North American mining companies are hunkering down to ride out a global economic slowdown, looking to rein in spending and perhaps delay some projects and exploration.
Barrick Gold Corp. and Newmont Mining Corp., the world's largest gold producers, have been forced to wrestle with volatile commodities prices, fluctuating oil prices, inflation and frozen credit markets.
Some analysts believe the industry will lower 2009 production forecasts, but the impact primarily will be felt overseas, where most of the world's gold mines are located.
"Our company and our industry are currently operating in an unprecedented macro business environment, consisting of extreme commodity price volatility, mass portfolio liquidation, global inflation and limited, if any, access to capital," Newmont chief executive Richard O'Brien said last week.
While major projects already underway will continue, the expansion of existing mines and some smaller projects will likely be put on hold, Argus Research analyst Bill Selesky said Friday.
"With the way commodity prices have come off in the face of a slowing global economy, what the miners are doing is starting to evaluate all their ongoing projects," he said. "It's all because of the credit crunch."
The year began well. Denver-based Newmont reported a fivefold jump in its first-quarter net income as production costs fell and gold prices jumped to a record $1,000 an ounce in March. Barrick, based in Toronto, swung to a profit.
