Normally a surge in the price of a commodity tends to bring forth a rise in output over time (weather, climate etc permitting); but sometimes a larger, more immediate factor intrudes and so it was in 2020 when prices rose as the Covid pandemic swept across the world, but output slumped as gold mines were forced to shut in countries like Peru, South Africa and China.
While gold rose to an all-time high on August 7 of $US2,067 an ounce (it’s currently around $US1,800 an ounce, down from $US1,942 on July 30, 2020), production in 2020 fell 4% to 3,400.8 tonnes thanks to the COVID-19 related disruptions.
The World Gold Council said the gold price dropped by 6.6% in the June half “as gains during most of Q2 were thwarted by a significant pullback in late June. Gold’s price also underperformed in most key currencies except for the Japanese yen and the Turkish lira, which weakened against the US dollar.”
But with Covid infections and the lockdowns slowing helped by the price surge (it has been going on for the past three years) global mine output hit a 21-year high in the six months to June.
Global gold mine output bounced back in the June half of this year as mines re-opened after the Covid wave had passed with a 9% rise from the first half of last year to 1,782.6 tonnes.
The World Gold Council says this was the highest half year figure it has recorded since 2000.
But not in Australia where there was a 3% dip thanks to lower output at Cadia Valley in NSW (Newcrest) and Fosterville in Victoria (owned by Kirkland Gold of Canada) in the half.
Increased output from the vast copper-gold operations of Grasberg in Indonesia and Oyu Tolgoi in Mongolia (53% owned by Rio Tinto) further contributed to this growth, as did operational ramp-ups in North America and higher grades at some Mexican mines.
Mexico in fact saw the largest increase in production, up 67% assisted by rising grades at operations such as Peñasquito and Morelos.
Canada reported production up 57%, helped by new project ramp ups (with more to come from mines at red Chris and Red Lake for instance, owned by Australian companies like Newcrest and Evolution).
The Musselwhite mine of Newmont Corporation returned to full production following a fire in the first quarter of 2019, the WGC said.
The 50% year on year increase in Peruvian production was almost fully attributable to the recovery from the COVID-19 pandemic, as was the 46% year on year increase in South Africa, which bounced back from the weakest quarterly output in at least 50 years.
The WGC said China saw a 5% fall in mine production after safety-related stoppages in Shandong province in the March quarter continued to affect operations in the second quarter.
Lower grades at Kyrgyzstan’s Kumtor mine saw a 21% year on year fall in production and Egypt saw 25% lower mine production after the Sukari open pit operation implemented a revised mine plan after pit-wall instability was detected.
Recycled gold supply fell by 5% in the first half, despite a higher average gold price as the economic recovery reduced the incentive to recycle gold.
The WGC said recycled gold supply amounted to 545. tonnes in the June half, down 5% year on year. In the June quarter gold recycling fell 2% y-o-y, to 276.6 tonnes despite the 6% increase in the US dollar gold price from a year earlier.
Total gold supply was 2,383 tonnes in the first half, up 4% from the same half of 2020.
