Newcrest looks for expansion abroad
GOLDMINER Newcrest is focusing on overseas expansion because the high dollar, labour and electricity prices and the carbon tax have lifted mining costs, making local expansion too difficult.
But chief executive Greg Robinson said that what had seemed like an endless rise in development and operating costs had probably now peaked.
The comments come as Rio Tinto, BHP Billiton and other miners step up their calls for the Gillard government to ease policies, such as the carbon tax, that raise industry costs.
Newcrest is spending $2 billion on expansion at its Cadia mine in NSW, but has yet to provide details.
“Labour costs are very, very high, the currency is high and energy costs and taxation issues are making Australia’s gold industry about a third and fourth-quartile industry,” Mr Robinson told the Australian Stockbrokers Association conference in Melbourne yesterday.
“It’s very difficult within this cost cycle to allocate major expansionary capital.”
Energy and labour made up between 50 per cent and 70 per cent of goldmining costs, he said.
Still, an easing of oil prices and market uncertainty that has led miners to reconsider expansions could mean better times are on the way.
“When you look at energy, electricity is getting expensive in Australia with carbon, etc, but diesel is coming off,” Mr Robinson said.
“Generally for the sector, what you are going to see, for gold at least, (is that) the cost cycle and the capital cycle have peaked.”
Mr Robinson would not expand on his comments to reporters after the conference.
He said he remained bullish on the gold price, currently about $US1550 an ounce.