Gold industry must spend $37 billion on greenfields projects and restarts

Wood Mackenzie has estimated that the gold industry would need to invest around US$37 billion on greenfield projects and restarts over the next five years just to maintain 2019 levels of production.

In a June research paper, the consultancy group said that the industry will need to commission 8 Moz of projects by 2025 – equating to approximately 44 projects – to avoid a perpetual decline in gold supply.

“If all our probable projects were to come online before 2025, this would almost meet the requirement to maintain 2019 production levels,” said Wood Mackenzie’s head of gold research Rory Townsend.

“The likelihood, however, is that we see some degree of slippage among a number of these assets due to permitting delays, prioritisation of other capital projects and changes in scope.”

Townsend highlighted social and governance issues hampering exploration and the progression of identified deposits in certain jurisdictions.

“Investment and exploration in countries such as South Africa has all but dried up, with the gold mining industry plagued by power outages, labour strikes and regulatory uncertainty. This has prompted investors and miners to consider countries they deem to be more mining friendly.

“Ghana has been a significant beneficiary of this and overtook South Africa to become the largest gold producer in Africa in 2018,” he added.

Wood Mackenzie has identified around 260 projects that gold miners and investors could turn to.