S&P: Mining cash costs to keep growing

By Cepi Setiadi

Standard & Poor's, rating services company based in Singapore predicts that mining cash costs will keep growing over the next two years.

Managing Director Corporate Rating of Standard & Poor's, Suzanne Smith, said that the increasing of labor cost will be one of the factor especially in Australia as well as historically lower-cost areas such as Indonesia, China and Africa.

She said that the bottlenecks in mining equipment production resulted in higher equipment prices since mid 2009.

"High fuel prices contribute to higher extraction costs," she added.

According to Suzanne, the regulation in several countries also added cost to mining sector.

"Regulations add to costs through levying higher royalties, mining taxes, setting higher environmental protection standard," she said.

In China coal for example, there is volume caps and price controls to protect resources.

Indonesia imposed export tax on unprocessed ores to increase revenue.

Editing by Adianto P. Simamora