Gold Fields flags oil shock as mining costs climb

South Africa’s Gold Fields (JSE: GFI) (NYSE: GFI) reaffirmed its 2026 production and cost guidance on Thursday, but warned that surging energy prices tied to the Iran war are pushing up fuel, freight and explosives costs across its global operations.

The gold miner expects to produce between 2.4 million and 2.6 million ounces of the metal in 2026, even as diesel prices have risen between 30% and 70% since February and liquefied natural gas prices have climbed about 30%, increasing pressure on operating costs.

Freight costs have risen 40%, while explosives and cyanide prices are both about 10% higher. 

Gold Fields estimated the impact, assuming oil at $100 per barrel, would add $40 to $50 per ounce across its portfolio. The company said fuel-efficient haulage systems and other operational measures should help offset the increases and allow it to maintain full-year cost guidance.

“The forecast impact of this, assuming an oil price of $100 per barrel, is between $40 to $50 per ounce on a portfolio level,” the company said in its quarterly update.

The warning highlights how renewed geopolitical tensions are rippling through the mining sector as producers grapple with volatile fuel markets and higher input costs. While bullion prices remain historically elevated, miners face growing pressure from inflation across energy-intensive operations, particularly at remote sites dependent on diesel and liquefied natural gas.

International crude prices surged after US and Israeli airstrikes on Iran triggered fears of broader supply disruptions, with Brent crude briefly reaching about $126 per barrel in late April before retreating below $100 this week. 

Gold prices, which hit a record near $5,595 an ounce in January, have since pulled back to around $4,750 an ounce.

Chile mine carries output

Gold Fields produced 633,000 ounces of gold in the first quarter, up 15% from a year earlier, as higher output from its Salares Norte mine in Chile offset weaker production at Tarkwa in Ghana and the Agnew and Gruyere mines in Australia.

Salares Norte delivered 173,000 gold-equivalent ounces during the quarter, up 245% year-over-year and 8% from the previous quarter, helped by stronger throughput and improved gold and silver recoveries. The company said the operation’s strong second-half performance in 2025 carried into its first full year of commercial production.

Gold Fields also confirmed that the Damang mine was transferred to the Ghanaian government in April, following the expiry of its mining lease. The company said the handover was completed safely while maintaining operational stability.

The miner separately disclosed notices of dispute from contractor Engineers and Planners (E&P) over historical claims tied to mining contracts at Tarkwa and Damang. The disputes are now heading to arbitration.

“We are committed to resolving these matters in an orderly manner, while maintaining operational stability at Tarkwa,” the company said.

Reshaping portfolio

Gold Fields has accelerated acquisitions and mine investments as it looks to improve asset quality and extend production lives across its portfolio.

The company acquired Osisko Mining in 2024 for $1.58 billion and bought Gold Road Resources in 2025 for $2.6 billion as part of its broader expansion strategy.

Over the next five years, Gold Fields plans to invest in materials handling upgrades at St Ives and Granny Smith, pre-stripping work at Salares Norte, development at South Deep and renewable energy projects aimed at lowering long-term power costs.