Big miners think inflation has eased, finally
Two of Australia’s biggest miners have signalled that inflationary pressures are easing, setting an optimistic tone for the next six weeks of production reports and profit results.
During earnings calls on Wednesday, Australia’s second-largest gold miner, Northern Star, observed prices were “stabilising,” while the country’s biggest iron ore miner, Rio Tinto, said some costs have decreased.
Northern Star’s super pit in Kalgoorlie, Western Australia. AFR
Stuart Tonkin, Northern Star’s chief executive, said higher wages and contractor costs along with higher power prices in West Australia will continue to put pressure on the cost of doing business. But he added: “broadly, costs have stabilised”.
“We are experiencing, and will experience, some higher costs in parts of the business – whether it’s labour or contractors – we’re forecasting probably some uplift in those. But broadly across the board in the basket of our costs we’re anticipating it be sort of flat,” he said on Wednesday.
Mr Tonkin’s view that inflation has stabilised comes after five years in which the cost of digging up valuable metals in Western Australia has soared on the back of higher energy prices and labour and equipment shortages that were exacerbated by the hard state border imposed during the pandemic.
His observation follows the Reserve Bank’s forecast that headline annual inflation is expected to fall to 6.3 per cent in June, down from 7 per cent in March.
It also came as Rio Tinto kept unit costs in its iron ore division steady over the first half of the financial year, and said it had observed declining prices for the raw materials needed for its alumina refineries and aluminium smelters.
Rio said caustic soda prices in the past six months were 36
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