Has gold mining peaked? World Gold Council: Gold deposits are hard to find, mining growth rate sees first decline

According to a report from the World Gold Council (WGC), the gold mining industry is facing challenges in production growth as gold deposits are becoming increasingly harder to find.

Challenges Facing Growth in Gold Mining Production

John Reade, Market Strategist at the World Gold Council, stated that although mine production in the first quarter of 2024 saw a year-on-year increase of 4%, from a broader perspective, mine production peaked between 2016 and 2018 and has not seen growth since then.

Reade explained, "In 2023, our mine production only increased by 0.5% year-on-year. The growth rate in 2022 was 1.35%, down from 2.7% the previous year. In 2020, global gold production saw its first decline in a decade, dropping by 1%."

Difficulty in Finding New Gold Deposits

Reade pointed out that gold deposits are becoming increasingly harder to find globally as many potential areas have already been explored. He noted, "After a rapid growth period from 2008, the mining industry has struggled to maintain production growth. Discovering new gold deposits, obtaining permits, raising funds, and operations have become increasingly challenging."

Challenges of Large-Scale Gold Mining

Data from the World Gold Council shows that large-scale gold mining requires significant capital investment, major exploration and development, often taking 10 to 20 years before production can commence. Even during the exploration phase, the likelihood of a discovery converting into a mine development is low, with only about 10% of global gold discoveries having sufficient metal content worth mining.

Reserves of Mined and Mineable Gold

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 data from the U.S. Geological Survey, estimated mineable gold reserves are around 57,000 metric tons.

Challenges in Government Permits and Infrastructure Development

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 start operations can take several years. Furthermore, many mining projects are located in remote areas requiring infrastructure such as roads, power, and water sources, which adds to the costs of constructing and operating these mines.

Following a recent strong surge driven by demand from China, the price of gold has slightly stabilized. The spot gold price is currently at $2,294.3 per ounce.