Supply
5 February, 2025
- Annual mine production grew fractionally y/y to a new record high
- The global hedge book decreased significantly in 2024 to 182t
- Full-year recycled gold supply rose 11% although remained 16% below the all-time high seen in 2012.
| Tonnes | 2023 | 2024 | Year-on-year % change |
|
| Total supply | 4,945.9 | 4,974.5 | 1 |
|
| Mine production | 3,644.1 | 3,661.2 | 0 |
|
| Net producer hedging | 67.4 | -56.8 | - |
|
| Recycled gold | 1,234.4 | 1,370.0 | 11 |
|
Total gold supply in 2024 increased 1% y/y to 4,974 tonnes, the highest in our 30-year data series, driven by higher mine production and recycling supply. Although initial estimates suggest that 2024 mine production reached an all-time high of 3,661t, this data is subject to revisions, which make it difficult to state with certainty that the previous record high has been broken.
Early estimates also suggest that net producer hedging fell significantly during the year as producers delivered into maturing contracts and bought back some longer-dated hedges.
Mine production
Current estimates suggest that mine production posted another gain in 2024, up 1% to 3,661t, just surpassing the 3,656t record set in 2018. But the prospects of revisions to production volumes make us cautious about calling 2024 a record year for mine output just yet. As usual, our estimates for Q4’24 have been made ahead of most companies’ quarterly reports, so the final numbers will differ from our current estimates. Such revisions reduced initial estimates of mine production in 2024, both in Q2 and Q3, and there is a possibility this may happen again.
Quarterly data also suggests that recent industry growth trends may be coming to an end. We estimate that Q4’24 mine production of 954t was marginally lower than the 955t reported for Q4’23.
Higher annual output was seen from Mexico (+14t or +11% y/y) following a recovery from industrial action in 2023; Canada (+14t or +7%) as large new mines such as IAMGOLD’s Côté and Equinox Gold’s Greenstone contributed to output; Peru (+7t, +5%) and Guinea (+4t, +6%).
Lower yearly production was seen in the US (-16t or -9% y/y) due to lower grades and production volumes at Barrick’s Carlin and Cortez mines; Australia (-10t or -3% y/y); Bolivia (-7t or -14% y/y) and DR Congo (-4t or -8% y/y).
In the final quarter of 2024 mine production from four countries drove the small y/y decline in global output:
- Production in the US fell by 18% with reduced volumes from a number of operations, including Cortez and Carlin, due to lower ore grades
- Burkina Faso saw a 13% y/y fall in mine production, with lower head grades at the Essakane mine due to pit sequencing and the use of low-grade stockpiles
- Production from Indonesia fell 12% y/y due to lower head grades at Grasberg and mine sequencing affecting output at Batu Hijau
- In South Africa mine production fell by 6% y/y after lower mill throughput was reported at several mines, including Beatrix and South Deep.
Increases from mines in four countries just failed to offset the declines described above:
- Mali saw production increase by 11% y/y due to higher output at Allien Gold’s Sadiola operation after earlier access was gained to high grade ore at the Korali-Sud orebody
- In Canada production was boosted by 10% y/y as the Côté and Greenstone mines continued to ramp up, while increased output was reported from Brucejack mine
- In Uzbekistan volumes increased 8% y/y due to higher throughput at Almalyk Mining and Navoi Mining
- In Russia estimated mine production volumes increased 5% y/y with improved recovery rates from Polyus’ Olimpiada operation and higher production from operations in the Magdan and Yakutia regions.
Regional trends in mine production show that only the CIS and Oceana regions saw higher output in Q4’24; up 6t and 4t respectively. All other regions saw lower production, with two regions – Central and South America, and North America – reporting the largest declines, each of 3t y/y.
Four mine start-ups (a combination of new and re-started operations), with a combined annual capacity of about 10t, have recently begun production. Namdini, a new mine in Ghana, anticipates average annual output of about 9t; Paulsen’s Gold in Australia is projected to produce about 1t annually; output of about 0.1t annually is expected at the Kasensell project in Zambia; and Nalunaq Gold in Greenland restarted production late in 2024 but has yet to indicate planned production rates.
Gold mining costs continued to increase in Q3’24 (the latest quarter for which data is available). The average All-In Sustaining Cost (AISC) hit US$1,456/oz in Q3, another record high: up 9% y/y and 4% q/q. The major contributors to higher costs during this quarter were royalty payments (boosted by higher gold prices), input cost inflation, especially labour and power costs, and higher sustaining capital expenditure. Several major gold producers saw volumes lowered by planned plant maintenance during the quarter, which also boosted unit AISC.
Net producer hedging
The industry aggregate producer hedge book is estimated to have fallen in 2024 by 23t to 182t, with declines occurring in each quarter of the year. Merger and acquisition (M&A) activity is partly behind this reduction: often, acquiring companies restructure or close-out the hedge books of acquired firms, and we’ve seen that happen on a few occasions in 2024.1 Also, with some hedge books now deeply out of the money, some companies have restructured or even eliminated forward books in their entirety. At the same time there have been no major announcements of new hedging positions, suggesting that the trend of reductions in the industry hedge book is set to continue.
Recycling
Higher gold prices tend to lead to increased recycling supply, so with record gold prices around the world it is no surprise that the fourth quarter saw both a q/q and a y/y increase in this category. Q4’24 saw 359t of recycled supply, up 15% y/y and 10% q/q. This represents the highest single quarter of recycled supply since Q3’20, a time when the gold price had jumped due to the impact of the COVID pandemic.
All regions saw y/y increases in recycling supply and, with the exception of the Middle East, all regions saw a q/q increase too. Given the increase in the average US$/oz gold price (+35% y/y and +8% q/q), the surprise is that recycling supply didn’t increase further.
Looking more closely at the regional performance it becomes clear that East Asia drove most of the y/y and q/q increase, with most of the volume from China. Aside from the gold price, the weak domestic economy appears to be driving recycling volumes. A handful of jewellery retailers went out of business during the fourth quarter, prompting inventory liquidation, while some others who remained in business were quick to scrap slow-moving product lines. Gold price expectations may have played a role too, with some apparently expecting a fall in the gold price following the decisive victory by Trump and the Republican Party in the US election.
The relatively muted response in other regions may be due to a lack of near-market stocks of jewellery to recycle. The steady increase in gold prices over the past few years has already drawn out decent volumes of old and unwanted jewellery, so the response to still-higher prices has been relatively subdued. But we heard one notable anecdote about the effect of record gold prices concerning a large volume of gold-plated items sent for recycling. With such low gold content – less than 1% by mass – this sort of material very rarely taken back for recycling as the gold weight and value are simply not worth it.
A still-high gold price is likely to keep recycling volumes strong into 2025, albeit below levels that might be expected considering gold prices around the world. For more details on the prospects this year for recycling, and supply more broadly, please see the Outlook section.
