China now No.1 gold miner
PRELIMINARY data suggests China last year overtook South Africa to become the world’s biggest gold producer for the first time.
South Africa, the world’s dominant gold producer in the past 120 years, has experienced steadily declining production in the past decade, hitting a low of 255 tonnes last year, according to South Africa’s chamber of mines.
The Perth-based MiningNews.net yesterday reported that precious metal analysts at Gold Fields Mining Services had estimated China’s gold production last year at a record 274 tonnes.
According to the Chamber, South Africa’s gold production has been declining by an average of 5.6% annually over the past decade with its share of world output plunging from around 70% in 1970 to over 20% a decade ago and only 11.8% in 2006.
Despite the problems of mining deep underground and falling ore grades, the industry directly contributes to 1.1% of South Africa’s gross domestic product and still employs almost 160,000 people.
The declining production trend in South Africa and the US makes it likely that China will retain the top position as a gold producer for the foreseeable future.
The news comes at a time when China has also overtaken the US to become the second largest market for gold after India with indications that it remains a net importer of the yellow metal in spite of its record production.
According to the authoritative World Gold Council, China’s demand for gold last year rose 26% to a record 326 tonnes. This suggests that around 52 tonnes of gold had to be imported for its needs.
The WGC estimated that 302 tonnes of gold was used in China to make jewellery with the remaining demand made up by industrial uses and other purposes.
Despite the big leap in demand, China’s gold usage pales into significance when compared with the world biggest consumer, India, where gold demand rose 7% to 722 tonnes.
Buoyant economic conditions in China and India has helped fuel strong demand for gold even though prices during the year broke through the US$850 (K2,471) an ounce barrier for the first time.
This is in sharp contrast to the US, the third biggest market where demand dropped by 18% to 278 tonnes.
The WGC estimated that world gold demand last year totaled 3,547 tonnes worth a record US$79 billion (K229.7 billion). – BRIAN GOMEZ
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