JOHANNESBURG (Business Day) --While annual gold mining output inched up 2% in 2005, South Africa, the world's largest producer, saw its production hit its lowest level in 82 years.
According to precious metals consultancy GFMS in its Gold Survey 2006, the decline in South Africa represented the sharpest fall for a decade, and was explained by mine closures due to its high domestic cost environment.
The key drivers of the global increase were reportedly due to markedly stronger annual performances at the world's two largest mines and a significant volume of production originating from new mines.
Landslides Affect Production
Referring to the former, Grasberg in Indonesia improved by nearly 60 tonnes following a weak 2004 that was strongly impacted by two landslides late in 2003, while Yanacocha in Peru achieved record annual output.
On a regional basis, the most sizable contributions to new production were identified as having come from Latin American countries, including Peru (Lagunas Norte) and Mexico (El Sauzal), as well as Telfer in Australia, which was commissioned in November 2004.
The largest annual falls in gold production occurred in South Africa and Canada, GFMS said.
Cash costs on an annual global basis increased by 7% in 2005, GFMS said.
The consultancy's analysis indicated that the hike in costs was attributable to worldwide inflationary pressures including rising wages and higher prices for fuel, cyanide and ultra-large tyres.
South Africa Highest Cost Country
On a regional basis, North America experienced the greatest annual rise in costs, with Canada and the U.S. increasing by 19% and 11% respectively; South Africa and Australia's rises were calculated at a more modest level.
"Despite this, the overall ranking remained unchanged, with South Africa and Australia remaining the two highest cost countries," GFMS said.
GFMS senior analyst Bruce Alway said the large volume of new production seen last year, brought about by a stream of projects coming to fruition, is anticipated to continue.
"While start-ups in 2006 will add to the bottom line, 2005's mines ramping up to full-rate production will be the source of further significant volumes," Alway added.