This is for you, goldbugs, read it and weep.
"Gold mining cash costs fall marginally in 2001-AME
2/24/2002 6:55:43 AM
SYDNEY, Feb 24 (Reuters) - The cash cost of global gold production declined marginally, by 2.5 percent, to US$156 an ounce in 2001, according to a survey by Australia's AME Mineral Economics.
AME's survey, released on Sunday, canvassed gold ventures in 24 countries which account for 72 percent of world mined output.
The latest annual fall was less than the nine percent decline recorded in 2000, but the average cash cost for Western world gold mines surveyed has fallen by 27 percent in real terms over the four years since 1997, AME said.
Most of this came in 1998, when cash costs dived by 15 percent to US$180 an ounce.
Of the four major gold-producing countries, the United States remained the lowest-cost producer, with an estimated average cash cost of US$161 an oz last year.
In recent years, Canada, Australia and South Africa, the other big three producers, have all seen their currencies decline against a strong U.S. dollar, with the devaluations closely matched by falls in their dollar-denominated cash costs.
Between 1997 and 2001, Australia's dollar lost 30 percent of its U.S. value, while its average cash cost of production fell in real terms by 32 percent.
Canada's real-terms costs were reduced by 19 percent although its currency fell by only 10 percent, while in South Africa a 42 percent devaluation converted costs into a 32 percent reduction in U.S. dollar terms.
Real-terms average cash production costs in the United States fell by 12 percent over the same four-year period.
AME pointed out that recent weeks had produced a flurry of activity on the world gold scene, with prices rising eight percent in the year so far to reach a high point of US$300 an ounce earlier this month.
"Nervous investors have been returning to physical gold and gold-based securities in the wake of recent corporate collapses.
"Fabrication demand has proved resilient, down only an estimated two percent last year, in spite of the deteriorating economic climate.
"On the supply side, changing patterns of production and continued rivalry between major gold miners have again aroused investors' interest and stimulated industry dynamics," AME said.
CONSOLIDATION TIME
AME pointed out that merger and acquisition activity was rife in 2001, with Newmont Mining Corp's (NEM) trumping of AngloGold Ltd's <ANGJ.J> bid for Normandy Mining Ltd (NDY) just one of a string of corporate moves.
Consolidation and a bumper year from Rio Tinto Ltd/Plc (RIO) (RIO) and Freeport-McMoRan Copper & Gold (FCX) channeled an extra 100 tonnes through the top 10 gold producing companies last year.
Industry consolidation looked set to continue, AME said.
However, AngloGold, the largest single producer in 2001 with seven million ounces, or 217 tonnes, had purposefully sold off expensive production to lower its average cash costs and improve profitability, it said.
As a consequence, the company was destined to take third spot in the producer rankings for 2002, behind the merged Newmont/Normandy group, which would be the world No. 1, and Barrick Gold Corp (ABX) .
Production had been moving beyond the four major nations.
In 1990 only 25 percent of Western world mined gold was produced outside the four major producing nations. By the end of 2001 that figure had risen to 43 percent, with Indonesia, Peru, Ghana and Papua New Guinea contributing to the redistribution.
Impressive increases in output had also been achieved by Mali, Argentina and Tanzania, where costs were below the global average. The mean production cost for Western world mines outside the big four producing countries was estimated at only US$100.
Eight major mining operations will close in 2002, starting with Mt Leyshon in Australia's Queensland state.
The closure of old high-cost operations and the opening of new low-cost mines would help lower average cash costs, AME said.
The group is forecasting that average Western world gold cash costs will have fallen to US$136 an ounce by 2006. |
