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Gold mine production across the world will likely increase by 5.7 per cent this year, with less disruption expected from the Covid pandemic compared with last year.
According to Fitch Solutions Country Risk and Industrial Research (FSCRIR), the growth will be the fastest this year after it dropped two per cent in 2019 and 0.5 per cent last year.
Leading up to 2025, global gold mine production will remain strong with FSCRIR projecting growth at 3.2 per cent next year, 4.3 per cent in 2023, 2.4 per cent in 2024 and 3.4 per cent in 2025.
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“We forecast global gold production to increase from 109.4 million ounces (moz) this year to 141.7 moz by 2030, averaging 3.2 per cent annual growth. This would be an acceleration from the average growth of 0.8 per cent over 2016-20,” the research body said in a note.
Sour note
But a sour note would be China’s gold production stagnating over the next decade after surging the last 10 years. “Declining ore grades will limit domestic investment and encourage Chinese firms to develop overseas projects,” Fitch Solution said.
This year, gold production is expected to increase by a meagre 0.2 per cent before stagnating for the rest of the decade. FSCRIR said Chinese production also faced challenges due to environmental regulations and closure of small mines.
China adopted new rules in the last few years to raise environmental requirements on solid waste from gold prospecting, resulting in the closure of a slew of gold mines and a drop in production in provinces such as Shandong, Jiangxi and Hunan.
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“Years of intensive gold mining have resulted in falling reserves and production halts in several areas, including Qinghai and Gansu,” the research agency said.
On Chinese firms raising investments in foreign mines, FSCRIR said that Shandong Gold had bought 50 per cent stake in the Veladero mine in Argentina from Barrick gold for $960 million.
Among other countries, Australia will witness a modest growth in mine production over the coming years as it has a strong project pipeline. Rising gold prices and competitive operating costs will help the growth, Fitch Solutions said.
Over the next nine years, Australia’s gold production will increase to 13.1 moz, from the 10.8 moz projected for this year. In particular, OZ Minerals’s second phase of development at the Carrapateena copper-gold project would yield 67 kilo ounces (koz) of gold annually during its estimated life of 20 years
Russia’s precautionary move
Russian gold production is likely to accelerate 3.8 per cent annually up to 2030, with production set to top 14 moz from the current 9.9 moz. Helping the output growth will be the precautions that Moscow will take against a possible sanction on its bank by Western countries. Banks are likely to increase their gold reserves, FSCRIR said.
A health project pipeline will also aid the trend, it said, adding that expanding US sanctions on Moscow will support Russian gold production in the short term. Fitch Solutions expects domestic demand there to continue as long as tensions with the US remain.
In the long term, a number of new projects — 21 are in the pipeline — will drive the production growth, it said.
Natalka project of Polyus Gold, which became fully operational two years ago, would be a main contributor to the growth in gold production in Russia, with a capacity to produce 420-470 koz annually. Polyus Gold is also set to develop Sukhoi Log, a large untapped goldfield that can potentially yield 1.07 moz of gold annually.
US to attract investment
Fitch Solutions said the US gold-mining sector will continue to attract significant investments in view of the country’s history of gold exploration and known precious metal deposits. Nevada, in particular, will remain a key location for exploration and development as Barrick and Newmont Goldcorp are committed to several large-scale projects there.
In particular, Barrick and Newmont have constructed a third mining shaft at Turquoise Ridge in the third quarter of 2018 and it is expected to increase annual production to more than 500 koz by 2023 at a competitive cost, FSCRIR added.
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