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World Gold Council: Gold is becoming harder to find

Published 11/06/2024, 12:53 pm
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Investing.com - The gold mining sector is grappling to maintain production growth as discovering new gold deposits is becoming increasingly challenging, according to the World Gold Council.

John Reade, Chief Market Strategist at the World Gold Council, stated that while the first quarter of 2024 saw a record 4% year-on-year increase in mine production, the bigger picture reveals a plateau in growth since 2018. Data from the international trade association supports this, indicating that mine production in 2023 only saw a slight 0.5% increase compared to the previous year.

Reade commented on the difficulties faced by the industry, saying, "It’s getting harder to find gold, permit it, finance it, and operate it."

The mining industry, after experiencing a decade of rapid growth starting in 2008, is now struggling to report sustained growth in production. Reade elaborated that new gold deposits are becoming harder to find worldwide as many potential areas have already been explored.

Large-scale gold mining is a capital-intensive process, requiring significant exploration and development. On average, it takes 10 to 20 years before a mine is ready for production. Even during the exploration process, the chance of a discovery turning into a developing mine is low, with only 10% of global gold discoveries containing enough metal to justify mining.

To date, approximately 187,000 metric tons of gold have been mined, with the majority coming from China, South Africa, and Australia. The United States Geological Survey estimates that about 57,000 tonnes of gold reserves can still be excavated.

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The process of securing government permits has become more difficult and time-consuming, adding to the challenges faced by the mining industry. Many mining projects are planned for remote areas, requiring infrastructure like roads, power, and water, leading to additional costs for building mines and financing operations.

Despite recent record highs for gold prices, driven by strong demand from China, the precious metal is currently trading at $2,294.3 per ounce.

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