Global gold output to rise 5.5% in 2021, Global Data reports says

After declining in 2019, global gold production was adversely affected by the Covid-19 pandemic during 2020, while the suspension of expansion works and contractions from mines nearing closure also exacerbated the decline.

Overall gold output in 2020 is estimated to have declined by 5.2% to 108 million ounces, according to U.K.-based analytics company GlobalData.

This year total gold production is expected to bounce back and increase by 5.5% to 113.9 million oz. and then grow to 124.1 million oz. by 2024 – a 2.9% compound annual growth rate (CAGR), Global Data predicts.

Indonesia, Peru and the United States will be the key contributors to this growth, GlobalData forecasts. Combined production in these countries is expected to recover from an estimated 20.1 million oz. in 2021 to 25.3 million oz. in 2024.

Key projects expected to commence operations during the forecast period include Barrick Gold (TSX: ABX; NYSE: GOLD) and Newmont’s (TSX: NGT; NYSE: NEM) Turquoise Ridge underground expansion project in Nevada, which is currently undergoing construction. With an annual gold production capacity of 500,000 oz., the project is expected to be commissioned in late-2022.

The Salares Norte project in Chile, which is wholly owned by Gold Fields, is also under construction. With an annual gold production capacity of 450,000 oz and a development capital expenditure of about US$860 million, the project is expected to begin operations in 2023.

The greatest impact of Covid-19 on gold production was observed during the first half of 2020, when six of the top 10 gold producers reported a collective 8.4% year-on-year fall in their output. Major declines were from Barrick (12.3%); Newcrest Mining (TSX: NCM) (15%), and Agnico Eagle Mines (TSX: AEM; NYSE: AEM) (8.4%). Major contributors offsetting the declines were Kirkland Lake Gold (48%), due to its acquisition of the Detour Lake mine in late 2019, and China’s Zijin Mining (5.9%).

Several gold mines were forced to suspend operations temporarily due to the pandemic, including Barrick’s Veladero, Pueblo Viejo and Porgera mines, and Agnico’s mining operations in Nunavut, Quebec and Mexico.

Regional production

China, after reporting an all-time production high of 16.7 million oz. of gold in 2014, has been on a downtrend ever since, as a consequence of policy changes and depleting ore reserves. Adding to these factors, the pandemic struck the country’s output hard during the first quarter of 2020. Therefore, China’s gold production is estimated to have declined by 7% to 12.4 million oz in 2020, according to GlobalData.

The pandemic also had a significant impact on African operations mainly during the second quarter of 2020, where gold production is gradually shifting its base towards Western African countries.

Gold mines that were temporarily suspended in Africa include Mponeng, Kalgold and Zondereinde in South Africa, Obuasi in Ghana, Hounde in Burkina Faso and Fekola in Mali. Overall, gold production from South Africa is expected to have declined by 10.9% in 2020, with declines also reported in Guyana (15.9%), Ghana (7.5%) and Mali (5.6%).

In Indonesia, production is expected to have declined by 28.9%, owing to the transition of the Grasberg open-pit mine, the country’s largest producer.

Unlike other key producers, GlobalData reports, Australian gold miners remained largely unaffected by the outbreak, as stringent measures were adopted by the government to contain the outbreak enabling minimal disruptions to mining activities.

State governments, including Western Australia, South Australia, Tasmania, and the Northern Territory, began to close their borders from late March 2020, with certain exceptions for essential service workers. Overall, gold production in Australia is expected to have grown by 4.3% in 2020, reaching 12 million ounces.