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Top 20 Global Gold Miners –
Newmont Narrows the No. 1 Gap

The following is an edited version of Lawrie Williams, Sharps Pixley, commentary on the Metals Focus’ Gold Focus 2018 report rankings of the world’s largest gold miners in terms of 2017 gold production.

While Barrick retained the top spot in 2017, Newmont was only 1.8 tonnes behind and with Barrick’s production continuing to contract as non-core assets are disposed of and with Newmont gold output still growing we think it is pretty safe to crown the latter as likely global gold production king in 2018.

There were some quite substantial production drops from some of the major gold miners as they still seek to allay cost pressures and reduce debt. In addition to Barrick, Goldcorp, Kinross and Newcrest among the Top 10 saw some quite significant gold output falls, although these were countered by decent rises from Newmont, AngloGold Ashanti and, in particular Polyus Gold at the forefront of Russia’s big gold production push. Significantly Russia’s second biggest producer, Polymetal also showed a major increase coming into our table of top global gold miners at No. 18, with a rise of 5.8 tonnes – around 21%. With another planned new mine opening this year, Polymetal may well rise further up the table of top producers in 2018.

The biggest gainer among the gold miners was Freeport McMoran which added 15.3 tonnes of gold production from its flagship Grasberg property moving it up into 11th place among the top 20 producers from 16th a year ago due to higher gold and copper grades in the final stages of mining from the operation’s open pit section. At this output level Grasberg was the world’s third largest gold mine in terms of output – despite it actually being primarily a copper producer! The two larger mines according to Metals Focus were Barrick’s Nevada operations and Muruntau in Uzbekistan.

Top 20 Gold Mining Companies 2016/2017 (Tonnes)
(1 tonne= 32150.7 troy ounces)

Source: Metals Focus

The biggest tonnage drops in gold output were by Goldcorp (9.5 tonnes), Yamana (down 9.1 tonnes). Barrick (6.1 tonnes) and China’s Zijin Mining (6.8 tonnes) the latter being particularly hard hit by the country’s environmental crackdown.

Of the North American headquartered gold miners, half of Goldcorp’s fall was due to the mining of lower grades at its Red Lake operations in Canada, coupled with lower comparable gold sales due to the sale of Los Filos in April 2017 and closure of Marlin in the second quarter of 2017, offset partially by higher production and sales volumes at Cerro Negro and Peñasquito. The company is guiding for another small drop in gold output in the current year to 2.5 million ounces (77.8 tonnes), as it completes a degree of efficiency-related restructuring.

Yamana saw significant output falls at its Mexican and Brazilian operations and since the year end has agreed to sell a majority stake in its Brio Gold offshoot to Leagold and has classified its Gualcamayo mine in Argentina as an asset for sale. Assuming the Brio sale is completed and a buyer is found for Gualcamayo the company is guiding for a further fall in gold output in 2018 to 900,000 ounces (28 tonnes), with the new Cerro Moro gold/silver mine in Argentina (a purchase from Extorre Gold in 2012) expected to come on stream and produce 85,000 ounces (2.6 tonnes) of gold and 3,750,000 ounces (117 tonnes) of silver in the year.

Barrick’s reductions in gold output have mostly arisen from what it considers non-core asset sales, together with a sharp fall in gold output and sales from its 63.9%-owned Acacia Mining in Tanzania. This latter is due to an export ban on gold/copper concentrate exports which impacts around 50% of combined production at Acacia’s Bulyanhulu and Buzwagi mines in an ongoing dispute with the Tanzanian government. From its main mines in Nevada it actually saw a significant gold production rise, but even so it is only guiding for 4.5-5 million ounces (140-155.5 tonnes) while its rival for the No. 1 gold production slot, Newmont, has set itself a target of 4.9-5.4 million ounces (152-168 tonnes) for the next couple of years, although this could be impacted slightly by the investigations following the deaths of six workers in an accident at the Ahafo mill expansion project. Q4 gold output at both the top gold miners was almost identical!

Among the other top producers, Anglogold Ashanti is also guiding higher gold output for 2018 which should keep it in third place, Kinross is looking ahead to perhaps a small fall in output, Newcrest, which saw quite a sharp fall in 2017, is maintaining guidance to around current levels, Gold Fields is guiding marginally lower output principally due to the sale of its Darlot operation in Australia to Red 5, while Agnico Eagle is also guiding lower output this year at 1.53 million ounces (47.6 tonnes).

Freeport’s position at No. 11 is a bit more of an unknown. While its enormous Grasberg copper/gold operation will continue to be one of the world’s top gold mines in its own right, its 2018 attributable ownership could change given the Indonesian government’s desire to buy a majority stake in PT Freeport Indonesia at “a reasonable price”, including the purchase of Rio Tinto’s participating interest in Grasberg and converting it into shares.

Taking all this into account – and looking ahead – Metals Focus sees a further tiny increase in overall global gold output in 2018. It sees growth coming from new projects in West Africa, Canada, Russia and Mongolia, but there is likely to be counteracting falls elsewhere with Chinese production continuing its downward path and other older mines closing down, or seeing falling gold output due to lower grades. It sees operating costs beginning to rise again as the measures the big miners have been taking to reduce them are beginning to run out of steam, while a declining dollar could affect operating economics. The consultancy also warns about political risk in less predictable jurisdictions – pointing to Barrick/Acacia’s problems in Tanzania as a particular case in point.

Editor’s Note: Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. His writings are featured on the London-based Sharps Pixley bullion brokers website. Sharps Pixley brings you all the latest precious metal news, live gold prices, price charts and market research written by leading precious metal experts. Sharps Pixley also buys and sells physical precious metals such as gold, platinum, palladium, and silver. Visit www.sharpspixley.com.

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