An employee lines up gold bars for a photo at YLG Bullion International headquarters in Bangkok, Thailand.
Dario Pignatelli | Bloomberg | Getty Images
The gold mining industry is struggling to maintain production growth as gold deposits become harder to find, according to the World Gold Association.
“Mine production in the first quarter of 2024 was up 4% year-on-year, the highest on record, but if you look at the bigger picture of mine production, it essentially plateaued around 2016 and 2018 and hasn’t grown since then,” said John Reid, chief market strategist at WGC.
Data from the International Trade Association showed mine production in 2023 was expected to grow just 0.5% from the previous year.
Global gold production fell for the first time in a decade in 2020, dropping 1%, while growth in 2022 was 1.35% compared to 2.7% the year before.
“I think the overwhelming fact is that after a decade of rapid growth since about 2008, the mining industry is struggling to report sustained growth in production,” Reid said.
He elaborated that it is becoming increasingly difficult to find new gold deposits around the world as many promising areas have already been explored.
It is becoming harder to find gold, get permits, raise funds and operate.
John Reid
World Gold Council
According to the WGC, large-scale gold mining is capital intensive, requires extensive exploration and development, and takes an average of 10 to 20 years before a mine is ready for production.
Even during the exploration process, the chances of a discovery developing into a mine are low, with only around 10% of gold discoveries worldwide containing enough metal to be worth mining.
About 187,000 tonnes of gold have been mined to date, mostly from China, South Africa and Australia, and the United States Geological Survey estimates that recoverable gold reserves are about 57,000 tonnes.
Apart from the discovery process, mining has become more difficult because government permits have become harder to obtain and take longer to get, Reid added. It can take years for mining companies to get the necessary licenses and permits before they can start operating.
Additionally, many mining projects are planned in remote areas that require infrastructure such as roads, power and water, resulting in additional costs to build and fund the operation of these mines, Reed said.
“It’s becoming harder to find gold, harder to permit, harder to finance and harder to operate,” he said.
Gold prices are taking a breather after rising to record highs in recent months, fuelled by strong demand led by China. Spot Gold It is currently trading at $2,294.3 per ounce.