Kerr, R. A. March 2, 2012. Is the World Tottering on the Precipice of Peak Gold? Science Vol. 335: pp. 1038-1039.
$1700 per ounce gold is driving a mining frenzy, but analysts are concerned that miners can’t extract gold any faster than they have the past decade.
Gold miners are worried. In the past 40 years, they’ve seen a slew of developments favoring their business. Gold’s price has risen so that on average it’s been worth several times what it was. Investment in the search for new gold deposits doubled and then doubled again, making gold more intensively sought after than any other metal or mineral group. Technologists have come up with better and cheaper ways to find and extract gold. And gold mining has spread throughout the planet.
And yet worldwide, production of the glittering element has hardly budged in the past decade. It’s not for lack of demand. Gold may not fuel economies the way oil does, but gold for jewelry—its primary use—has been much in demand, and that demand will likely increase. Investors’ interest could be intense for years longer. But to judge by the mining industry’s modest success of late in finding new deposits of gold, production will not be much higher in the next decade.
Miners and analysts agree that most of the easy-to-find, easy-to-develop gold has been found. To discover still-hidden deposits and at least maintain production, let alone increase it, miners will need continued high or even higher gold prices, revolutionary new technology, and the cooperation of often reluctant host countries.
Resource geochemist Stephen Kesler of the University of Michigan, Ann Arbor, says this “is an issue of considerable concern” because no one wants to see the world’s first mineral resource peak anytime soon.
A golden age
Demand for gold jewelry and for gold as an investment has driven up prices and fueled exploration.
In 1971, governments stopped fixing their currencies to gold at a price of $35 an ounce ($185 in 2009 dollars). As the unleashed gold price rose through the 1970s toward a 1980 peak above $1500 an ounce, so too did investment in exploration for gold. Exploration expenditures soared in the 1980s by an order of magnitude, never again falling below double the spending of the 1970s.
Technical and scientific breakthroughs fed gold mining fever as well. Recognition of new types of gold deposits—such as the Carlin deposits of Nevada, which have no visible gold grains—aided exploration. So did new technology, from more-sensitive sample analyses that detect low levels of gold to orbiting satellites that use spectra to map promising mineral terrains. New, cheaper gold-extraction techniques—such as leaching gold from heaps of ore with a cyanide solution—made ores worth mining even when they contained less than a gram of gold per ton of rock.
By the 1980s and especially in the 1990s, those changes greatly broadened the gold mining club. They made the United States, Australia, and China major producers in a business previously dominated by South Africa. They also drew in more than a dozen new countries. And production soared. From a low of 1200 metric tons of gold in 1975, the industry’s output more than doubled to 2600 tons in 2001.
End of an age
The exuberance of the 1980s and ’90s has definitely cooled, and now it is tinged with anxiety. Production immediately began dropping from its 2001 record high to a low of 2260 tons in 2008. Miners have since clawed their way back to record-equaling production, spurred by gold prices rocketing to the (inflation-adjusted) levels of 1980.
That resurgence isn’t heartening gold miners much, though, because their best indicator of future production—the amount of gold discovered in the past 10 years or so—is showing no signs of life. As he reported at the 2011 NewGenGold Conference in Perth last November (http://www.minexconsulting.com/publications/nov2011b.html), Schodde has compiled reports of the amounts of gold discovered per year from 1950 to 2010 (see figure). Using history as a guide, he increased the size of recent discoveries to account for the inevitable growth in the apparent size of a newly discovered deposit as geologists explore it.
By Schodde’s reckoning, gold discoveries peaked in the 1980s. That presumably led to the 2001 production peak. Since the 1980s, discoveries have been something like 20% lower. Is that enough to sustain production over the next decade or two? “Yes,” Schodde says, “but it’s a struggle, it really is.” A bolstered exploration effort has been yielding meager returns; the average gold content of ore mined has steadily fallen by a factor of 4 since 1979. So to produce an ounce of gold, four times the tonnage of rock has to be moved and processed.
The golden age seems to be over. “It’s becoming harder and harder to find” gold, concludes minerals analyst Michael Chender, CEO of Metals Economics Group in Halifax, Canada. “There’s a general sense that most of what’s easily available has been found and picked up.” Andrew Lloyd agrees; the industry “has increased exploration, but they’re not finding a lot of new deposits, especially the large ones,” says the spokesperson for the world’s largest gold mining company, Barrick Gold Corp., headquartered in Toronto, Canada. “The industry as a whole is really struggling to keep up with demand.”
Pause or peak?
Applying a standard peaking analysis to the history of gold production, retired oil geologist Jean Laherrère concluded in 2009 that 2001 was the peak and that production would soon plummet.
Gold plateauists tend to see greater challenges in gold production now than ever before, but no good solutions in the offing. For example, all the exploration innovations of the past 50 years have not let geologists find deposits any deeper in Earth’s crust. Hot, briny solutions deposited gold not at the surface but several kilometers below it. But Schodde finds that the depth to gold deposits discovered in virgin territory has averaged a mere 30 meters in each of the past 5 decades. In every decade, almost half of those discoveries were deposits now exposed at the surface by erosion. Even the generally optimistic Kesler “cannot think of any major processing, mining, or exploration method that is very recent in appearance” that could help out anytime soon.
Litigation further stretches out the development process and increases costs. The gold mining industry produces hundreds of millions of tons of waste rock a year and uses tons of cyanide. The mass of potential pollution is already increasing as the grade of gold ores has declined.
Gold, mined as it has been for 6000 years, may be a harbinger of production challenges in other metal industries. Analysts often mention economically essential copper as another element encountering mining constraints. But trends in mineral discovery in general suggest to Kesler that “we are approaching some sort of wall in materials to support our way of life.”
Laherrere, J. Nov 25 & Dec 9. Peak gold, easier to model than peak oil? theoildrum Europe.
Geologist Jean Laherrere estimated in 2009 that less than 100 ktons of extractable gold remained to be mined worldwide and would soon enter a permanent decline, with most countries peaking by 2025
[FYI, Gold requires a great deal of energy to melt. It needs a temperature slightly over 1,000 Centigrade (1832 Fahrenheit), hotter than an open fire].