FACTS ‘N’ FIGURES — Miners rethink future gold output

World gold production is expected to increase by an average of 1% per year over the next four years, reaching 83.5 million oz. in 2001.

This modest projected growth rate is in sharp contrast to that of the 1980s, when production jumped to 65 million oz. gold from 41 million oz., for an average annual growth rate of 5%. The sustained low gold price over the past year has caused miners to recalculate their projections of future production. Just a year ago, miners were forecasting that worldwide production would increase annually at an average of 3.6%. In total, 15 million oz. of cumulative production have been removed from miners’ plans for the next three years.

The gold producers of South Africa, which lead the world, are hopeful that they can maintain their combined annual production at between 15 and 16 million oz. gold through 2001. Faced with lower gold prices and fewer shallow, low-cost ounces in reserves, the South African gold sector has reorganized to lower its costs and halt an almost continuous decline in production dating back to the 1960s.

The U.S. produced a record 11.4 million oz. gold in 1997, retaining its rank as the world’s second-largest producer. However, U.S. production is expected to dip to 10.4 million oz. by 2001, partly as a result of North American companies’ increased focus on overseas projects in the past five years, particularly in Latin America and Asia (the two regions that are forecasting continued growth in production). Australian producers also had a record year in 1997, producing 10 million oz., enabling the country to retain its third-place ranking. The Australians are expecting a further rise in production in 1998. But, like their U.S. counterparts, Australian gold miners have altered their plans for the next four years in the face of lower gold prices, expecting production to ease off to 9.6 million oz. in 2001.

Together, South Africa, the United States and Australia produced 47% of the world’s gold in 1997. At the beginning of the millennium, their collective share is expected to drop to 43%. By comparison, Latin America and Asia represented only 21% of world gold production last year, but are forecast to combine for 26% by 2001.

— The preceding is an excerpt from World Gold Mine Production 1997-2001, a publication of Washington, D.C.-based The Gold Institute.