I’ve recently seen several headlines highlighting the fall of a mining giant. South Africa, for so long the dominant source of gold for the market, is now no longer Africa’s premier producing nation. That title now goes to Ghana. But how globally significant is this? Well, not very I would argue; that is, it doesn’t signal anything new in terms of global gold supply and market dynamics.
South African gold output has been declining for several decades now. From a peak of around 1,000t in 1970, the nation’s gold output fell to 130t in 2018. A combination of closure, maturing assets and industrial strife has created an inhospitable operating environment. Even the leading gold miners headquartered in South Africa are now focusing elsewhere. (Although, according to the US Geological Survey, the country still has 6,000 tonnes of gold reserves.)1
But all this reminds me of a chart we published almost a decade ago (see below).2 While the decline of South African production has been a feature of the gold market for several decades, so has the emergence of new sources of gold. Geographically-speaking, gold mine production is more diversified that ever. (Not much has changed since 2010 in terms of gold production’s geographic split.) And this is a key strength of the gold market. Given the global spread of gold mining, supply to the market is less susceptible to regional shocks and therefore far more stable than in some other metals. The top six gold producing nations only account for 45% of global gold production (compared to platinum, for example, which sources 98% of its new supply from the top five producing nations).345