26 Sep 2012

Newmont looking to wind down spending

8:10 am on 26 September 2012

Mining company Newmont says it needs to get its costs under control if it is going to continue as a viable business.

The gold miner has cut jobs in Australia and the United States and plans to axe a further 20 staff and contractors from its Waihi operations in New Zealand where it employs 350 people across three sites.

Newmont Waihi Gold's external affairs manager Sefton Darby says the company is experiencing rapidly declining profitability.

Mr Darby says taking into account currency movements, the price of gold in New Zealand dollar terms has gone up by about 60% since 2008, while costs have increased 80% in the same period.

The price of gold is not only lagging behind the rising cost of labour, but also the cost of materials such as steel and cement, and this is squeezing the company.

Newmont has significantly scaled back prospecting and exploration in Coromandel and Northland. Its Waihi Gold's Favona and Trio underground sites are only expected to be able to produce enough gold until 2016.

Mr Darby says the company is still going through a consents process to build the Correnso underground mine in Waihi which would supply enough gold until 2022.

The company will confirm the full scope of losses and changes once the consultation process has finished next week.

It says the cuts are part of a wider package of job cuts across Newmont sites globally, in Australia and the United States. Staff at Newmont's four mines and regional headquarters in Australia have also been notified of likely redundancies.