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LAWRIE WILLIAMS: World Top 20 Gold Producing Countries 2021 and Gold Outlook

Now is the time of year that the world’s major analytical assessors release their respective takes on what has been happening in terms of global gold production over the past year, and what is likely to happen in the year ahead.  As can be seen from the table below, gleaned from the 2022 Gold Focus report from one of the world’s leading precious metals consultancy groups, London-based Metals Focus, global gold output has risen over the past year, albeit at a relatively subdued rate, despite talk of peak gold which does not yet appear to be with us, but is close! 

In some respects, gold production figures for the past couple of years will have been slightly anomalous in any case because of the differing impacts of the Covid pandemic-related curtailments at many operations.  These have been more severely implemented in some countries than in others and will probably have impacted 2020 output volumes more severely than for 2021.  Closer examination of the 100-page plus Gold Focus report will indeed show that new mined gold production is estimated to have fallen a little in 2020, and the 2021 amount  produced is only close to that of 2019 (if marginally lower) although the consultancy is forecasting a 1.7% increase in the current year.  In other words global new mined gold production is virtually flat at the moment despite higher average price levels.

Table 1.  World Top 20 Gold Producing Nations 2021/2020 (Tonnes)

Country

2021

2020

Y/Y Change

China (PRC)

332.0

368.3

-10%

Russia

330.9

331.7

-0.3%

Australia

315.1

327.8

-4%

Canada

192.9

173.3

+11%

USA

186.8

193.4

-3%

Ghana

129.2

130.3

-1%

Peru

127.3

101.6

+25%

Mexico

124.5

110.4

+13%

Indonesia

117.5

100.9

+16%

South Africa

113.6

102.5

+11%

Uzbekistan

104.9

100.2

+5%

Burkina Faso

102.8

93.4

+10%

Mali

98.7

92.4

+7%

Brazil

90.1

98.9

-9%

Sudan

85.1

81.8

+4%

Kazakhstan

77.6

79.2

-2%

DR Congo

63.3

58.9

+7%

Colombia

61.0

53.6

+14%

Guinea

60.5

56.9

+7%

Zimbabwe

46.4

40.9

+14%

Others

820.7

779.6

+5%

Global Total

3580.7

3475.9

+3%

Source:  Metals Focus

What is apparent from the table though is that China’s position as the world’s top gold producer appears to be under strong threat from Russia, and perhaps also from Australia.  We had thought that this might yet be three of four years away, but at the current rate of decline of Chinese gold output that could well happen as soon as the current year, although the sanctions regime as a result of the Russia/Ukraine war could impact Russian gold mine output if key equipment and consumables imports are interrupted as a result. 

However, the sharp decline in Chinese gold output last year was largely due to safety-related mine shutdowns in Shandong province.  It appears that many of these curtailed operations are now producing again, so we may well see a pick-up in Chinese gold production this year accordingly which should put off any further closure of the national global gold production gap by another year or so.

It is apparent, though, that China, Russia and Australia are way ahead of any other country in terms of national gold production, with Canada coming up strong, but still well behind.  It is notable that South Africa, which dominated global gold production for most of the 20th Century, has now fallen to only 10th place according to the latest Metals Focus estimates, and no longer even boasts Africa’s largest gold mines – the DRC’s Kibali and Mali’s Loulo-Gounkoto properties have assumed that position.  Interestingly it has been Randgold Resources with effective South African roots, now part of Barrick Gold, which was largely responsible for bringing both these operations into being.  There are also other larger African gold mining operations in terms of 2021 gold output elsewhere in Mali, Ghana, Tanzania and Burkina Faso before we get to South Africa’s largest producing gold mine.  How the mighty have fallen.

As to the global production and price outlook, Metals Focus is predicting a fairly conservative average gold price of only $1,830 for the current year which can’t be far off the average year to date and is well below the Russia/Ukraine war-boosted averages for March, April and May.  The Metals Focus analysts are particularly worried that central banks’ restrictive policy moves may result in severe economic slowdowns, but with inflation staying stubbornly high, which coincides with our view. The resulting loss of disposable incomes could fuel a downward spiral for economies leading first to stagflation, which may already be with us, and then to recession.

In truth the recent volatility in the markets, which is affecting all of precious metals, equities and bitcoin adversely for the most part, makes outlook predictions almost impossible.  And, of course, if the Russia/Ukraine war escalates, as some observers fear is inevitable, all price bets are off – particularly for gold.  Such escalation could involve Russian military moves against other European sovereign nations or, heaven forbid, the employment of chemical, biological or even nuclear weapons as has been threatened by Russia.

The coming week’s FOMC meeting will thus only scratch the surface of some of the worries facing the international community.  We think the Fed’s likely moves and ensuing commentary will hit equities and possibly bitcoin and have a mixed effect on the gold price depending on whether higher rates are seen as positive, or negative, for the dollar.  Either is possible.  We think the potential vulnerabilities for equities and bitcoin exceed those for gold in particular, but in the current economic environment anything is possible.  Hold tight – stormy times ahead!

10 Jun 2022 | Categories: Gold, China, Dollar, Russia, US, FOMC, Bitcoin, Mining, Euro, inflation, stagflation

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