Fears rise over future supply of gold

“For the first time in history, gold supply into the future is under enormous pressure.” The warning from Mark Bristow, chief executive of London-listed Randgold, encapsulates the gold mining sector’s woes.

“There is a chronic shortage of exploration money and as usual the gold price is not acting in the way everyone thought it would do,” says Peter Hambro, chairman of the company.

This backdrop has left many in the industry forecasting a supply shortage by the end of the decade.

Mr Bristow believes this supply shortage will be inevitable unless some major discoveries of large, high-grade ore bodies are suddenly made. “Which frankly seems a remote possibility.”

Across the world, miners have instead spent their cash expanding existing deposits, improving efficiency or cautiously looking at acquisitions.

“You’re seeing production profiles falling off a cliff in a few years — and that’s why strategically we’ve swum against that tide,” he says.

With analysts at BMO Capital markets predicting a peak of gold supply in 2019, acquisitions may not be the focus now, but will be required longer-term, they say.

Fears rise over future supply of gold