Over the past six months, the uncontrollable element of industry wide operating cost inflation has been broadly steady, reflecting mixed trends across the procurement landscape.
A number of uncontrollable cost drivers across our minerals business, such as diesel, explosives and steel products, have levelled off in price over the most recent half.
General consumer price inflation has been lower than expected by policy makers across Australia, Chile and the United States.
In Australia, total mining sector employment reached 240,000 in the June quarter of 2019. That is about 13 per cent below the cycle peak.
Mining wage growth in Australia has increased from below 2 per cent to 2.3 per cent year-on-year. Within Minerals Australia, pockets of inflation have emerged due to a need for niche skills and higher turnover rates in some segments of the workforce.
In Chile, general inflation has been modest. In the economy more broadly, there is confidence that the capital project pipeline is robust, construction industry confidence is on the rise and recent large scale immigration will have a positive impact on the nation’s trend growth trajectory.
Globally, earth moving equipment deliveries have increased strongly in consecutive years, but deliveries are still only half of the cycle peak achieved early this decade.
In the petroleum business, deepwater costs have recovered a little but they remain close to cycle lows. Onshore costs have returned to 85 per cent of peak levels, while offshore cost are just 70 per cent of the way there.