Source: Cai Lian She Author: Liu Rui
Amid strong demand for gold, the World Gold Council points out that global gold production may no longer keep up with demand growth; The primary reason for the difficulty in increasing gold production is that many promising areas worldwide have already been prospected, making it increasingly difficult to find new gold mines.
In recent months, the price of gold has repeatedly hit new highs. Although it fell sharply last Friday, the trading price of London Gold is still hovering around the high level of $2299 per ounce.
During the strong demand for gold, the World Gold Council points out that global gold production may no longer keep up with demand growth.
Gold production is becoming increasingly difficult to sustain its growth trend.
According to the World Gold Council, as global gold mines become more difficult to explore, the growth of global gold mining production is becoming increasingly difficult to sustain.
"Although we have seen a 4% year-on-year increase in (gold) mine production in the first quarter of 2024," said John Reade, chief market strategist at the World Gold Council, "from a broader perspective, I think global mine production has reached a stable level around 2016 and 2018, and we have not seen any growth since then."
According to the International Trade Association, global gold production declined for the first time in 10 years in 2020, down 1% year-on-year. Although global gold production increased by 2.7% year-on-year in 2021 on the low base of the previous year, the year-on-year growth rate in 2022 has narrowed to only 1.35%. By 2023, global gold production will only increase slightly by 0.5% year-on-year.
"I think the most important thing is that after 10 years of rapid growth in the global gold mining industry since 2008, it is now very difficult to sustain continuous growth in production," Reade said.
It is becoming increasingly difficult to prospect for gold and get approval for mining projects.
The primary reason for the difficulty in increasing gold production is that many promising areas worldwide have already been prospected, making it increasingly difficult to find new gold mines.
According to the World Gold Council, large-scale gold mining is a capital-intensive project that requires extensive prospecting and development, and takes an average of 10 to 20 years to start production.
Reade added that in addition to the increasing difficulty in prospecting for gold, it is also becoming increasingly difficult to obtain government permits, making gold mining more difficult. Currently, a mining company may take several years to obtain the licenses required for company operations and mining exploration and development.
In addition, many mining projects are located in remote areas, which means that basic infrastructure such as roads, electricity and water needs to be built, adding to the cost of building and financing these mines.
"Finding gold mines, obtaining gold mining approvals, and financing and mining gold are becoming increasingly difficult," Reade said.
Editor/Lambor