According to a report by the World Gold Council (WGC), the gold mining industry is facing challenges in production growth as gold deposits become increasingly difficult to find.
The report indicates that while mining production in the first quarter of 2024 saw a 4% year-on-year increase, overall mining production peaked between 2016 and 2018, and has not seen growth since then.
John Reade, market strategist at the World Gold Council, stated, “In 2023, mining production only saw a 0.5% year-on-year increase. The growth rate in 2022 was 1.35%, compared to 2.7% the previous year. Global gold production in 2020 witnessed 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 noted, “After a rapid growth period over the past decade since 2008, the mining industry has struggled to maintain production growth. Discovering new gold deposits, obtaining permits, raising funds, and operations have become increasingly challenging.”
Data from the World Gold Council shows that large-scale gold mining requires significant capital and involves extensive exploration and development, typically taking 10 to 20 years before production can begin. Even during the exploration process, the probability of discoveries that can be converted into mine developments is low, with only about 10% of global gold discoveries having sufficient 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 US Geological Survey, estimated mineable gold reserves amount to about 57,000 metric tons.
In addition to the exploration process, obtaining government permits has become more challenging and time-consuming. Reade added that acquiring the necessary permits and licenses before mining companies can commence operations may take several years. Furthermore, many mining projects are located in remote areas requiring infrastructure (such as roads, electricity, and water sources), which increases the costs of constructing and operating these mines.
Following a recent strong surge driven by Chinese demand, the price of gold has slightly stabilized. The spot price of gold is currently at $2,294.3 per ounce.