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 Production Growth Faces Challenges
Gold Deposits Are 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 although mining production in the first quarter of 2024 reached a record 4% year-on-year growth, 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 grew by 0.5% year-on-year. The growth rate in 2022 was 1.35%, while the previous year was 2.7%. In 2020, global gold production saw 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 decade of rapid growth since 2008, the mining industry has struggled to maintain production growth.” “Discovering new gold deposits, obtaining permits, raising funds, and operating are becoming increasingly difficult.”
Data from the World Gold Council shows that large-scale gold mining requires substantial capital and significant exploration and development, often taking 10 to 20 years to reach production. 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 most coming from China, South Africa, and Australia. According to data from 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 obtaining the necessary permits and licenses before mining companies can start operations may take several years. Furthermore, many mining projects are located in remote areas requiring infrastructure (such as roads, power, and water sources), increasing the costs of constructing these mines and operating them.
After a recent strong increase driven by Chinese demand, the price of gold is currently stabilizing slightly. The spot price of gold is currently at $2,294.3 per ounce.