LAWRIE WILLIAMS: World top 20 gold mining companies and mines

Yesterday we published the country-by-country listing of the world’s top gold producing nations as gleaned from the very comprehensive 100-page plus Gold Focus 2021 report from London-based precious metals consultancy, Metals Focus.  The consultancy is well respected, employing a substantial team of analysts covering all aspects of the precious metals sector and produces, inter alia, the statistical data utilised in the regular reports from the World Gold Council in the UK and for the Silver Institute in the U.S.

Please see the table below for the top 20 company-by-company gold output figures for full year 2020.  As can be seen most companies reported reduced gold output last year, in line with Metals Focus’ overall findings as reported in the prior article.  Much of this will have been due to COVID pandemic related closures and production interruptions.

The top producing companies were mostly the same as in 2019, with a couple of notable exceptions.  Newmont continues as the largest corporate gold producer, maintain the position it achieved last year following its merger with another top producer in Goldcorp.  Barrick, which also reported a significant merger with Randgold Resources, comfortably retains second place despite quite a large production fall as it continues to offload what it sees as non-core businesses which has helped it to run down its substantial debt position and put it in a much more competitive position under its new top management – inherited from Randgold.

Table 1:  World top 20 gold producing companies (tonnes)

Source: Metals Focus

RSA = Republic of South Africa

There are, of course, winners and losers in the new Top 20 gold production hierarchy with Yamana Gold for example no longer appearing in the listing, but at this lower end of the tabulation production volumes are close, with, for example, only 4 tonnes separating the company in 16^th position and that in 20^th.

Table 2. The World's top 20 gold mines in 2020 (tonnes Au)

Source:  Metals Focus

Metals Focus notes that the COVID-19 pandemic was the primary driver behind the 119 tonne year-on-year drop in new mined gold supply in 2020. However, the consultancy also comments that the 3% decline in global gold output was less severe than falls in the other precious metals due to a comparatively lower concentration of gold production in countries where mining was heavily impacted by the pandemic.   

The COVID-related production shortfalls probably had even a greater impact than the above figure would suggest.  Metals Focus had estimated a year earlier that global gold production would grow by 2.2% in 2020, compared with a year earlier.  If we take this projected increase into account it could be assessed that the full COVID pandemic impact on global gold production in 2020 was a 270 tonne shortfall compared with expectations.

The bulk of the pandemic related closures and restrictions will have occurred in the first half of 2020, starting with China – the world’s largest producer - where it first became evident.  Some operations were required to temporarily halt production there in February as lockdowns came into effect, before returning to normal production rates in March. This was followed by national lockdowns in several major gold producing countries, including Peru, South Africa and Mexico, from mid-March. Elsewhere, in countries such as Canada and Brazil, restrictions varied between provinces or states, while in countries such as Russia and Australia. The world’s second and third largest gold producers, Metals Focus reports that mining was able to continue largely unimpeded.

Implementing precautionary measures, and isolated outbreaks at individual mine sites, slowed the return to full production rates in several countries. The impact of the pandemic was also felt in the ASM (Artisanal and Small Scale Mining) sector as travel restrictions and lockdowns led to reduced workforces on ASM sites and made it difficult for producers to get gold to buyers. These issues eased in the second half of the year which has resulted in Metals Focus predicting around a 3% increase in global gold production in the current year, despite continuing comment from some analysts that ‘peak gold’ may already be with us..

One extremely interesting factor arising from the Metals Focus report is that the gold mining sector as a whole remains in pretty good shape at current gold prices, with All In Sustaining Costs (AISC) at most operations remaining below $1,000 an ounce.  While AISC levels don’t represent the full applicable costs picture for most mines, they do give a good idea of potential profitability and the big gap between AISC and the likely 2021 average gold price suggests a very profitable year for the gold miners.  It should also be recognised, perhaps, that the COVID-related production shortfalls will also have led to higher unit costs at affected operations so these may even come down this year at some mines, potentially making them even more profitable.

If the gold price does climb to $2,000 and above this year, as many analysts believe, the much lower costs base should lead to exceptionally strong profits.  Even if the current gold price levels prevail then it could still be a very strong profit year for the gold miners, which somewhat belies their rather poor stock price performance during gold’s recent price weakness.

22 Jun 2021 | Categories: Gold, China, US, Russia, Mining

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