The global gold mining industry is poised for substantial growth in the coming years, with market experts projecting a robust expansion at a compound annual growth rate (CAGR) of approximately 3.5 per cent.
According to a recent report from Zion Market Research, the industry’s value, which stood at around USD$198 billion in 2022, is forecasted to exceed an impressive USD$260 billion by 2030.
However, the industry has challenges, including fluctuating gold prices and mounting environmental concerns.
The primary driver behind the expansion of the gold mining market is the growing demand for jewelry. The jewelry industry stands as the largest consumer of gold globally. Cultural and economic factors in countries like China and India often fuel heightened demand for jewelry during special occasions like weddings and festivals. Economic growth and increased incomes in these regions are expected to further boost jewelry consumption.
India, for instance, witnessed a remarkable surge in gold consumption, reaching 797.3 tonnes in 2021, the highest level in five years, according to data from the World Gold Council.
In 2021, the demand for gold jewelry experienced steady growth, surpassing pre-pandemic levels and reaching a six-year high at 610.9 tonnes, with urban customers being the primary contributors to this consumption volume.
However, several limiting factors impact the growth of the gold mining industry. Price fluctuations in the gold market, often influenced by investor sentiment and global economic conditions, can have substantial adverse effects on mining profitability and the stock prices of mining companies.
As accessible and high-grade gold deposits become increasingly scarce, mining companies incur higher costs for exploration and extraction, often necessitating operations in remote and challenging environments.
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Gold mining is a process that involves two primary methods: placer mining and hard rock mining. In the early days, gold was obtained through placer mining, which employed various techniques such as manual prospecting, sluice boxes, hydraulic mining, and dredging.
These methods all share a common principle, relying on gravity and water movement to separate gold from sand and gravel as water passes through the ore.
Environmental concerns pose a significant barrier to the gold mining industry’s expansion. Gold mining activities can harm the environment by destroying forests, contaminating water supplies, and emitting greenhouse gases. Stricter environmental regulations and the scrutiny of regulatory bodies and environmental organizations can raise compliance costs and limit access to mining areas. Consequently, these environmental challenges are expected to impede market growth in the near future.
However, modern gold extraction predominantly occurs through hard rock mining, an underground method that necessitates the creation of tunnels to access substantial gold ore deposits. Typically, hard rock mining is conducted in regions abundant in hard rock formations.
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The gold mining sector has exciting growth potential due to a rising number of acquisitions. For instance, in June 2023, West Red Lake Gold Mines Ltd. acquired Pure Gold Mining Inc., gaining access to the valuable Madsen Gold Project. This project includes a fully licensed underground gold mine with an estimated resource of 1.65 million ounces. Coupled with the high-grade Rowan gold prospect, this move aims to expand mineral resources, reduce risk, and tap into the rich assets in a renowned Canadian gold camp, driving market growth.
The report identifies key players in the market including Gold Fields Ltd (JSE: GFI), Agnico Eagle Mines Ltd (NYSE: AEM), Barrick Gold Corporation (NYSE: GOLD), Polyus Gold International Ltd (LSE: PGIL), Global Gold Mining Market, Newmont Mining Corporation (NYSE: NEM), Kinross Gold Corporation (TSX: K), Anglogold Ashanti Ltd (NYSE: AU), Newcrest Mining Ltd (ASX: NCM) among others.
