Has Gold Mining Peaked World Gold Council Gold Mines Hard to Find Mining Growth Rate Sees First Decline
According to the report of the World Gold Council (WGC), the gold mining industry is facing challenges in production growth as gold deposits are becoming increasingly difficult to find.
Gold Mining Industry Production Growth Faces Challenges
Gold Deposits are Becoming Harder to Find
Challenges of Large-Scale Gold Mining
Existing and Potential Gold Reserves
Challenges of Government Permits and Infrastructure Construction
John Reade, market strategist at the World Gold Council, stated that although mining production in the first quarter of 2024 set a record with a 4% year-on-year increase, from a broader perspective, mining production peaked between 2016 and 2018 and has not grown since then.
Reade stated, “Our mining production in 2023 only increased by 0.5% year-on-year. The growth rate in 2022 was 1.35%, while the previous year was 2.7%. Global gold production saw its first decline in a decade in 2020, dropping by 1%.”
Reade explained that gold deposits are becoming increasingly difficult to find globally as many potential areas have already been explored. He pointed out, “After a rapid growth period in the decade since 2008, the mining industry has struggled to maintain production growth. Discovering new gold deposits, obtaining permits, raising funds, and operating are becoming increasingly challenging.”
Data from the World Gold Council shows that large-scale gold mining requires significant capital and involves significant exploration and development, often taking 10 to 20 years to reach production. Even in the exploration process, the probability of a discovery that can be converted into a mine development is low, with only about 10% of global gold discoveries having enough metal content worth mining.
As of now, approximately 187,000 metric tons of gold have been mined globally, with the majority coming from China, South Africa, and Australia. According to the U.S. Geological Survey, estimated mineable gold reserves are around 57,000 metric tons.
In addition to the exploration process, obtaining government permits has become more challenging and requires more time for approval. Reade added that it may take several years to obtain the necessary permits and licenses before mining companies can begin operations. Furthermore, many mining projects are located in remote areas requiring infrastructure (such as roads, power, and water sources), which increases the costs of constructing and operating these mines.
After a recent strong increase driven by demand from China, gold prices are currently stabilizing. The spot gold price is currently at $2,294.3 per ounce.
