The gold mining industry is facing challenges in sustaining production growth as deposits become harder to find, according to the World Gold Council (WGC). Despite record first quarter mine production in 2024, overall growth has plateaued since 2016-2018. Data from the WGC shows that mine production only increased by 0.5% in 2023, with previous years showing similar slowdowns. The industry has been struggling to report sustained growth in production after a decade of rapid expansion starting in 2008. New gold deposits are becoming increasingly difficult to find as many potential areas have already been explored.
Large-scale gold mining is a capital-intensive process that requires significant exploration and development, often taking 10 to 20 years before a mine is ready for production. The likelihood of a discovery progressing into mine development is low, with only about 10% of global gold discoveries containing sufficient metal to justify mining. Despite around 187,000 metric tons of gold having been mined to date, the majority coming from China, South Africa, and Australia, estimates suggest that there are only around 57,000 tonnes of gold reserves that can be excavated.
The process of securing government permits and licenses before mining operations can begin has become more difficult, with delays in obtaining these approvals adding to the challenges faced by mining companies. Many mining projects are located in remote areas that lack necessary infrastructure such as roads, power, and water, leading to increased costs in building and financing these operations. Overall, the process of finding, permitting, financing, and operating gold mines is becoming increasingly challenging for the industry.
Despite these challenges, gold prices have rallied to record highs in recent months due to strong demand, particularly from China. Spot gold is currently trading at $2,294.3 per ounce, reflecting the ongoing interest in the precious metal. The industry continues to navigate the difficulties of finding and extracting gold, with the WGC emphasizing the struggle to sustain production growth in the face of declining deposits and increasing costs. The future of gold mining will likely depend on how companies adapt to these challenges and explore new strategies for growth and sustainability.
