METALS COMMENTARY — World gold output on the rise with South Africa as top producer

Worldwide gold production is expected to increase over the next three years, to 83.1 million oz. by 1998, according to The Gold Institute’s annual World Gold Mine Production forecast.

South Africa continues to be the top producer, having generated 16.8 million oz. in 1995. The report notes, however, that South African production has dropped steadily over the past decade and may fall by another 13%, to 14.6 million oz., by 1999.

The U.S., the world’s second-leading producer, churned out 10.6 million oz.

in 1995, or about 15% of world production. The study projects that production will increase to 13.9 million oz. by 1998 before slipping, in 1999, to 12.7 million oz.

Australia’s 1995 production fell slightly, to 8.1 million oz., though output there is expected to grow by a hefty 38% by 1999, to 11.2 million oz.

Production last year from the former U.S.S.R. fell 9.3%, to 7.3 million oz., and is expected to decline further, to 7 million oz., in 1996. However, production is expected to increase to 7.2 million oz. in 1997 and to 7.5 million oz. in 1998-99.

Canadian gold production totalled 4.8 million oz. in 1995 and is expected to increase by 21% over the next four years, to 5.7 million oz. by 1999. China, the world’s fifth-largest gold producer, is expected to produce 6 million oz.

annually by 1999, up from 4.4 million oz. in 1995.

The study also notes that, although emerging national producers are forecasting significant increases through to 1999, the cumulative effect of that rise will not significantly alter regional portions of world gold production over the next four years.

The Gold Institute tracks exploration spending as an early indicator of trends in future production. The study notes, for example, that exploration budgets have dropped precipitously in the U.S. over the past four years, to a projected US$121.1 million in 1996 from a high of US$149 million in 1992. At the same time, spending in Central and South America has increased to a projected US$145.7 million in 1996 from US$28.1 million in 1992.

“In view of this spending transfer, it comes as no surprise that Central and South American companies forecast the greatest percentage increases in production over the next four years,” the report states.