(GG - Get Report)
is in a similar boat to Barrick. CEO Chuck Jeannes said in 2011 there will be a "6% absolute dollar increase year on year" due to inflation, the most painful aspect being high oil prices.
Jeannes blames uncertainty in the Middle East leading to uncertainty in oil prices, which causes price uncertainty for the company. For its part, Goldcorp has hedges on oil and in its operations in Mexico, which use a lot of fuel, the government sets the price. Nevertheless, Goldcorp is still building a natural gas power plant in Mexico to help cost issues.
(GFI - Get Report)
CEO Nick Holland says "oil prices in particular can have a profound impact on the open pit operations because of the .... distances out of the pit [and to the factories] ... and we may have to re-engineer the way we do things."
Holland is thinking about a conveyer system in areas where the company is vulnerable and, in the future, would consider new operations that don't require a large amount of oil. The CEO believes that oil prices could hit $150 a barrel in a few years and warns that the gold mining industry has "to start factoring that in."
(GFI - Get Report)
is trying to do just that, but much of the company's operations are in the Arctic and CEO Sean Boyd says there are no alternatives to diesel right now. "We look closely at hedging. We have hedged diesel."
Agnico-Eagle has its fuel requirements for Meadowbank, in Nunavut Canada, at $80 a barrel until September 2011. Boyd says liquid natural gas might be an option in the far future, but that Agnico-Eagle is stuck with oil for now.
Whether a big producer or small explorer, the theme is clear at BMO: high oil prices are becoming the Achilles' heel for gold miners.
Written by Alix Steel in New York
>To contact the writer of this article, click here:
>To follow the writer on Twitter, go to
>To submit a news tip, send an email to: