This amazing growth has come with costs, primarily in the form of higher labor costs. In “Lovesick Miners Raise Costs for Rio, BHP,” Bloomberg describes how the isolation of work in the remote mining areas makes these jobs very unattractive. Mining companies like BHP Biliton (BHP) and Rio Tinto (RIO) not only have to pay extremely high wages as compensation, but they also must include other perks to help miners deal with the isolation. For example, work schedules for miners can include extended trips to major cities in between extended shifts. Still, major shortages of labor exist in many skills. Australia will likely need to rely more and more on foreign workers to do these jobs – the isolation THOSE workers will feel will likely be many times what Australian miners feel. So, this dynamic will be important to watch.

Overall, this article is a fascinating look into the lives of Australian miners and how their work impacts their ability to gain and maintain relationships.

The post Australian mining companies struggle with higher labor costs appeared first on Inflation Watch.

The world’s largest miners are pushing for increases of 10% to 25% over this year’s contract prices for iron ore and coal, people familiar with the nascent negotiations said, which would raise costs for the steel used in cars, construction, appliances and other goods.

China, which consumes about 65% of the world’s seaborne iron ore, is trying to use its size to push for lower or flat prices on iron ore and coal—two chief ingredients in steel.

But the people familiar with the talks among steelmakers and miners BHP Billiton, Rio Tinto and Brazil’s Vale SA said steel demand is rebounding and iron-ore supplies are tightening, setting the stage for a near-certain price increase.

By the time both sides settle, probably in April, steelmakers could pay $70-$75 a metric ton for iron ore. Steelmakers have been paying about $65 a metric ton this year.

The post Miners press for higher prices on iron ore, coal appeared first on Inflation Watch.

The post Credit Suisse: Strong Steel Outlook to Boost Coal Prices appeared first on Inflation Watch.

Colorado Springs Utilities’ decade-old coal-hauling contracts expire next year, so it’s time to make a new deal. And the negotiations, which began recently, are sure to bring higher costs, says Utilities energy supply general manager Drew Rankin.

That’s because East Coast utilities have elbowed their way in at the same mines Colorado Springs buys from: Powder River Basin in Wyoming and mines in northwestern Colorado. Eastern utilities want the coal because it has a lower sulfur content and burns cleaner. That’s crucial as the government looks to force power generators to cut carbon dioxide pollution and to add expensive emissions control equipment.

The city projects that rail charges will increase by about a third by 2012, from around $10 per ton in 2008 to an estimated $15 per ton, or $30 million annually. The price of coal itself will go up even more, doubling from 2008 to 2012 to roughly $27 per ton, or $54 million a year, city forecasts show. The increases definitely will impact rates, although it’s too soon to estimate how significantly.

Small wonder, then, that coal companies’ shares are soaring.

In related news, see “Goldman Raises Iron Ore, Coking Coal Price Forecasts.”

The post Colorado Springs utilities to pay twice as much for coal appeared first on Inflation Watch.