Mining costs, which were the industry's biggest headache up until a year ago, are now a bright spot for a sector more concerned with volatile demand and tight financing markets, top executives told the Reuters Global Mining and Steel Summit this week.

With prices for energy, reagents, and steel retreating and the strong U.S. dollar bringing down operating costs in other countries, gold miners in particular are set to benefit as the price of the metal has stayed strong, top executives told the Reuters Global Mining and Steel Summit in New York this week.

I expect to see things like (cheaper) steel and reagents and tires and such hitting the bottom line later in the first quarter and into the second quarter as we work through our own inventories and through the inventories of our suppliers, Goldcorp CEO Chuck Jeannes told the summit in New York.

Canada's second-biggest gold company also expects to benefit from the U.S. dollar's strength against currencies in Mexico and Canada, where it mines.

Jeannes said the company has entered hedges to lock the lower currencies, which could allow Goldcorp to beat its expected 2009 cost guidance of $365 an ounce.

We're locking in the opportunity, all other things being equal, to better that cost guidance for the year, he said.

The shift in costs follows several years of rampant inflation in the mining sector, which had kept gold miners from realizing the benefits of soaring gold prices.

The reductions have been the silver lining of a worldwide economic slowdown, as weaker demand has lowered energy costs, sapped demand for reagents such as sulfuric acid, and decimated the base metals industry, thus making it easier to obtain mining equipment.


Now gold companies are confidently projecting wider margins -- which means more cash flow -- and also an easier road to getting ounces out of the ground.

Today lead times our shorter. (A year ago) you might have had (to wait) 18 months for equipment. Now it might be three months, said Aaron Regent, CEO of top gold miner Barrick Gold(ABX.TO: Quote).

He said he was also contemplating entering U.S. dollar hedges to lock in cost savings, and said the lower cost picture may allow Barrick to reduce projected costs for multibillion dollar projects like Pascua-Lama, which straddles the border of Chile and Argentina.

That's a project where we think there could be an opportunity to reduce the capital costs, so that's something we're looking at right now, he said.

Yamana Gold (YRI.TO: Quote) also hopes to lower its capital costs, said CEO Peter Marrone.

The company delayed some of its secondary projects last fall with a plan to reexamine them this year. It was an effort to conserve capital during the financial crisis, but also to re-evaluate them at lower costs.

For instance, Yamana already has a feasibility study for its C1 Santa Luz property in Brazil, but will delay making a construction decision until the middle of this year.

We're going to re-evaluate it in the context of what we think the true capital costs will be in the context of what's gone on in the world, he said.

Jerry Grandey, CEO of top uranium producer Cameco Corp (CCO.TO: Quote), doesn't expect the rules of his industry to be rewritten by lower costs, but he said there have been dramatic reversals, particularly in costs for sulfuric acid which it uses at its Inkai mine in Kazakhstan.

After dealing with shortages last year, increased production and less activity by other miners and by the fertilizer industry has brought the price way down, he said.

The last we heard is it went from $600 a tonne down to about $10, he said. It's quite a dramatic reversal.

(Reporting by Cameron French)

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