And the safe haven asset par excellence but it is increasingly difficult to find and miners are struggling to dig further. It is the World Gold Council that has raised the alarm on the gold mining industry which is currently struggling to sustain production growth, considering that deposits of the yellow metal are becoming increasingly difficult to find.
“We saw record mineral production in the first quarter of 2024, up 4% from the previous year. But the big picture of mining production is that it actually stabilized around 2016 and 2018 and hasn’t grown since then,” he said. John ReadeChief Market Strategist of the WGC as reported by CNBC.
Gold: production slows. Extraction more and more expensive
According to data from the international trade association, in 2023 the mineral production it increased only 0.5% compared to a year ago. In 2022 growth was 1.35% year-on-year, the previous year 2.7%, while in 2020 global gold production recorded its first decline in a decade, falling by 1%.
“I think the most important fact is that after 10 years of rapid growth starting around 2008, the mining industry is struggling to experience sustained growth in production,” Reade said.
AND increasingly difficult to find new deposits gold worldwide, as many areas have already been explored. Large-scale gold mining is capital-intensive and requires significant exploration and development, with timelines averaging 10 to 20 years before a mine is ready for production, according to the WGC. Even during the exploration process, the likelihood of a discovery turning into a mine is low: only about 10% of the world’s gold discoveries have been investigated.
To date, approximately 187,000 tonnes of gold have been mined, most of it from China, South Africa and Australia. Minable gold reserves are estimated at about 57,000 tons, according to the United States Geological Survey.
Aside from the discovery process, government permits that are increasingly difficult to obtain and take longer to issue have made mining more difficult, Reade added. Obtaining the licenses and permits needed for mining companies to start operations can take several years.
Additionally, many mining projects are planned in remote areas that require infrastructure such as roads, power and water, resulting in additional costs for building these mines and financing operations, Reade said.
“It is increasingly difficult to find gold, get permits, finance it and manage it,” he said.
And amidst all this gold prices are taking a breather after reaching the historic highs in recent months, thanks to strong demand led by China. Spot gold is currently trading at $2,294.30 per ounce.
