Northern Star warns of border restrictions driving up labor costs

(Bloomberg) – Northern Star Resources Ltd. is the latest Australian miner to warn that pandemic-related border restrictions in the country’s key resource state continue to increase pressures on labor costs.

“It’s been tough,” chief executive Stuart Tonkin said in an interview with Bloomberg Television on Thursday. “Because for the past two years Western Australia has really kept a very tight border, the typical interstate or international imports to supplement that labor pool just haven’t been there.”

Western Australia, where Northern Star is based and holds the bulk of its gold mining operations, is one of the last jurisdictions in the world to attempt to eliminate Covid-19 within its community through to strict border controls and quarantine rules.

The state resource industry, which is a crucial source of income for Australia, depends on airlifting workers to remote locations, which has been extremely difficult for the past two years. This has led to labor shortages for everything from truck drivers to explosives experts.

Read: Shortage of explosives experts for drivers is hurting Australia’s top miners

Tonkin added that the shortages had seen companies “steal” talent, increase pressures on labor costs and create uncertainty that disrupted many companies’ plans.

Still, Northern Star posted a profit of A$261 million ($187 million) for the six months to December 31, up 43% from the corresponding period a year earlier. It said it remained on track to meet full-year production guidance, despite Western Australia’s border restrictions and their impacts on labor and costs.

A deal announced in 2020 to acquire Saracen Mineral Holdings saw Northern Star take full control of the Super Pit gold mine in Western Australia. The company aims to nearly double gold production by 2026 to 2 million ounces per year.

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