Assisted by Canadian- and Australian-led projects that aim to add millions of ounces to world gold supply, China became the world's largest gold producer in 2007.

China produced 276 metric tons of gold last year, equal to about 9.7 million ounces. That's up 12% from 2006 and represented just over one-tenth of the world's supply.

The new ranking pushes the mighty gold producer South Africa into second place. And for the first time the gold giant has lost its top ranking since 1905.

South African Gold Mining

According to new figures from Statistics South Africa, total domestic mining production was 0.2% lower in 2007 compared with 2006. This 0.2% drop in annual mining production is followed by a 1.5% decline in 2006 and a 1.3% increase in 2005.
 
Significant contributors to the annual decrease include nickel, copper, and other non-metallic minerals such as diamonds. However, it was the gold industry in South Africa that really pitched in the most toward the annual production decrease.

South African gold mining production fell by 6.5% in 2007 in volume terms against the previous year. Meanwhile production of the yellow metal fell 4.1% in December compared to December 2006 and a full 7.8% during 4Q 2007 over the previous year.

Overall mineral production has leveled off in the past three years. The chart below shows the seasonally adjusted figures and trend series for the index of mining production between January 2003 and December 2007.

The trend series rose from the beginning of 2003 until February 2004, but leveled off until November of the same year. The trend reached a peak in April 2005 and a trough in January 2006. From February 2006 the trend increased until November 2006 but started to decline thereafter.

This general leveling off of South African mine production may have dramatic effects on global mine supply and prices in the short-term future because despite losing the title as world top gold producer to China, South Africa still produces a significant amount of the yellow metal.

New gold mines are always being developed, serving to replace the loss in current production. However, new mines can often taking up to 10 years to come on stream, mean mining output is relatively inelastic and unable to react quickly to a drop in new mine supply. So a significant drop in mine supply should result in a long-term rally of gold prices. The leveling out of South African gold mining is yet another compounding fundamental added to our bullish position for gold.

Until next time,

Greg McCoach

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I saw a very recent programme re gold production from SA mines, the interviewee, a mining company executive, expected production from "their" mine to be 20% down this year due to the irregular electricity supply to the mine. It is probable all the mines in the area(25%? of total global production), have similar problems with this strategic supply.
Another query: where is all the future gold production to come from?. Demand is increasing all the time(more affluent Indians and Chinese, representing 35% of global population), there is no way that I can see where this increased production will come from. To me this means a continued increase in the gold price. Any half decent hard rock gold mine will take at least 10 years to get into production(from initial exploration),

Well informed articles, I haven't invested in the gold market, but have monitored its progress over the recent months, if these articles were more public there wouldnt be such a profit to be made..
..keep them coming..