Barrick (ABX), (AEM) (GG) (GFI) (ABGL) See Gold Cost Challenges

CEOs of Barrick Gold (NYSE:ABX), Agnico Eagle (NYSE:AEM), Goldcorp (NYSE:GG), Gold Fields (NYSE:GFI) and African Barrick Gold (ABGL) all recently said they see the rising costs of mining gold as a future challenge to the industry and their individual companies.

Even as the gold miners report stronger cash flows and good profits, costs are increasingly becoming an area of concern and some worry about the impact costs will have on capital expenditure

While the high price of silver, copper and other by-products of gold extraction have kept operating costs in check, miners are worried that capital spending on new projects will become unmanageable as labor, steel and energy costs keep pushing higher.

On top of that, gold miners have also suffered as the Canadian dollar, Australian dollar, Chilean peso and Mexican peso have strengthened against the U.S. dollar. Sales of most miners are typically denominated in U.S. dollars, while costs are often based in local "commodity" currencies.

A catch-22 for the industry is its success as well, as outlying gold deposits which couldn't be mined in the past because of prohibitive costs are now able to be mined successfully, but it does cost more to do it, but gold demand forces companies to pursue the resource.

Another problem is the delayed reaction from greedy governments, which are now attempting to extract a larger portion of the earning of the companies because of out of control spending and making promises they can't keep.

The problem there is they're making decisions based on past performance and costs rather than what the companies are now, and will be facing in future years. That could also devastate and slow the industry down if the greedy politicians attempt to take even more from the miners.