The cost of producing gold has climbed and its value has
fallen. Photo by Reuters.
New Zealand's two largest gold-miners are continuing
cost-cutting operational reviews and neither is ruling out
further job losses.
East Otago-based Oceana Gold and Newmont Waihi Gold, in the
central North Island, have collectively announced cuts, or
pending cuts, totalling almost $US350 million ($NZ447
At the annual New Zealand branch conference of the Australian
Institute of Mining and Metallurgy (AusIMM) in Nelson
yesterday, Oceana chief executive Mick Wilkes said a 20% fall
over a month in gold prices effectively ''knocked off''
$US100 million in revenue, which could also equate to losing
two years' mine life of its main pit, at Macraes in East
''A lower gold price requires further judicious allocation of
scarce capital,'' Mr Wilkes said.
Oceana has signalled its Reefton open pit may be under care
and maintenance by 2015, putting 260 jobs in jeopardy if
mothballed, and up to 15 office jobs were understood to have
been axed last week.
''We have seen some recovery in the gold price, but not
enough to justify expenditure at Reefton,'' Mr Wilkes said.
Gold was trading yesterday at $US1394 an ounce.
Answering questions after his address, Mr Wilkes confirmed
Oceana's New Zealand review was complete and the review focus
was now on Philippine operations.
An announcement might be made in the future on any New
Zealand job losses.
''We're talking to staff and still in negotiations,'' he
Newmont Waihi Gold general manager of operations Glen
Grindlay more candidly outlined $US246 million in cost
savings since the first quarter 2012, including $US50 million
in advanced project funding, down almost 50%, and a 33%
decline in exploration, down $US29 million, plus the loss of
about 200 jobs during that period.
While consents for its new Correnzo underground mine were
being appealed, Mr Grindlay was bullish about an extra
estimated two million ounces below the existing Martha pit.
However, it would have to mined in tandem with underground
He noted that Newmont, which employs 46,000 people worldwide,
had its most expensive production costs at its Waihi
operation, about $US900-$US1000 an ounce.
After his address to delegates, Mr Grindlay said if Newmont
had not made its cost-cutting decisions a year ago, some of
its Waihi mining could have been mothballed, as Oceana has
signalled at Reefton.
The resource sector's predicament was worse than it was
during the global financial crisis, in that costs had more
than doubled in five years, so savings still had to be made.
For 2014, Newmont was basing all planning on $US1200 an
ounce, expecting gains of about $US200 a year up to $US2000
an ounce by 2020.
When asked if the $US246 million in savings was enough, Mr
Grindlay said it was hard to say.
More jobs could go.
Mr Wilkes told delegates a decision would be made by the end
of the year on whether the Blackwater underground mine would
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