By Alejandro Colombo
A Meteoric Rise
As 2023 draws to a close, the gold market has experienced a remarkable surge, with prices soaring from US$2,067.55 per ounce at the beginning of the year to US$2,567.30 by mid-November—a staggering increase of approximately 24%. This upward trajectory peaked just before the U.S. presidential elections, where gold prices reached an impressive US$2,777.80. However, a subsequent decline of over 8% can be attributed to anticipated monetary policies under a potential Donald Trump administration. Despite this fluctuation, gold has appreciated by more than 45% over the past two years, underscoring its status as a safe haven amidst ongoing geopolitical tensions, particularly in Ukraine and the Middle East.
Insights from the World Gold Council
The World Gold Council (WGC) recently released its quarterly report, revealing a 5% year-on-year increase in gold demand, reaching a record 1,313 tons for the third quarter. This surge is reflected in the gold price, which has consistently hit new historical highs. Notably, gold mining production rose by 6% year-on-year, surpassing previous records set in 2018. Recycled gold volumes also increased by 11%, although widespread economic challenges have not yet prompted significant sales.
The report highlighted that global gold exchange-traded fund (ETF) inflows of 95 tons were the primary driver of this growth, marking the first positive quarter since early 2022. However, investment in bars and coins saw a 9% decline, largely due to weaker demand in key markets, despite strong performance in India. Jewelry consumption also fell by 12%, although the value of demand rose by 13%, indicating that consumers are spending more despite purchasing less.
A Shift in Global Gold Production
Over the past two decades, the landscape of gold production has shifted dramatically. Countries like China and Russia have emerged as dominant players, replacing historical leaders such as South Africa and the United States. In 2023, global gold production reached 3,000 tons, up from 2,600 tons in 2003. South Africa’s share of global production has plummeted from over 70% to less than 4%, while the U.S. and Peru have also seen significant declines.
In contrast, China and Russia have increased their production by 89% and 72%, respectively, solidifying their positions as the top producers. Together, they accounted for 22% of global gold output in 2023, a stark contrast to the 33% share held by South Africa, the U.S., and Peru in 2003.
Argentina’s Gold Resources and Mining Landscape
Argentina’s modern mining industry was catalyzed by the Bajo la Alumbrera project in Catamarca province. Since then, the country has seen a proliferation of gold mining ventures across various regions, including:
Lindero (Fortuna Mining) in Salta province
Cerro Vanguardia, Cerro Negro, Cerro Moro, and Don Nicolás in the Deseado Massif of Santa Cruz province
Veladero, Gualcamayo, and Casposo in San Juan province
In 2023, Argentina produced 1.26 million ounces (35 tons) of gold, with the yellow metal accounting for 56% of the nation’s mining exports, valued at US$2.299 billion out of a total of US$4.060 billion. Although this represents a slight decline from previous years, gold continues to be the largest contributor to Argentina’s mining sector.
The Future of Gold in Argentina: Tied to Copper
Argentina’s gold exploration budget has historically averaged 45% of the total over the past decade, though it dipped to 32% in 2023, overtaken by lithium exploration. The National Mining Secretariat has reported a substantial resource of 56.4 million ounces of gold across 25 advanced exploration projects, requiring an estimated US$2.872 billion for development.
Key projects include:
Gualcamayo: A US$1 billion investment is planned for the development of a new mine and supporting infrastructure.
Hualilán: Recently obtained its Environmental Impact Declaration, moving towards a prefeasibility study.
Calcatreu: Received all necessary permits for construction and production startup.
Interestingly, a significant portion of Argentina’s gold resources is found as a by-product of major copper porphyries, such as Josemaría, Filo del Sol, and Los Azules. This connection between gold and copper projects presents a unique opportunity for Argentina to enhance its gold production, leveraging the precious metal contained within copper mining operations.
Conclusion
As Argentina navigates its mining future, gold remains a pivotal player in its economic landscape. The interplay between gold and copper projects could unlock new potential for growth, positioning Argentina as a significant contributor to the global gold market. With ongoing investments and exploration efforts, the golden metal is set to continue its reign as a cornerstone of Argentina’s mining exports, while its future remains intricately linked to the fortunes of copper.
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