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More pain for gold miners – this time job cuts

With the price of gold falling to the ‘all-in’ cost for gold mines to get the precious metal out of the ground yesterday, it’s hardly surprising that we’re starting to hear of lay-offs at some of the largest gold miners.

We’ve all ready reported on gold mines being closed, followed by write-downs on acquired mines, now its the turn of job cuts. From the WSJ:

SYDNEY—Australia’s mining industry is shedding jobs at an accelerating pace, with companies that enjoyed a decade long boom axing thousands of workers as the value of commodities including coal and gold fall to multiyear lows.

More than 1,000 jobs have been cut this week alone in the mining sector

And it’s not just a falling gold price that is leading to the cuts, it’s also rising costs of production:

Barrick Gold Corp., ABX.T -8.34% the world’s largest gold producer by output, has cut 87 workers from its Australian operations this month and plans to shut a regional exploration office by the end of the year. The company, which has also announced redundancies at its head office in Toronto and across its U.S. operations, cited an increase in operating costs and falling gold prices for the cuts.

Australia’s largest listed gold miner, Newcrest Mining Ltd., NCM.AU +6.34% is trimming about 250 jobs after gold prices fell 26% since the start of the year, largely from its Lihir mine and its office in Brisbane, Queensland, which it will close.

It’s worth remembering that last year we reported on Nick Holland, head of South African mine Gold Fields Ltd, saying that if gold remained below $1600 an ounce gold miners would get “crushed”:

The wave of rationalisation that is starting to emerge among the major diversified miners will soon spread to the gold sector, as soaring costs and labour shortages begin to squeeze margins

…Mr Holland criticised fellow gold producers for failing to include corporate and capital costs when publicising their profit margins, saying they were only fooling themselves and governments, who would duly seek to tap the industry for more taxes.

Mr Holland said rising energy, labour and production costs would virtually double costs in the next five years, and a gold price of close to $US2000 per ounce would be needed to keep pace.

If costs remain close to $US1600 where they have been in recent weeks, much of the industry would be “killed”.

We’re now trading at $1230 – we can only imagine the pain that’s sweeping through the gold mine community right now.

Link to this article: : http://www.goldmadesimplenews.com/mining/more-pain-for-gold-miners-this-time-job-cuts-11064/

Posted by on Jun 27 2013. Filed under Mining. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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