AUSTRALIAN miner, Newcrest Mining Limited says the second large driver of cost after gold prices was currency followed by labour costs.
Newcrest managing director Greg Robinson told the company’s annual general meeting in Melbourne yesterday that financially, Newcrest was generally worse off with a strong A$ as it lowers revenue and increases the impact of domestic costs.
“This is the same for the Indonesian Rupiah and the PNG Kina.
He said over the last six years currency has been a significant driver of higher cost outcomes.
Labour cost was also attributed to as another cost driver.
Mostly labour costs at around 40% of the total cost base, energy around 20% and consumable commodity inputs at around 20%.
“Labour costs in Australia have skyrocketed over the past decade. Wages have increased as companies in generally larger industries such as iron ore, coal and LNG, compete for a limited pool of talent also causing the productivity decline as employment conditions became more favourable and rosters shortened.
“Energy has also followed a similar path to labour costs in Australia, unlike, for example, in the North American markets,” he said.
The miner said it remains focused on the discovery and production of gold.
Mr Robinson said the company had a significant copper position in metal inventory associated with the style of gold deposits for which they explore.
“We remain unhedged on gold price.
“This decision was made in 2007 and has remained in place. Over this period we have maintained a sound balance sheet designed to withstand commodity price volatility.
“We continue to believe in large, long life, low cost mines as the bedrock to deliver superior returns for shareholders over time.
Mr Robinson told shareholders at the meeting that the recent criticisms against the company regarding operational capability were related to the failure to deliver production guidance.
“We are working very hard to restore our reputation in relation to performance and reliability,” he said.