Lifecycles of gold mines are being challenged
It is important to note that existing mines age and will be phase out gradually. And absent margin motivations, it is possible that gold production could fall in the medium to longer term, and declining older mines could partially offset any new increase.
On the other hand, a rising gold price, which usually pushes up miners’ margins, is likely to “Encourage the opening of new mines; See old mines, which were once closed due to lack of profitability, re-open, or maintain existing mines beyond their anticipated life; and Incentivise growth in ASGM.
While re-opening old mines and growth in ASGM may have an immediate impact on gold production, it takes much longer and becomes more difficult for new mines to start producing. It was found that while a rising gold price usually coincides with higher gold miners’ CAPEX in the same year, mined production lags the gold price by at least six years.
All of these factors contribute to a scenario where global mined gold production eases up to peak levels in the coming years before plateauing and undergoing a very gradual decline from 2028 onward.
Alongside relatively stable gold demand – due principally to gold’s dual nature as a consumer good and an investment asset – the global gold market is one of resilience and balance.
