KEY POINTS
- A significant decline in new gold discoveries is raising concerns about future supply.
- Exploration budgets have fallen, leading to fewer high-quality gold deposits being found.
- This trend may result in tighter gold supplies and higher prices in the coming years.
The global gold mining industry is facing a serious challenge: a sharp decline in the rate of new high-quality gold discovery. A recent report has revealed that new gold deposits are becoming scarce and this is raising questions about the future availability of this metal, which might have a bearing on the market and the global economy.
This is because major gold mining companies are facing the problem of where to get new reserves, and the question of declining gold discoveries is becoming acute.
The industry has noted a worrying trend of low exploration success in the recent past and this has raised concerns that future gold supply growth is at risk.
This comes at a time when global demand for gold remains high, for investment, jewelry and industrial purposes. A report by Mining.com notes that most gold firms have cut their exploration expenses to a large extent.
This has resulted in a reduction in the number of high-quality deposits being identified, particularly in strategic mining jurisdictions such as Canada, Australia and Africa.
Analysts have cautioned that with no new resources, the supply of gold may not be able to meet the demand in the future years hence the need to find new resources.
Exploration budgets affected by industry forces
The decline in discoveries can be attributed to the following reasons. Exploration costs have been cut down because instead of investing in exploration for new resources, companies are interested in getting the most out of the existing mines.
Also, the discovery of gold has become difficult, most of the easily accessible gold deposits have been exploited. New deposits are usually discovered in hard-to-reach or deep areas that are difficult to exploit; this means that more capital and technology are needed.
The lack of discoveries is also attributed to the increase in the costs of exploration. Over the last few years, the cost of finding less has gone up as exploration has become more costly and less rewarding.
This trend has discouraged many companies from exploring new resources and instead, they are concentrating on increasing the productivity of the existing fields.
Long-term consequences on the supply and price of gold
This is especially so if the trend of few discoveries is to continue in the future, the long-term effect on gold supply may be greatly affected. If the new deposits are not coming in to replenish the supply in the gold pipeline, then production may not meet the demand.
This could lead to an increase in the price of gold since the supply is likely to reduce, thus making gold a more attractive investment.
Since the new mines take time to develop and the first years of production are usually high, the absence of new resource discoveries could exert more pressure on the industry as the existing mines age and their production starts declining.
Technological advancement in mining could go a long way in increasing the life span of some of the mines but this could not be enough to make up for the overall shortage of new gold sources.
Expectations of future gold find
However, there is optimism that with improved mining technology and exploration methods, the situation could change in the future. Other ways, which are being adopted by companies in the search for new deposits include the use of artificial intelligence and machine learning.
These technologies could be instrumental in the rejuvenation of exploration and an increase in future gold supply.
Meanwhile, the gold mining industry will have to prepare for the future where new deposits may be scarce and new ideas will be needed to feed the world’s demand for gold.
The optimism is that with increased exploration and with the help of technology the industry can overcome the current problem of lack of good quality gold deposits and guarantee future supply.
