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AngloGold also sounds alarm on gold supply
Steven Swindells
April 18 2002 at 07:04AM
London - Gold mining companies have warned that supplies of the precious metal are poised to fall sharply but analysts believe the world has more than enough gold to prevent significant price spikes.
The latest producer to sound the alarm bell that the industry was running out of gold faster than it could replace it was world number two miner AngloGold, which predicted that the big discoveries of the past 20 years would run dry.
"Over the next 10 to 15 years, new mine supply is likely to be neutral or negative than it is to increase as it did in the past 15 years," AngloGold chief executive Bobby Godsell said on the sidelines of a mining conference in Australia yesterday.
Godsell's admonition was the latest in a string of industry warning lights over the prospects of future gold supplies, which ran at an estimated 2 595 tons last year.
Mined output is seen falling to around 2 570 tons this year, with no short-term sign of an immediate pick-up, while jewellery demand alone is running at about 3 000 tons, according to industry experts.
An industry-backed survey released by Toronto-based Beacon Group Advisors this month even warned that supplies would plummet by nearly 30 percent by the end of the decade unless prices rallied from current levels of around $300 a troy ounce.
Some miners, including Gold Fields of South Africa, have even called this conservative.
"The gold price has to go at least $25 an ounce higher, stay there and look sustainable before we see people dusting off mining projects. The supply side is probably the best support the market has," said Martin Potts, a mining analyst at Williams de Broe in London.
Gold prices have been supported this year by the prospect that the existing gap between mined supply and demand will grow as output from leading mature producers South Africa and the US levels off and declines.
A decision by the same miners to curb the amount of their nuggets sold into forward markets to guarantee their income has also been instrumental in dragging gold above the key $300 an ounce level this year from lows of $250-60 in 2001.
But not all analysts are entirely won over by the doom and gloom predicted by the industry, with sceptics pointing to other readily available sources of gold, notably central banks.
"Supply shortages aren't really an issue in the gold market," said Howard Patten, metals analyst at Barclays Capital. "Even if there is a chipping away of supply from producers there is a very strong chance that other sources will step in, the main source being the central banks."
The world's biggest central banks, led by the US and Germany, sit on about 32 000 tons of gold in officially declared reserves. - Reuters |
