Inflation affects Gold Fields project in Chile, says CEO

For Promit Mukherjee and Helen Reid

CAPE TOWN (Reuters) – Rising inflation is eroding gold miner Gold Fields’ contingency cost cushion for its Salares Norte project in Chile, Chief Executive Chris Griffith said on Monday, adding the company that listed in South Africa is seeing inflation of at least 10% in the regions where it operates.

The Salares Norte gold project, the company’s largest, will begin production in the first quarter of next year, and labor shortages around the project have forced Gold Fields to create parallel work streams.

“That kind of inflation is what is rapidly eating away at our contingency,” Griffith said in an interview on the sidelines of the Mining Indaba conference in Cape Town.

Cost inflation is a headache for all mining companies that are heavy consumers of fuel and electricity. Prices for some products that Gold Fields consumes, such as steel bolts, reagents and explosives, have risen as much as 30%, Griffith said.

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In general, however, Gold Fields is a net beneficiary of inflation, Griffith said, as the price of gold tends to rise in tandem with prices.

Although gold prices soared after Russia’s invasion of Ukraine on February 24, they have retreated considerably since then.

Gold Fields is also facing a “nervous moment” in Chile as the country continues the process of rewriting its constitution, Griffith said.

Chile’s Constitutional Convention on Saturday approved articles expanding environmental rights, but stopped short of approving a proposal giving the state exclusive mining rights over lithium, hydrocarbons and rare earth metals, as well as majority ownership of mines. copper.

Griffith said demands from countries to raise taxes are also becoming a bigger concern for the company, especially in Peru, Chile and Ghana.

Asked about the planned start date for Salares Norte, Griffith stated that so far “we are on the right track, holding out by a hair’s breadth.”

(Reporting by Promit Mukherjee and Helen Reid in Cape Town, Editing in Spanish by Manuel Farías)

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