Promit Mukherjee, Helen Reid

CAPE TOWN (Reuters] – Rising inflation is causing Gold Fields (NYSE 🙂 to reduce its contingency budget for Salares Norte, Chile. Chris Griffith, chief executive officer of Gold Fields, stated on Monday that South Africa’s listed company has been experiencing inflation at minimum 10% in all regions it serves.

Salares Norte’s biggest project is expected to begin production in the first quarter next year. Gold Fields was forced to establish parallel work streams because of labour shortages.

Griffith spoke out about the impact of this inflation in an interview he gave on the sidelines to the Mining Indaba conference held in Cape Town.

For all the heavy users of oil and electricity, cost inflation can be a problem.

Griffith reported that the prices of some items Gold Fields requires, including steel bolts, explosives, and reagents has risen as high as 30%.

Griffith claimed that Gold Fields, in general, is an inflation-affected beneficiary because gold prices tend to rise with increases in price.

Although gold prices rose after Russia invaded Ukraine on February 24, the price of gold has fallen significantly.

Griffith also stated that Gold Fields in Chile is facing “nervous times” as Chile continues its process to revise its constitution.

Chile’s constitution assembly approved articles broadening environmental rights Saturday but failed to approve a proposal giving the state sole mining rights over rare earths, lithium and hydrocarbons.

Griffith indicated that higher tax demands from countries, in particular Peru, Chile, Ghana, are becoming more of a concern to the company.

Griffith answered a question about Salares Norte’s target date. He said that “so far, we are still on the track, hanging onto the skin of our teeth.”