According to a report from the World Gold Council (WGC), the gold mining industry is facing challenges in production growth as gold deposits become increasingly difficult to find.
Gold Mining Production Growth Facing Challenges
Gold Deposits Becoming Harder to Find
Challenges of Large-Scale Gold Mining
Already Mined and Potentially Mined Gold Reserves
Challenges of Government Permits and Infrastructure Construction
John Reade, market strategist at the World Gold Council, stated that while 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% compared to the previous year. The growth rate in 2022 was 1.35%, and the year before that was 2.7%. Global gold production in 2020 experienced its first decline in a decade, 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 fast growth period in the industry from 2008, it has been challenging to maintain production growth.” “Discovering new gold deposits, obtaining permits, raising funds, and operations are becoming increasingly difficult.”
Data from the World Gold Council shows that large-scale gold mining requires significant capital and major exploration and development, often taking 10 to 20 years before production can begin. Even during the exploration process, the probability of a discovery being 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 time-consuming. Reade added that it may take several years to obtain the necessary permits and licenses before mining companies can start operations. Furthermore, many mining projects are located in remote areas requiring infrastructure (such as roads, electricity, and water sources), which increases the cost of constructing and operating these mines.
After a recent strong increase driven by demand from China, the price of gold is currently stabilizing. The spot price of gold is currently at $2,294.3 per ounce.