World production in 2008

China, the USA, Australia and South Africa were the fourth largest producers in 2008, although China was the only one of these where the production increased in 2008 compared to 2007. Together these four countries produced 41 per cent of the total world output (European Mineral Statistics 2004-2008, BGS 2010). Gold production is recorded in more than 85 countries while several countries also produce substantial quantities of gold from small operations which are not recorded in official statistics. World mine production, which had been rising for around 20 years, peaked in 2000 at 2560 tonnes. Annual mine production in 2008 was 2290 tonnes. South Africa dominated world production for many decades and in 1970 was producing over 1000 tonnes annually, equating to 60% of world production. South African output has since been declining whilst many other countries have expanded production. The decline in South African gold production is attributed to the mature nature of the mines and declining reserves, high production costs and accidents. South Africa experienced a further 15% fall in gold production from 252 tonnes in 2007 to 213 tonnes in 2008, largely attributed to safety problems and significant power shortages. In 2007 Chine became the world’s largest gold producer, as a result of dramatic increases in production in recent years. Its output reached 285 tonnes in 2008, a 4% increase on the previous year. Chine’s gold production increased by 26% between 2004 and 2008 and the Chinese Government has been highly supportive of gold exploration leading to a rapidly expanding resource base (Mining journal, 2007). Other traditionally dominant gold producers, including Australia, USA and Canada, are rapidly losing ground to new producers. US gold output declined by 1% in 2008, Canadian by 6% and Australian output by 13%. In recent years Indonesia has experienced an exceptional rise in production from only 3 tonnes in 1985 to 143 tonnes in 2005, largely as a result of lower ore grades at Grasberg. Peru, which is now the world’s fifth largest gold producer, has increased production from 24 tonnes in 1992 to more than 200 tonnes in recent years, thanks to new large-scale mines such as Yanacocha. Peruvian production increased from 170 tonnes in 2007 to 180 tonnes in 2008 as a result of plant upgrade at Yanacocha. Russian gold production increased by 9% in 2008 as a result of the opening of the new Kupol Mine in the far east of the country (Mining Exploration News, 2009). In addition to primary production, recycling is a significant source of gold, annually contributing around 28% to global supply. (World Gold Council, 2009). Source: (World Mineral Production 2004-2008, BGS 2010).

Reserves estimates for Australia, Canada, China, and Papua New Guinea were revised based on new information derived from government and industry reports.
e - Estimated
(Source: U.S. Geological Survey, Mineral Commodity Summaries, January 2010)

Trends in 2009
In 2009 continued power generation problems, coupled with continuing labor problems in South Africa, caused several mines to continue to produce at reduced production levels. Australian gold producers have increased production because of new operations and increased production from several older mines. Production in Indonesia recovered from the low level in 2008 owing to increased ore grade. China has increased gold production again and remained the leading gold-producing nation, followed by Australia, South Africa, and the United States.

Jewelry consumption continued to drop as the price of gold continued to increase. The estimated price in 2009 was 24% higher than the price in 2008.

With the increase in price of gold and the worldwide economic slowdown, investment in gold has increased, with investors seeking safe haven investments. Gold Exchange-Traded Funds (ETFs) have gained popularity with investors. According to some industry analysts, investing in gold in the traditional manner is not as accessible and carries higher costs owing to insurance, storage, and higher markups. The claimed advantage of the ETF is that the investor can purchase gold ETF shares through a stockbroker without being concerned about these problems. Each share represents one-tenth of an ounce of allocated gold. Demand for physical gold was also very high. There were local shortages of gold coins weighing 1 ounce or less.

(Source: U.S. Geological Survey, Mineral Commodity Summaries, January 2010)

Prices
The gold price can be volatile but has strengthen considerably in recent years due to declining mine output, increasing jewelry demand, speculative activity, devaluation on the US dollar and other factors. The gold price rose above US$1000 per troy ounce for the first time in March 2008 in response to a weak US dollar and rising oil prices, although it dropped back later in the year and finished 2008 at US$880 per troy ounce. In 2009 the price of gold experienced a generally upward trend, albeit with some significant fluctuations, and remained above US$1000 per troy ounce from October to the end of the year when it finished at around US$110 per troy ounce.

(Source: European Mineral Statistics 2004-2008, BGS 2010).

 Source: (World Mineral Production 2004-2008, BGS 2010).