Gold Mining Costs "Could Double" by 2017

SOARING ENERGY and labor costs could double the average Gold Mining cost per ounce, the CEO of the world's 4th largest producer company has said.

Without sharply higher Gold Prices, some miners "will get killed" GoldFields CEO Nick Holland told an audience at the Melbourne Mining Club in Australia on Tuesday.

"It may be that we have are going to have to see the [Gold Mining ] sector rationalise before people believe us."

Having put the all-in Gold Mining cost – which includes exploration, as well as infrastructure spending on top of operating costs – at $1400 per ounce in May, Holland now says a market price of $2000 may be needed to protect the industry.

"If we're going to replace the ounces being mined out...we're going to need higher Gold Prices," Holland believes.

Gold Mining output faces pressures beyond cost, however. Six of the eight largest producing nations now have declining production, reports the Investor's Chronicle magazine. Former world #1 South Africa now accounts for just 7% of world production, down from more than 75% in the late 1960s.

"Furthermore, gold continues to get more difficult to mine," says the IC. "The average grade of gold mined keeps going down and is now around 1.5 grams per tonne of ore."

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