Polymetal’s chief executive Vitaly Nesis
Polymetal’s chief executive Vitaly Nesis said the chip shortage posed ‘a major risk’ to the mining sector © Hollie Adams/Bloomberg

The chip shortage squeezing global carmakers is set to spread to the natural resources sector, the chief executive of Russian gold miner Polymetal has warned, adding to inflationary pressures already afflicting the industry.

Vitaly Nesis said supply-chain problems facing the likes of Toyota would soon hit makers of mining vehicles and machinery.

“Toyota is not special, the chip shortage is very real,” he told the Financial Times. “I’m worried . . . I think this is a major risk.”

The comments come as the global mining industry grapples with higher costs for raw materials such as diesel and steel, as well as wage inflation. Fellow Russian miner Polyus recently said it expected its costs to increase in the second half of the year due to “ongoing inflationary pressures”.

Polymetal, a member of the UK’s benchmark FTSE 100 index, said last week its capital spending would rise a further 25 per cent this year, partly to pre-order mining equipment such as trucks, loaders and drill rigs.

There was already a “palpable sense of threat” among suppliers of mining vehicles, Nesis said.

“Seeing the global wave of deficits we took the steps to kind of pre-empt the likely issues with the shortage of mining equipment,” he said. “We are scared of what’s going on . . . If the shit hits the fan it will be really painful.”

Polymetal said it now expected to spend $675m to $725m this year. The company is already battling higher costs for construction and labour, as well as for materials such as cement and plastics.

The group has had to fly workers from St Petersburg to its mines in the far east of Russia because of border restrictions that prevented people arriving from Central Asia, Nesis said.

Price increases had already become apparent in the market for control instruments such as sensors used in processing plants, Nesis added, with Polymetal already having to offer a “significant premium” to secure them.

The chief executive told analysts recently that he did not expect “any relief” from inflationary pressures in the near future.

Shares in Polymetal fell about 3 per cent last week to trade at 1,488p.

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