the industry and continued volatility in metal prices only reinforces the need to run our operations as safely and efficiently as possible to ensure success in any commodity cycle," said spokesman Omar Jabara.
Newmont currently employs approximately 750 people locally, the vast majority at its headquarters in Greenwood Village. The company directly employs 16,000 people globally, and contractors bring that total to 40,000.
"We face some very difficult decisions in streamlining our organization and are committed to treating people fairly throughout this process. Ultimately, we cannot postpone the work we need to accomplish now to create sustainable value for our stakeholders into the future," CEO and president Gary Goldberg said in a statement.
The exact number of cuts in Colorado and at other sites is still undetermined, Jabara said. The workforce remaining in Colorado will be focused on strategy and governance.
After peaking above $1,900 an ounce in mid-2011, gold is now trading under $1,400 an ounce, with a large drop in early April after reports that China's economy was slowing. That decline has put intense pressure on gold-mining companies and gold-related investments across the board.
Newmont's stock price has fallen from nearly $58 a share in October to $33.33 a share at Wednesday's close, knocking the company off its long-held perch as the state's largest public company in market value.
Part of the squeeze mining companies such as Newmont face comes from the fact that the cost to mine gold has increased dramatically over the years along with the price, Goldberg said in a March interview.
Although gold prices rose by more than $1,000 an ounce during the recently ended 12-year run, the cost of bringing that ounce of gold out of the ground rose by $900, Goldberg said.
Those operational costs remain fairly static even as the price buyers are willing to pay for gold falls sharply.
Denver, thanks to its historical roots, talent base and companies such as Newmont, is known as the country's gold-mining capital.
Newmont relocated its headquarters in late 2008 from the Wells Fargo Building downtown to the new Palazzo Verdi, a 300,000-square-foot building at 6401 S. Fiddler's Green Circle.
The move was necessary in part to accommodate rapid employee growth at Newmont, which relocated about 400 employees.
"They are under pressure," said John Brackney, president and CEO of the South Metro Denver Chamber of Commerce. "We assume they will come back up. They have a very talented workforce."
Newmont, founded in 1921, has assets in the U.S., Australia, Peru, Indonesia, Ghana, Mexico and New Zealand. It has faced protests over the year at some of its locations, especially in Peru.
Newmont had land holdings of 29,000 square miles and 99.2 million ounces of proven and probable gold reserves at the end of last year, making it the largest U.S.-based gold-mining firm.
Aldo Svaldi: 303-954-1410, email@example.com or twitter.com/aldosvaldi