Gold production costs at all-time high

At U$1,289, the all-in sustaining costs (AISC) for mine production of an ounce of gold in the first nine months of 2022 were at their highest ever, according to the latest data from the World Gold Council – a clear trend over the last years. In addition to the mining and processing costs, including those for material, energy and labour, the AISC also include the fixed costs, which are completely independent of production volume, as well as the expenses incurred for the maintenance and further development of a gold mine. Furthermore, exploration costs including outside capital costs and negotiation costs for mining rights are also taken into account.

AISC represent floor price for gold

The continuously rising AISC represent the minimum price – the so-called floor – for an ounce of gold which gold producers need to charge to ensure operability, let alone the development of new mining sites. According to a study by Metals Focus, the incentive price that mining companies would have to achieve per ounce of gold in order to be interested in continuing their business in the long run, or for potential competitors to enter the market at all, was already significantly higher than the AISC in 2017, at around US$1,500.

Second-highest gold production volume in history

This year’s gold demand remains high: total gold production over the first three quarters of 2022 was just 15 tonnes shy of the all-time high of 2018. Climate-friendly gold recycling, on the other hand, has decreased by 6 per cent – mainly a consequence of China’s strict COVID measures, which prevented many people in China from selling their scrap gold. This information is backed by recently published Metals Focus data, indicating gold recycling in East Asia was down 10.8 percent year-on-year. By contrast, gold recycling has seen the highest increase in Europe, where it was up 5.2 percent. Among other things, this development underpins the importance of urban mining as a source of recyclable gold.