new year promises easing of surging equipment and labor costs
San Francisco, CA -- (SBWIRE) -- 01/11/2013 -- The slumping demand for non-precious metals, which lies beyond the control of Canada's embattled gold producers, is shaping up to be the most positive hope for recovery in 2013 after a year of difficult share prices.
One of the most important aspects to restoring the faith of the gold miners is reining in the runaway costs of inflation, according to the experts. With that in mind, the weakening of prices for base metals, coal and iron-ore is coming in at the right time for bullion producers. Such producers can no longer utilize surging gold prices to justify seemingly unrestrained spending.
Goldcorp, Barrick Gold, and top-tier contemporaries are attempting to pare spending and return more cash to respective shareholders as they push ahead cautiously with major developments in the gold sector.
"There may be a catalyst here and that is cost stabilization," said Adam Graf, a mining analyst with Dahlman Rose in New York. "Because the rest of the mining industry is going to be weaker in 2013, that should benefit the gold guys."
The costs of mining have surged within the last few years, with strong demand from both India and China pushing metal prices to new heights. Promoting a global mining boom has put pressure on a tight labor and equipment market as a whole.
Now, growth in China is slowing, which comes along with the economic uncertainties of the U.S. And Europe that have weighed on the base metal sector, and lead to shutdowns and deferrals of projects globally.
With fewer projects competing for the same supply of resources, the cost of labor and equipment is sure to soften in the coming year. That is great news for gold miners, who push ahead with new mining projects.
"In 2013, we'll be looking at things like dividend increases, growth in earnings per share," said John Ing, a gold analyst at Maison Placements, in Toronto. "And I think that will restore the enthusiasm for the gold miners."
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