Barrick Gold CEO Says Inflation Affecting Miners’ Bottom Lines

A top executive from Barrick Gold has revealed that inflation will not be going anywhere anytime soon. Even though plenty of pundits expect that inflation will begin to reduce in 2023 as central banks increase borrowing costs, CEO Mark Bristow says that he doesn’t see inflation reducing much this year. Furthermore, the exec noted that inflation would keep hindering the mining industry for a while, as increased costs would place a heavy burden on miners’ bottom lines.

During an interview with Bloomberg, Bristow stated that inflation definitely wasn’t over and noted that no one was currently doing anything to put a stop to economic inflation. He then revealed that Barrick Gold’s 2022 earnings were impacted by higher inflation rates, coupled with reduced production. Bristow also mentioned that certain challenges at the miner’s Nevada-based Turquoise Ridge mine also had a negative effect on the company’s 2022 earnings.

The mining firm’s share prices fell by about 4.5% in Toronto after analysis of its fourth-quarter results revealed higher total cash costs coupled with negative free cash flow.

The world has been gripped by stagnating economic conditions since the coronavirus pandemic first struck in 2020 and forced a slowdown in economic activities in most, if not all, countries around the globe. Companies were already contending with supply chain issues and increased production costs when Russia’s invasion of Ukraine resulted in a crippling energy shortage and caused energy prices to skyrocket. With the war in Ukraine still going on a year after it began, high energy costs are forcing companies in energy-dependent industries such as mining to spend more on energy, eating into their earnings and negatively affecting their bottom lines.

Despite the rough landscape, Bristow doesn’t think it’s all doom and gloom; a fall in natural gas prices due to unexpectedly warm weather has reduced the strain on the company’s fuel budget. Additionally, Bristow added that Barrick still has high reserves of human resources as it uses the U.S. dollar across most of its operations to pay workers.

Despite the challenges Barrick has faced in recent years, Bristow believes that the future is bright for the second-largest mining producer in the world. He also mentioned that the company plans to ramp up investment into its mining operations over the next year to help increase its gold production by an additional million ounces by the end of 2024.

It would be interesting to know what adjustments other major miners, such as Hecla Mining Company (NYSE: HL), are making to absorb the effects of inflation and still deliver great shareholder value.

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