Gold News

Gold Mining "Unable to Keep Up" with Demand

OUTPUT FROM Gold Mining operations in South Africa – former world No.1 – has risen to meet surging investment demand, but this growth cannot be sustained according to leading analysts.

Fitch Ratings said in a report Monday that "continuing cost pressures, such as high labor and electricity inflation, and scarce opportunities for new lost-cost gold mine discoveries, are likely to constrain production growth over the long term (3-5 years)."

Gold Mining output rose 3.7% year-on-year in August, latest data from South Africa's Chamber of Mines show.

This comes after more than halving, however, from the peak levels of 1998.

"Near-term output growth reported in 2010 could also potentially include production from previously mothballed operations," says Fitch. "These operations require increased levels of investment to sustain full capacity production – which is likely reduce some of the short-term gains in free cash flow generation."

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