Research agency Fitch Solutions says global gold mine production growth is set to rebound in the coming years, owing to higher prices and mergers between major mining firms.
The agency forecasts global gold production to increase from 107-million ounces this year to 132-million ounces by 2029, averaging a yearly growth rate of 2.4%.
This compares with the average growth rate of 0.5% between 2016 and 2018.
Fitch further says it is likely that Russia will surpass China as the world’s largest gold miner by 2029.
“We expect Russian gold production growth to accelerate in 2020 as domestic demand for the precious metal is buoyed by the possibility of further Western sanctions on State banks, which will respond by increasing their reserves of gold.
“In the longer term, we expect gold production to be supported by a healthy project pipeline.
“We forecast Russia's gold output to grow from 11.3-million ounces in 2020 to 15.5-million ounces in 2029. This would represent average annual growth of 3.7% over the period,” the agency explains.
That will result in Russia overtaking China as the largest gold miner, accounting for 11.7% of global output by 2029, compared with 10.4% this year.
The ongoing and expanding US sanctions on Russia are expected to paradoxically support gold production in Russia in the short term, says Fitch, adding that the rising risk of Russian State banks being frozen out of dealing in dollar-denominated assets altogether, as bilateral relations remain strained, is pushing the Russian central bank to increase its holdings of gold.
As long as tensions with the US remain, domestic demand for gold is set to remain.
In the longer term, Russian gold production will be driven by a number of new mining projects that are due to come on line. Fitch is aware of 21 new gold projects in the pipeline, which is significantly more than copper – which is the next best performing commodity in Russia on this metric, with eight new projects.
China’s gold production is set to remain roughly stagnant from 2020 to 2029, with an expected average yearly growth rate of 0.1%, compared with an average yearly growth rate of 2.7% over the previous ten-year period.
Fitch says Chinese gold output has been challenged by strict environmental regulations and closures of smaller mines, as well as falling ore grades.
The country will, nonetheless, remain a significant global producer of gold ore.
Meanwhile, the agency predicts that Australia’s gold sector will see modest gold production growth over the coming years, supported by a strong project pipeline, rising gold prices and competitive operating costs in the country.
“We forecast the country’s production to increase from 10.9-million ounces in 2020 to 13.3-million ounces by 2029, averaging a yearly growth rate of 2.3%.”
The US gold mining sector will also continue to attract significant investment.
Particularly, Fitch says Nevada will remain a key location for exploration and development, with both Barrick Gold Corporation and Newmont Goldcorp having several large-scale projects in the state.
South Africa’s gold mine production is expected to decline slightly from 4.8-million ounces this year to 4.71-million ounces in 2029, declining at a yearly average rate of 1%.