“Like the broader economy,the mining industry has been experiencing a combination of ‘good’,or demand-led inflation,and ‘bad’,supply bottleneck inflation,” Agar will tell the International Mining and Resources Conference (IMARC).
“Unfortunately,the balance between the two has been skewed heavily towards the ‘bad’ since the Russian invasion of Ukraine.”
Companies across the nation’s $400-billion resources industry have been grappling with ballooning cost pressures squeezing their margins this year as COVID-19 exacerbates a chronic shortage of skilled workers needed to run their operations and develop new projects. Meanwhile,the cost of energy has been soaring since Russia’s invasion of Ukraine,as buyers worldwide shun Russian fossil fuel supplies and deepen a global energy crunch that had been building for some time.
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The price of crude oil,which is used to make fuel and briefly sank below $0 in the United States during 2020,surged past $US120 a barrel earlier this year and remains around $US90 today.
“Labour markets are tight globally,with no sign of easing soon,” Agar says. “The energy crisis in Europe is profound and will continue to drive volatility in energy markets.”
However,BHP is starting to see “some improvement” in global supply chain performance. Supply chain disruption in manufacturing is now significantly lower than in the second half of the 2021 calendar year,while shipping delays and port congestion have eased considerably.