2011-01-04

Wage hikes could crimp mining shares

Gold miners and others have benefited from low overall inflation and it's a reason why the mining stocks are relative values to the metals themselves. That's not always the case though, if the costs of mining and refining rise faster than the price of the end commodity, it's possible that owning the commodity itself is a better bet.

Which is why this story is worth keeping an eye on. Mining Firms Dig Deeper As Worker Costs Escalate
But some mining companies say the industry is facing increased competition for skilled workers from the oil and natural-gas industry, which is also ramping up spending for exploration and development.

While the scarcity translates into higher costs for mining companies, it benefits workers, who can move from one mine to another, seeking better pay and working conditions.

Kyle Hirsch, a silver miner in Big Creek, Idaho, left his job at the Lucky Friday mine, owned by Hecla Mining Co., and started working at another nearby silver mine, which was paying $350 more a week. "I have been a tramp all my life, going from mining job to mining job," says Mr. Hirsch, 44 years old, who now works as a driller at the Crescent Silver mine in Idaho. "Right now is a good time to mine. Mining is money."

Idaho-based United Mining Group Inc., which owns an 80% interest in the Crescent Silver Mine, says it pays a two-man crew of miners about $100 for every foot of rock they clear. Typically, a crew clears a depth of about 10 feet during a shift, totaling about $1,000.

Last year, the crews were earning less, about $70 to $80 for each foot of rock excavated, according to Greg Stewart, president of United Mining Group. "We have to pay more now," says Mr. Stewart, because of the competition for workers.
This is a global phenomenon; click through to the article for other examples.

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