Where is Gold Mining Headed?

Far surpassing the many political and environmental problems taking over the international gold mining industry, some experts in this area are concerned that mine production seems to be declining generally becuase of a decade of exploration budgets having been trimmed to the bone. A lead time of up to ten years is needed between the time that an ore body is found, mapped, and allowed, and actual production. During the 1990s, the low gold costs forced the mining companies to cut back on exploration with the intent of balancing falling revenues. The gold market is now paying the price for those cutbacks as we move on to the second half of the decade in the form of static to declining production. High grade pockets in most cases were mined in the 1990s, and now the mining companies are pressed to pull lower grade ore.

In mid-2003, mineweb.com, which is a website devoted to gold mining, quoted South African mine company CEO Bernard Swaepoel as saying that “for a cocktail of reasons... we (the industry) won’t be able to mine enough gold to supply the market going forward.” As a matter of fact, if you compare production to fabrication needs over the past ten years, you can understand an interesting trend – the separation is expanding quickly, and although fabrication needs are very possibly going to continue growing over the next few years, mine production will not advance at best, or if the case worsens it could go into a severe decline.