Agnico Eagle Mines (TSX:AEM) has warned that rising diesel prices could increase its gold production costs by up to 200% heading into next year, highlighting continued inflationary pressures across the mining industry.
During an analyst call last week, the Canadian gold producer said it expects higher diesel prices to add about US$50–60 ($71–85) per ounce to its costs in the fourth quarter, up from US$30 per ounce in the previous period.
The increase highlights growing inflationary pressures across the mining industry, with prices for diesel, sulphur, and sulphuric acid — all key mining inputs — rising amid supply disruptions linked to the Middle East conflict.
However, Agnico says its operations remain somewhat insulated from the energy price shock, as much of its production comes from mines in northern Ontario and Québec, Canada, that are powered largely by hydroelectric and nuclear generation.
Still, diesel accounts for approximately 11% of the company’s operating costs, leaving it exposed to further price increases.
“We don’t have any more insight into long-term diesel prices in 2027 than anyone else,” CEO Ammar Al-Joundi said during the call, adding that the company had hedged some of its fuel requirements.
Trade tensions add to cost pressures
Beyond rising energy prices, Agnico is also facing higher costs from ongoing trade tensions between the US and Canada.
The company has incorporated an estimated tariff-related impact of approximately US$5 per ounce into its latest cost guidance.
However, CFO Jamie Porter warns that the financial burden could increase next year if the two countries fail to reach a trade agreement.
“If there isn’t a trade deal, we’d actually expect that impact to increase in 2027,” Porter said in the call.
The combined pressures are reflected in Agnico’s all-in sustaining costs (AISC), which rose to US$1,648 per ounce in the third quarter.
The Toronto-based company now expects full-year AISC to finish near the upper end of its 2026 guidance range of US$1,400–1,550 per ounce.
Meanwhile, Agnico expects annual gold production to come in near the lower end of its guidance range of 3.3–3.5 million ounces.
The miner produced 814,012 ounces of gold in the third quarter, bringing its reported year-to-date production to approximately 2.94 million ounces.
Write to Jackson Chen at Mining.com.au
Main image: Agnico Eagle Mines
