Strong gold and copper growth forecasts as covid disruptions subside

For gold, Fitch expects production growth in 2021 to achieve its fastest rate in three years. Over the medium-term (2021 to 2025), global mine production growth will remain strong, as high prices by historical standards encourage investment and output.

Fitch forecasts global gold production to increase from 109.4 million oz. in 2021 to 141.7 million oz. by 2030, averaging 3.2% annual growth. According to Fitch, this reflects an acceleration from the average growth of just 0.8% over 2016 to 2020.

After surging during the previous 10 years, China’s gold output will stagnate over the coming decade. Declining ore grades will limit domestic investment and encourage Chinese firms to develop overseas projects increasingly.

Major Chinese firms are expected to ramp up investment in foreign gold mines, as the country’s gold demand growth far outpaces production. Key deals in recent years have included Chinese firm Shandong Gold’s purchase of a 50% stake in the Veladero mine in Argentina from Barrick Gold for $960 million. The firms will also work together on exploration activities in the area.

In 2017, Zijin Mining produced 1.2 million oz. of gold, reportedly accounting for 10.2% of China’s total output.

Australia’s gold sector will see modest production growth over the coming years, supported by a strong project pipeline, rising gold prices and competitive operating costs. Fitch forecasts the country’s production to increase from 10.8 million oz. in 2021 to 13.1 million oz. in 2030, averaging 2.2% annual growth.

Canada and Australia are expected to lead the gold project pipeline, each bringing online between 175,000 to 200,000 oz. of annual primary output.

On the copper side, Fitch expects global copper mine production to expand by 7.8% year on year in 2021 as several new projects come online. The growth rate is also affected by growth coming off a low base due to covid lockdowns reducing output in 2020.

Fitch expects copper output over the medium term to remain strong as new projects and expansions come online, supported by rising copper prices and demand.

Fitch forecasts global copper mine production to increase by an average annual rate of 3.7% over 2021 to 2030, with yearly output rising from 20.2 million tonnes in 2020 to 29.4 million tonnes by the end of the decade.