CAPE TOWN – Surging inflation is eating into gold miner Gold Fields’ contingency cost buffer for its Salares Norte project in Chile, CEO Chris Griffith said on Monday, adding that the South Africa-listed company is seeing at least 10% inflation in the regions where it operates.
The Salares Norte gold project, the company’s largest, is set to start producing in the first quarter of next year, and labour shortages around the project have forced Gold Fields to create parallel work streams.
Cost inflation is a headache for all mining companies that are heavy consumers of fuel and electricity.
Although gold prices spiked after Russia’s invasion of Ukraine on February 24, they have fallen back significantly since.
Gold Fields is also facing a “nervous time” in Chile as the country continues the process of rewriting its constitution, Griffith said.
Chile’s constitutional assembly passed articles expanding environmental rights on Saturday, but stopped short of approving a proposal to give the state exclusive mining rights over lithium, hydrocarbons and rare earth metals and majority ownership of copper mines.
Griffith said countries’ demands for higher taxes are also becoming a bigger concern for the company, particularly in Peru, Chile, and Ghana.
Asked about the target start date for Salares Norte, Griffith said “so far we are still on track, hanging on by the skin of our teeth.”