Peak gold maybe but Australian and Russian output still rising

Article first posted today on sharpspixley.com

Now March is with us we are beginning to receive reasonably accurate figures on 2017 gold production around the world and the bi g question is is peak gold here or not.  The answer is maybe.  According to the World Gold Council’s figures, global gold output actually increased in 2017, but by such a small margin that it should probably be considered flat at 3,267 tonnes – as compared with 3,260 tonnes a year earlier – a tiny 0.2% increase and with global output continuing to trend downwards we can probably assume that 2017 was indeed the year of peak gold.

But, there is much variation between national outputs.  While the world’s largest gold producer – China – is estimated to have seen its gold output fall by 9-10%, the world’s second, third and fourth largest miners – Australia, Russia and the USA have reportedly seen their annual gold production increase, but perhaps by not as much in combination as the fall in Chinese output.

As to the actual figures it all comes down to the accuracy of those reporting.  China’s output reportedly fell to 430 tonnes from over 460 tonnes in 2017.

There is an argument ongoing as to which nation is currently the world’s second largest gold producer.  In 2016 it was Australia with 287 tonnes while Russia was in 3rd place with 274 tonnes.  Australian consultancy, Surbiton Associate which tends to produce very accurate figures on Australia reports 2017 Australian production at 301 tonnes, a good increase on 2016, and avers Australia remains the world’s second largest producer of gold.  However, as we reported here three weeks ago (See:  Russia may now be World No. 2 Gold Miner), the Russian Finance Ministry stated that Russian gold output in 2017 was a little over 306 tonnes which would put it ahead of Australia as the World No.2.  Reports also suggest that gold output from other top producers Canada and Peru grew in 2017, while that of the former No.1 gold miner, South Africa continued to fall by nearly 4% last year according to that country’s Bureau of Statistics.

But the actual league table of producers is probably immaterial – it is the overall figure which counts and that does suggest that global gold production has, at the very least, plateaued. Cutbacks on gold exploration and big new capital projects, as the lower gold prices after the 2012 peak caused the big mining companies to rethink their expansion plans and capital expenditures, are taking their toll.  Most of the big miners are predicting short term  production falls after a number of years of ‘growth at any cost’.

Back to Australia and the latest Surbiton Associates assessment though: Australian gold mine production in calendar 2017 resultedin the highest annual output since 1999.  Total gold mine output in 2017 reached 301 tonnes or almost 9.7 million ounces, up three tonnes on calendar 2016. Production in the December quarter 2017 totalled some 80 tonnes, up six tonnes on the previous quarter.

“At the average gold price for 2017, the 301 tonnes was worth almost A$16 billion,” said Dr Sandra Close, a Surbiton Associates’ director. “Australian gold production is still trending upwards and the next few years look promising.”

“The higher output in the December quarter was due to a number of factors including the strong recovery at Newcrest’s Cadia East mine near Orange, NSW which was almost 60,000 ounces higher,” Dr Close said. “Other operations with higher output included the Super Pit’s increase of 28,000 ounces, Peak up 21,000 ounces and Tropicana up 19,000 ounces.

“Further out, development of the Gold Fields and Gold Road Resources’ Gruyere joint venture in WA is one-third complete, with the start of mining scheduled for late this year,” Dr Close said. “The operation will commence in early 2019 at a rate of around 270,000 ounces of gold per year when in full production.”

The only closure of note was Doray Minerals’ Andy Well mine. It commenced production in 2013 and was placed on care and maintenance in early November, after producing about 40,000 ounces in 2017.

“Given the number of projects coming on stream and with few closures anticipated, it would not be surprising to see another 20 tonnes of production added to Australia’s annual output,” Dr Close said. “This suggests that Australia’s all-time record annual gold production of 314 tonnes recorded in 1997 might well be exceeded.”

She said however, that despite the generally upward trend anticipated, production will probably decline in the March quarter 2018 due to wet weather in Western Australia which is a common occurrence early in the year.

As noted above, Surbiton estimates thst Australia remains the world’s second largest gold producer behind China which produced an estimated 4300 tonnes in 2017.

Australia’s largest gold producers for the 2017 year were:

Operation Ounces Owner
Boddington 787,000 Newmont Mining Corp
Super Pit – JV 738,000 Newmont Mining Corp 50%, Barrick Gold Corp 50%
Cadia Valley* 545,869 Newcrest Mining Ltd
Tropicana 461,704 AngloGold 50%, Independence Group NL 50%
Tanami 419,000 Newmont Mining Corp

 

 

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3 thoughts on “Peak gold maybe but Australian and Russian output still rising

  1. Gus olson March 4, 2018 / 8:29 pm

    Sent from my iPad

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