JOHANNESBURG (Commodity Online): Even as the investors across the globe are rushing to buy gold fearing a big fall of dollar, miners in South Africa said the production in gold mines will come down drastically in the coming months as deposits are exhausted and new discoveries remain elusive.

In terms of production, 2009 is the outlier as far as the trend, Omar Jabara, spokesman for US-based Newmont Mining, the second-largest gold producer in the world, told a news agency.

Overall, it’s a fact that gold production from mines has been in decline since 2001 and has gone roughly from 85 million ounces to about 75 million ounces a year, said Vincent Borg, spokesman for number one producer Barrick Gold.

A report appeared in iafrica.com said almost everywhere, mineral deposits are being exhausted and new deposits are not being found fast enough to replace them.

South Africa, which was once at the vanguard of world production, saw a 9.3-per cent drop in production year-over-year in the second quarter.

Just because gold reached a new high doesn’t mean that the miners can tell the mines to produce as much gold as they can.

Barrick and Newmont expect nevertheless to continue increasing production next year by seven percent and five to 10 per cent, respectively.

It takes from seven to 10 years to start production of a mine after finding an economically viable gold deposit.

And no significant new discoveries have been found in recent years, despite the higher gold prices and despite higher exploration budgets.

The global gold mine production is forecast to rise by 3.7 per cent in 2009 to about 2500 tonnes, but will satisfy only two-thirds of demand, which soared this year amid the global financial crisis to 3800 tonnes,.

Historically, gold recycling or the sale of central bank stockpiles made up for supply shortages.

But during the latest financial crisis, banks have been buying up gold in large quantities to protect monetary reserves against weakness in the US dollar.

Since the start of November, for example, India’s central bank has scooped up 200 tonnes of gold from the International Monetary Fund, at market value for about $6.7-billion.

With mine production sloping downwards, an increasing supply of gold must come from existing supplies such as coins, bullion or jewelry but it will be very limited.
(SOURCE: iafrica.com)

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