Miners say they're running out of gold

25 Nov 2009, 8:02 pm   -   Source: AFP
1 Comments
Share This
+ Comment
1
Experts say that almost everywhere, mineral deposits are being exhausted and new deposits are not being found fast enough to replace them. (File Getty)

Experts say that almost everywhere, mineral deposits are being exhausted and new deposits are not being found fast enough to replace them. (File Getty)

Gold production will continue to fall, despite a brief boost in 2009 and soaring prices, as deposits are exhausted and new discoveries remain elusive.

RELATED

Gold production will continue to fall, despite a brief boost in 2009 and soaring prices, as deposits are exhausted and new discoveries remain elusive, say miners.
  
In terms of production, "2009 is the outlier as far as the trend," Omar Jabara, spokesman for US-based Newmont Mining, the second-largest gold producer in the world, told AFP.
  
Overall, "it's a fact that gold production from mines has been in decline since 2001 and has gone roughly from 85 million ounces to about 75 million ounces a year," said Vincent Borg, spokesman for number one producer Barrick Gold.
  
"It sort of goes down about one million ounces every year and our forecast is that it will continue to decline despite the higher price" for gold nowadays, he said.
  
Almost everywhere, mineral deposits are being exhausted and new deposits are not being found fast enough to replace them, these experts explain.
  
South Africa, which was once at the vanguard of world production, saw a 9.3-percent drop in production year-over-year in the second quarter, according to its Chamber of Mines.
  
Globally, "it's just that the assets are not there anymore," Tonya Todd, a spokeswoman for Goldcorp, Canada's second biggest gold mining firm.
  
"Just because gold reached a new high today doesn't mean we can send a message to our 26 mines saying produce as much gold as you can today because they are already," said Borg.
  
"It's not like a water tap you can turn on and it comes right away."
  
Barrick and Newmont expect nevertheless to continue increasing production next year by seven percent and five to 10 percent, respectively. But long-term, it's downhill.
  
Omar Jabara explained that it takes from seven to 10 years to start production of a mine after finding an economically viable gold deposit.
  
And "no significant new discoveries have been found in recent years, despite the higher gold prices and despite higher exploration budgets," said Borg.
  
What is already happening and is likely to continue is that the grade or quality of deposits industry-wide will be "on average lower than deposits discovered in the past," opined Jabara.
  
The global gold mine production is forecast to rise by 3.7 percent in 2009 to about 2,500 tonnes, but will satisfy only two-thirds of demand, which soared this year amid the global financial crisis to 3,800 tonnes, according to the World Gold Council.
  
Historically, gold recycling or the sale of central bank stockpiles made up for supply shortages.
  
But during the latest financial crisis, banks have been buying up gold in large quantities to protect monetary reserves against weakness in the US dollar.
  
Since the start of November, for example, India's central bank has scooped up 200 tonnes of gold from the International Monetary Fund, at market value for about 6.7 billion dollars.
  
Amid uncertainty in the stock market, small investors and hedge funds are also coveting gold, driving up demand for the precious metal.
  
With mine production sloping downwards, an increasing supply of gold must come from existing supplies -- such as coins, bullion or jewelry -- but it will be very limited.
  
"All the gold ever produced through history amounts to about 165,000 tonnes, which would barely fill two Olympic-size swimming pools," said Jabara.
  
The price of gold, after reaching new highs over the past year, on Monday hit 1,174 dollars per ounce.
 

  • Follow us: 
  • Follow us on Facebook
  • Follow us on Twitter
  • Follow us on Youtube

Your Comments

Spend on Exploration Not Acquisition

Kam - from Albany, 3 years ago

Twice the comment was made that no new deposits are being discovered. If companies like Barrick & Newmont weren't so risk averse and did greenfields exploration instead of relying on acquiring proven deposits maybe there would be potential for new mines in the future. They should stop complaining & start real exploration, or else these foreigners should let us reclaim our industry, find the mines & operate them like we did before.

Join the Discussion

Name
City / Suburb E.g. Artarmon, Sydney
Title
Comment
You have characters remaining.
Validation
What's this?
This is a captcha-picture. It is used to prevent mass-access by robots.
All submitted comments become the property of SBS. They are moderated, so we reserve the right to edit comments and remove HTML tags. Not all submitted comments will be published. Publication does not mean we endorse the opinions expressed. Please read our terms and conditions for more information.