Falling costs fail to erase pain from lower prices; higher-cost projects are at risk.
This article originally appeared on BullionVault and is republished here with permission.
Gold mining output is set to stall or even decline in 2015 from last year's new record high, according to the industry's leading analysts.
Total output rose for the sixth year running in 2014, says consultancy and data providers Thomson Reuters GFMS, adding some 2% to reach a new record of 3,133 tonnes.
But fresh cuts to new exploration – put at 31% in 2014, the second year of heavy cuts according to consultancy SNL Metals & Mining – mean "global production growth will [now] stall," GFMS says in this week's new Gold Survey 2015, "as the project pipeline delivers less incremental growth and a handful of depleted mines close."
London-based consultancy Metals Focus said in its 2015 yearbook last week that gold mining output will in fact "decline marginally" in 2015 "as the number of new projects entering production slows."
What's more, with gold prices too low to support some higher-cost projects, "some cost-related closures seem likely."
Direct gold mining costs per ounce fell globally by some 4% to $750 according to both Metals Focus and Thomson Reuters GFMS. But their methodologies differ sharply over what's known as the "all in sustaining" cost – a wider measure accounting for local development and infrastructure, as well as exploration for new ounces in the ground to replace mined metal on the corporate balance sheet – with the Metals Focus seeing an 8% drop to $1065 while GFMS sees a mere 3% drop to $1208.