Commodity Online
TORONTO: This news may add to the rising gold prices across global markets.

At a meeting of the shareholders, Barrick Gold chief has revealed that global gold production from mines will continue to decline, as the gold industry battles maturing mines, a scarcity of new discoveries and longer permitting and construction times for new projects.

Aaron Regent, CEO of Barrick Gold, said the gold industry needs to replace almost 100-million ounces of reserves per year, and clearly this has not been happening.

Gold mine supply has been on a downward trend since 2001, despite a more than tripling of the gold price, and this trend is likely to continue.

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Even though some companies have reported huge increase in their production in the first quarter of this year like Lihir Gold, which announced huge rise in production in the first quarter.

New projects can take as long as seven to 10 years to bring online, compared with just three to five years in the past, Regent said.

Several gold projects around the world have also been put on ice because of ballooning capital costs and difficulties raising finance.

Global gold mine production contracted almost 3% last year, to its lowest level in 12 years, according to consultancy GFMS.

The fact that it is getting harder to finance gold mines, it is clearly more difficult to find, permit and build the mines — they are more expensive and it takes longer — means that supply is likely to decline more than people thing,” Barrick CFO Jamie Sokalsky said.

The company’s website said with gold supply dwindling, demand for the yellow metal, especially from investors and possibly as a result of central back buying, can be expected to continue to grow.

The financial crisis, and government actions to stabilise the global economy, have helped gold to reassert itself as an attractive financial asset, as a store of value, a safehaven and an alternative to currency, stocks and bonds.

Exchange-traded funds have attracted a whole new group of gold investors, which have steadily increased their holdings in the yellow metal, despite investors’ need for liquidity over the past year.

Gold demand could also be significantly boosted by a move by central banks to diversify their reserves, Regent said.

“The concentration of US dollar reserves is high, and actions by central bankers imply that they are rethinking their portfolio strategies are starting to diversify their holdings.”

Gold sales by Central Bank Gold Agreement signatories slowed last year, and there has been evidence of central banks in countries like Russia and China buying gold.

Barrick Gold Corporation is the largest pure gold mining company in the world, with its headquarters in Toronto, Ontario, Canada; and four regional business units located in Australia, Africa, North America and South America.

Barrick is currently undertaking mining and exploration projects in Papua New Guinea, the United States, Canada, Dominican Republic, Australia, Peru, Chile, Russia, South Africa, Pakistan, Argentina and Tanzania. In 2006, it produced 8.64 million troy ounces of gold at a cash cost of $282/ounce.