Tuesday, 06 November 2012 08:59
Gold mining giant Newmont has appointed a new head of Asia Pacific and deferred the expansion of its Tanami mine as it begins a global program of cost cutting.
Jeff Huspeni, the company's senior vice president of Asia Pacific, will retire in March next year after 30 years at Newmont, paving the way for senior vice president of South American operations Carlos Santa Cruz to take over.
The world's second-largest gold producer on Friday downgraded its production forecast for its large Boddington mine in Western Australia amid mill stoppages and soaring production costs.
Both Boddington and Tanami, where the company has experienced problems accessing high grade ore, have been a drag on its third-quarter profit result.
Last month Newmont Asia Pacific reduced its Australian workforce by 50 positions as part of a cost review.
Newmont chief operating officer Gary Goldberg said the US-based company was identifying regions to make the cuts as it examines costs within its global portfolio.
"The focus that we're taking out in the operations is to look at total cost," Mr Goldberg said.
Newmont was not just looking at cash costs or sustaining capital, but taking in "the whole picture" and identifying efficient returns from capital.
"We're going through that process with each of the regions, going through what their plans are, understanding what's in there," he said.
"You can make some cuts today and that will hurt you tomorrow if you don't make sure you do the right investment."
"It's important that we don't randomly cut."
Newmont said it was making progress on cost cutting and it will release additional savings targets for 2013 in February at the company's full year results.
The company expects to make US$120 million ($116.54 million) in 2012 savings in 2012, up from US$100 million ($97.12 million) forecast in July.
Newmont said issues related to a shortfall of backfilling in the mine and limited access to higher grade ore would take some time to address.
"We've decided to defer development work on the Tanami shaft project as we focus on improving the execution and delivery at the existing operation," he said.
"We expect to reassess the restart date of the Tanami shaft project in 2015."
By the end of 2012 the company expects to spend US$300 ($291.36) to US$500 million ($485.60 million) less in development than at the start of the year.
Newmont also plans to cut back its exploration budget in 2013 by around US$50 million ($48.56 million) to US$75 million ($72.84 million).
In 2014 the company expects to do less exploration, have fewer overheads and to make cuts to projects that do not make sense.
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