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World Gold Council: It's getting harder to mine gold

Published 2024/06/10, 16:14
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Investing.com - The gold mining sector is struggling to maintain production growth as finding deposits of the yellow metal has become more difficult, according to the World Gold Council.

John Reade, Chief Market Analyst at the World Gold Council, said: "We’ve seen record first quarter mine production in 2024 up 4% year on year. But the bigger picture, I think about mine production is that, effectively, it plateaued around 2016, 2018 and we’ve seen no growth since then."

According to the International Trade Association data, mine production increased by only 0.5% in 2023 compared to the previous year.

In 2022, growth was 1.35% year-on-year, and the year before that it was 2.7%, while in 2020 global gold production saw its first decline in a decade, decreasing by 1%.

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Reade added, "I think the overwhelming story there is: after 10 years of rapid growth from around 2008, the mining industry is struggling to report sustained growth in production."

He explained that finding new gold deposits has become more challenging worldwide because many potential areas have already been explored.

The World Gold Council confirmed that large-scale gold mining requires significant capital and extensive exploration and development, with an average of 10 to 20 years before a mine is ready for production.

Even during the exploration process, the likelihood of turning a discovery into a mine under development is low, with only about 10% of global gold discoveries containing enough metal to justify mining.

To date, approximately 187,000 tons of gold have been extracted, with most of it coming from China, South Africa, and Australia. The extractable gold reserves are estimated to be about 57,000 tons, according to the US Geological Survey.

Reade noted that in addition to the discovery process, obtaining government permits has become more difficult and takes longer, making mining more challenging. Securing the necessary licenses and permits before mining companies can start operations can take several years.

Furthermore, many mining projects are planned for remote areas requiring infrastructure such as roads, power, and water, leading to additional costs in building these mines and funding operations, Reade said.

Gold prices had declined after reaching record levels in recent months, driven by strong demand led by China. Given the difficulties in gold production and challenges in the mining sector, it can be said that the yellow metal has the potential to achieve new record highs in the coming period.

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