Coronavirus takes the sheen out of gold production

Gold price touches a record high for 11th day
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Kochi: The coronavirus that causes COVID-19 has affected the world's gold mines, too. While the yellow metal shines with record prices, the market is worried that production will decline this year.

The lack of manpower and soaring production costs are hampering the opening of new mines. Production is estimated to have fallen by 3% in the first three months of the current year. The total mine production was only 795.8 tonnes, which is the highest decline since 2015. 

China, the world’s largest producer of gold, saw a 12% decline in production between January and March. In fact, mining in China seems to have come to a halt.

Peak gold

Although some countries have resumed mining, they have not been able to achieve the expected increase in production. South Africa experienced an 11% decline. However, there has been an increase in Ecuador (51%), Canada (5%) and Burkina Faso (18%) as they had discovered new mines earlier.

The operations of mines can be restored to their previous levels only if the COVID-19 restrictions are completely removed. As early as 2017, the World Gold Council (WGC) had said that the availability from mines is at the highest, a situation called ‘peak gold’.

High mining costs

According to the WGC, the production of mines in 2019 was 3,531 tonnes, or about 1 per cent lower than in 2018. The challenge for mining companies is finding new sources of gold.

According to the WGC, 1,90,040 tonnes of gold has been mined in the world so far. It has been discovered that there is still 54,000 tonnes of gold that can be mined from below the ground. The world produces 2,500-3,000 tonnes of gold every year.

While earlier, 10 grammes of pure gold could be obtained from one tonne of ore, the amount has now fallen to just 1.5 grammes.

Gold Production (in tonnes)

Top 5 countries:

China: 383.2

Russia: 329.5

Australia: 325.1

US: 200.2

Canada: 182.9

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