The suspension of mining activities due to the Covid-19 outbreak in the second quarter of this year will result in a 1.7% decline in global gold production in 2020, says GlobalData.
According to the data and analytics company, all the world’s top gold producers, including Newmont (TSX: NGT; NYSE: NEM), Barrick Gold (TSX: ABX; NYSE: GOLD), AngloGold Ashanti (NYSE: AU), and Newcrest Mining (ASX: NCM) are expected to experience a reduction in output during 2020 owing to restrictions in mining operations and lockdowns in several key markets, such as South Africa.
“The widespread uncertainty due to the fear of a possible global economic downturn, however, pushed gold prices to an all-time high in August 2020, and they remain around US$2,000 per oz. supporting profit growth for a number of gold miners, despite the falling output,” Vinneth Bajaj, a senior mining analyst at GlobalData, stated in a press release.
The coronavirus pandemic led to the two largest gold miners, Newmont and Barrick Gold, reducing their production guidance from a collective 11.6 million oz. to around 11 million oz., says GlobalData.
Production from these companies, says GlobalData, more than halved in the second quarter to 1.4 million oz., down from 2.9 million oz. in the second quarter of 2019.
The reduction in output followed the temporary suspensions of operations at Barrick’s Veladero and Porgera mines and Newmont’s Cerro Negro, Yanacocha, Eleonore, Penasquito, and Musselwhite mines for most of April and May this year due to restrictions imposed by the outbreak, GlobalData says.
While AngloGold Ashanti and Kinross Gold (TSX: K; NYSE: KGC) have suspended their production guidance for the year, Polyus Gold (LSE: PLZL), Russia’s largest gold producer, has stuck with its guidance.
Restrictions due to Covid-19 imposed on AngloGold Ashanti’s South African operations have led to a drop in output of 63,000 oz. in the first half of 2020 compared with the same period last year, GlobalData says, while the company’s overall reduction in global production for the first half of 2020 was 85,000 ounces.
“Other factors that have impacted the leading companies’ output during 2020 have been lower ore grades and sale of assets,” says Bajaj. “In Newcrest’s case, output was lower due to the sale of the Gosowong mine to Indotan Halmahera in March, whilst Newmont sold its Red Lake project in April and Kalgoorlie projects in the beginning of 2020.”