"Gold Boom Drives Rising Costs for Australian Producers"

" Gold Boom Drives Rising Costs for Australian Producers \r\n\r\nAs Australian gold producers set annual guidance for the 2026 financial year, a clear trend has emerged across the sector.\r\n\r\nWhile miners outside the gold sector are expecting to see flat to lower unit costs for the 12 months to June 30, 2026 (FY26), gold miners are almost universally forecasting a rise in costs.\r\n\r\nShares in\u00a0 sector leader Northern Star Resources \u00a0(ASX: NST) were heavily sold off last month after the company said it expected all-in sustaining costs (AISC) for FY26 to rise to A$2,300-$2,700 an ounce ($1,477-$1,862\/oz) from A$2,163\/oz in FY25.\r\n\r\n\u201cUnfortunately, we\u2019re not seeing costs plateau, and that pressure still remains and you\u2019re seeing that across the sector,\u201d Northern Star managing director Stuart Tonkin told reporters at the Diggers & Dealers Mining Forum in Kalgoorlie this month.\r\n\r\n\u201cWe haven\u2019t really seen the relief that was expected when\u00a0 nickel and lithium projects were paused or wound down . If anything, gold has picked up that and then some and so that\u2019s just added to the pressure.\u201d\r\n Labor pains \r\nTonkin said the main sticking point was labor, where the company was seeing a 3-4% increase for FY26.\r\n\r\n\u201cWith the service providers, we\u2019re seeing more than that because they have stale contracts that might have been formed a few years ago, and there\u2019s been that build-up,\u201d he said.\r\n\r\nEvolution Mining (ASX: EVN) guided AISC costs of A$1,720-1,880\/oz for FY26, up from A$1,572\/oz in FY25.\r\n\r\nThe guidance factored in 4% inflation, equating to A$105-125\/oz. According to the company, around 50% of its cost base is labor.\r\n\r\nWestern Australia producer Ramelius Resources (ASX: RMS) reported AISC of A$1,551\/oz for FY25.\r\n\r\nWhile the company is yet to report FY26 guidance, managing director Mark Zeptner said costs were set to rise.\r\n\r\n\u201cI think there\u2019s a little bit more cost coming into the business,\u201d he said on the sidelines of the Diggers & Dealers Mining Forum.\r\n\r\n\u201cOn wages, we\u2019re looking at between 4% and 5% increases, where we were probably talking more 3% 12 months ago. I think it\u2019s probably really a gold-based boom and iron ore is ticking up as well. Everyone in the gold space seems to be either expanding their projects or restarting projects and we\u2019re the same, so I think there\u2019s potentially a bit of stress coming into the labor market.\u201d\r\n\r\nZeptner suspected it may add around A$100\/oz to Ramelius\u2019 AISC, allowing the company to retain its position as a low-cost producer.\r\n\r\n\u201cI don\u2019t think it\u2019s anywhere near as bad as it was when inflation was double digits, but it has ticked up a bit,\u201d he said.\r\n Higher-cost production \r\nWestgold Resources (ASX, TSX: WGX) this month set cost guidance A$2,600-2,900\/oz, higher than FY25.\r\n\r\nThe company hauls its ore as far as 180 kilometres from the Fortnum mine to the Meekatharra plant in Western Australia.\r\n\r\nManaging director Wayne Bramwell said the company was seeing the largest cost increase in haulage, rather than labor.\r\n\r\n\u201cHaulage is a big chunk of our business, and if you\u2019re hauling more tonnes, you pay more dollars,\u201d he said.\r\n\r\n\u201cAs the gold price is high, there\u2019s always the risk \u2013 and we\u2019ve done in the past \u2013 you lower your head grades to chase more gold, but you\u2019re processing more tonnes, so your unit cost goes up, so that\u2019s a fool\u2019s errand in some sense.\r\n\r\n\u201cThat\u2019s why we\u2019re trying to get away from a mentality of chasing volume and try to chase grade. It\u2019s about margin, not about the headline of how many ounces you produce.\u201d\r\n\r\nCEO Jim Beyer said the company was experiencing the same cost pressures as its peers, but that Regis\u2019 costs were also higher due to the company\u2019s plan to take advantage of the higher gold price.\r\n\r\n\u201cI need to be clear: our strategy of bringing in higher-cost, lower-margin ounces is still making money at the moment, not at the expense of our long-term \u2018good\u2019 ounces,\u201d he said.\r\n\r\n\u201cWe are not delaying good ounces and bringing in ordinary ones. We\u2019re doing both what we originally planned with what we call our core ounces, and we\u2019re adding marginal ones while it makes sense.\u201d\r\n Retention strategies \r\nNorthern Star\u2019s largest operation is\u00a0 KCGM in Kalgoorlie , which is also one of Australia\u2019s largest gold mines.\r\n\r\nThe workforce is largely residential, but a A$1.5 billion plant expansion currently underway has forced the company to invest A$30-35 million in an accommodation camp and increase its reliance on a fly-in, fly-out (FIFO) workforce.\r\n\r\nTonkin said that given the expansion construction jobs were temporary, it didn\u2019t motivate people to move to Kalgoorlie.\r\n\r\n\u201cFIFO is expensive for us as accommodation, so those are the things that all fit back into this cost structure uplift,\u201d he said.\r\n\r\nMeanwhile, Evolution\u2019s Mungari operation, outside Kalgoorlie, experienced extremely high turnover rates of as high as 38% only two years ago.\r\n\r\nEvolution managing director Lawrie Conway said the company had managed to reduce that turnover rate to 15% via its incentive-based remuneration scheme.\r\n\r\n\u201cThere is that demand picking up again, particularly with gold, but I think we\u2019ve got the right remuneration structure in place for our workforce to not see that as a bigger impact,\u201d he said.\r\n\r\n\u201cAnyone in the organization, from an entry level, maintenance, through to myself, has an at-risk component, and what we did a couple of years ago, when we saw inflation really rising, we actually increased the percentage of our quarterly bonus for the operator level, and we increased that rather than lifting their salaries.\r\n\r\n\u201cAnd you know what we saw through the last 12 months with our performance? It was probably the equivalent of them getting a 4% pay rise in what they got in their bonus, but it\u2019s not fixed in and that\u2019s why we think the balance between the fixed and the variable structure works really well.\u201d"

"Gold Boom Drives Rising Costs for Australian Producers"

The Global Push for a Just Transition in Energy JobsAMP

Why the IEA Reinstated Its “Business as Usual” ScenarioAMP

GRA Targets Offshore Income in Expanded Tax Compliance DriveAMP