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Global gold supply to fall after 2022 - report

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(Kitco News) - According to the data by the Department of Industry, Science, Energy and Resources of the Government of Australia (DISER), global gold supply to increase by 2.7% to 4,791 tonnes in 2022 compared to 2021, and then fall after 2022.

In 2022, lower global gold scrap supply will be more than offset by higher gold mine production, the study found.

DISER said that lower gold prices and improving economic situations of many households are likely to discourage the sale of gold jewellery, adding that as a result, gold scrap supply is forecast to fall by 2.0% to 1,127 tonnes in 2022.

On the other hand, world gold mine production is forecast to increase by 3.7% to 3,692 tonnes in 2022, driven by increased production in Australia, Canada, the US and Papua New Guinea (PNG).

According to the report, in Australia – the world's second largest gold producer - a solid pipeline of projects is expected to bring the country's gold mine production to 305 tonnes in 2022. Production in Canada and the US is forecast to increase by 19% and 9.8% to 225 and 201 tonnes in 2022, respectively.

Production in the PNG is forecast to increase by 31% to 55 tonnes in 2022, driven by a restart at Porgera gold mine, which has been in care and maintenance since April 2020.

DISER added that after 2022, world gold supply is projected to fall at an annual average rate of 0.7%, to reach 4,630 tonnes in 2027. Driving the fall will be lower gold recycling activities.

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Gold scrap supply is projected to decline at an average annual rate of 4.6% over the outlook period, to 888 tonnes in 2027, as lower gold prices discourage gold selling in major jewellery consuming markets such as China and India.

"Offsetting the fall in gold scrap supply is a forecast net rise in global gold mine production, as new mines come on stream and mine expansions occur; output is forecast to rise until 2024, reaching 3,767 tonnes, before falling to 3,737 tonnes in 2027," the authors of the report noted.

DISER said that the decline in production in the final two years of the outlook period will be due to the closure of unprofitable gold mines in many parts of the world, adding that profitability will be squeezed by rising production costs and lower prices.

Gold output in Australia is expected to increase until 2025–26, propelled by mine expansions and new projects coming online.

New projects in Canada, Chile, Brazil and Argentina are likely to increase gold output in North America and Central and South America by 124 and 82 tonnes, respectively, by 2026.

However, DISER pointed out that a continuation of strict environmental regulations and industry consolidation will see gold production in China - the world's largest gold producer - fall over the outlook period.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.