LAWRIE WILLIAMS:: Russia closing gap on China as World No.1 gold miner?

Assuming the veracity of the latest figures from official sources in China and Russia the latter is expanding its gold output while the former’s output is contracting.  The latest figures are as follows: China’s 2018 gold output, as announced by the China Gold Association, was around 401 tonnes, down from 426 tonnes in 2017 - a fall of almost 6%, while Russia’s 2018 gold output was up nearly 2.5% to 314 tonnes according to the country’s Finance Ministry.  If the figures are correct, and the trend continues, Russia could surpass China as the world’s largest gold producer within around 4 years given that China’s output is seen as continuing to fall given ever-increasing environmental strictures, while Russia’s output is continuing to advance.

Russia has already overtaken China in the size of its official gold reserves as reported to the IMF, although we continue to express our doubts about the veracity of the Chinese total (See: China officially adds to gold reserves again)

In 2017, according to the major gold analytical consultancies, Russia was the third largest global gold producer - but vying with Australia for second place.  Interestingly the aforementioned consultancies invariably come up with lower annual estimates for Russian gold production than that announced by the Finance Ministry - but they also come up with lower estimates for Australian domestic production than that calculated by Melbourne-based consultancy Surbiton Associates, which should, on past performance, be publishing its latest estimate for Australia’s 2018 gold production in around two to three weeks’ time.  Last year Surbiton put Australian output at 301 tonnes and, if anything we would take the Surbiton figure as being perhaps closer to that nation’s true position than the big global consultancies’ estimates given Surbiton’s almost total specialisation in the Australian gold sector.

Whether global gold output will be seen to have fallen, plateaued, or risen marginally in 2018 compared with the prior year still remains open to question.  Notably another of the world’s top gold mining countries - South Africa - has ,according to its national statistical body, Statistics South Africa, seen a sharp decline in its 2018 gold output.  During the second half of the year at least the country’s gold output saw a double digit percentage fall virtually every month.  We suspect that once the final annual figures are tallied, the country which once dominated global gold production will find itself still in place as the world’s seventh largest gold producer but may well see its total output falling by around 20 tonnes to the mid 130 tonne level - a very significant drop.

We shall have to wait and see what the major analytical consultancies make of the global picture when they publish their annual assessments - probably not until end-March/early April.  We increasingly suspect that they may show global gold output will have peaked in 2018, given the lack of major new discoveries and a global downturn in gold exploration activity, coupled with declining grades at some existing operations and forced closures of some older marginal mines as they become uneconomic.  Perhaps Peak Gold is actually with us at last!

 

15 Feb 2019

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London - recently described as the World’s No. 2 University (after MIT).

e: lawrie.williams@sharpspixley.com