World’s No. 2 gold miner says diesel risks driving up 2027 costs

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Photo by Cole Burston/BloombergAgnico Eagle Mines Ltd. warned that rising diesel prices risk raising the cost of producing gold by as much as US$80 per ounce next year, signalling mounting inflationary pressures for the mining industry.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe world’s second-biggest gold producer expects elevated diesel prices to add about US$50 to US$60 an ounce to its costs in the fourth quarter, up from roughly US$30 an ounce in the prior period, Chief Financial Officer Jamie Porter said during a call with analysts Thursday. Miners rely heavily on the fuel to power trucks and other equipment.This advertisement has not loaded yet, but your article continues below.Shares in the Canadian company fell as much as 4.5 per cent in Toronto, alongside a broader selloff across the mining sector.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try againMining companies are grappling with rising costs for labour and other key inputs. Prices for diesel, sulfur and sulfuric acid have climbed amid supply disruptions stemming from the conflict in the Middle East and reduced fuel flows through the Strait of Hormuz. At the same time, historically elevated metal prices, such as gold and copper, have helped cushion the impact for some miners.Agnico is somewhat insulated because much of its production comes from mines in northern Ontario and Quebec that are connected to electricity grids powered largely by hydroelectric and nuclear generation, Porter said. Still, diesel accounts for about 11 per cent of the miner’s operating costs.“We don’t have any more insight into long-term diesel prices in 2027 than anyone else,” chief executive Ammar Al-Joundi said on the call, adding that the company had hedged some of its fuel needs.Toronto-based Agnico is also facing higher costs as the United States and Canada continue to quarrel over tariffs. The company incorporated an estimated impact of about US$5 an ounce into its latest cost guidance, released Wednesday. Porter warned that the burden could grow next year if trade tensions persist.“If there isn’t a trade deal, we’d actually expect that impact to increase in 2027,” he said.The company’s all-in sustaining costs rose to US$1,648 an ounce in the third quarter, and it now expects the measure to finish 2026 near the upper end of its US$1,400-to-US$1,550-an-ounce guidance range, according to the Wednesday report.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.