World Mineral Production - NERC Open Research Archive - Natural ...

mid-August. Between late August and late September the gold
price increased substantially to US$743 per ounce, in response
to the weak US dollar and news that the US Federal Reserves
would cut interest rates. During the final quarter of 2007 the
gold price accelerated upwards, reaching US$789 at the end of
October, driven by escalating oil prices and the weakening US
dollar. In early November as the oil price approached US$100
per barrel, the gold price hit a 28-year high, of US$841. The
fluctuating strength of the dollar during the second half of
November ensured price volatility around the US$800 per
ounce mark. Having ended November at around US$780 the
gold price fluctuated during December, finishing the year at
US$833 per ounce, a 30 per cent increase during 2007.
Industry events in 2007
Dehedging, a process whereby producers settle forward sales
obligations, was a prominent feature of the gold market in
2007. Since 2000 the increasing difference between lower
forward selling prices and rising spot gold prices has led to
producers reducing their volume of forward sales (Berg, 2007;
Pieterse, 2007). Dehedging, impacts on the spot market by
effectively reducing the amount of global mine production
available (Berg, 2007). Dehedging reached record levels in
2007 as mining companies sought to reduce their hedge books
(Kruger, 2007).
European central bank gold sales approached the maximum,
self-imposed limit of 500 tonnes per annum during 2007, with
major contributions by the central banks of Spain, France and
Switzerland (O’Connell, 2007b). In 2007 concerns were raised
about the quality of the Bank of England’s gold stocks. The
Bank holds around 320 tonnes in reserve but not all of this
metal appears to conform with standards defined by the
London Bullion Market Association (Lawlor, 2007; Nikkhah,
2007).
A number of new mines came on stream or moved to full
production in 2007. Newmont’s newly opened Ahafo mine in
Ghana and Phoenix and Leeville mines in Nevada entered
their first year of full production in 2007 (Rumley, 2007).
Barrick’s Ruby Hill mine, Nevada, recommenced production
in early 2007 (Barrick, 2007). Gold production commenced at
Sino Gold’s Jinfeng mine, in China, in mid-2007 (Sino Gold,
36
US$/troy Oz
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500
Jan-2006
Feb-2006
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Apr-2006
May-2006
London afternoon daily gold price. Source: Metal Bulletin, 2008
Jun-2006
Jul-2006
Aug-2006
Sep-2006
Gold Price Trend
Oct-2006
Nov-2006
Dec-2006
Jan-2007
Feb-2007
Mar-2007
Apr-2007
May-2007
Jun-2007
2007). In 2007, China announced the discovery of what is
claimed to be one of Asia’s largest gold deposits in the northeast
of the country (Mining Journal, 2007b). BHP Billiton has
announced an increase of 77 per cent by tonnage in the total
resource estimate for its Olympic Dam mine, the largest gold
resource in Australia and a US$6 billion expansion is planned
(BHP Billiton, 2007; Mercer, 2007). Buoyant prices during
2007 ensured that gold dominated mineral exploration
expenditure, accounting for 41 per cent of worldwide
exploration budgets (MEG, 2007).
Selected bibliography
Jul-2007
Aug-2007
BARRICK. 2007. Global Operations North America [online].
Barrick [cited 15 January 2008]. Available from
http://www.barrick.com/GlobalOperations/
NorthAmerica/RubyHill/default.aspx
BERG, G. 2007. Gold Market Outlook – June 2007 [online].
National Australia Bank [cited 15 January 2008]. Available
from http://www.nab.com.au/vgnmedia/downld/
GoldJune07.pdf
BHP BILLITON. 2007. Annual Report 2007 [online]. BHP
Billiton [cited 15 January 2008]. Available from
http://www.bhpbilliton.com/bbContentRepository/
20071114140799/bhbpannualreport07.pdf
FREI, E. 2007. Gold, silver sees gains in New York [online].
Metal Markets, July 24 2007 [cited 15 January 2008].
Available from http://www.metalmarkets.org.uk/
2007/08/16/investors-sell-precious-metals-prices-drop/
KRUGER, T 2007. Record gold dehedging to slow [online].
Mineweb, 2 August 2007 [cited 15 January 2008]. Available
from http://www.mineweb.com/mineweb/view/
mineweb/en/page33?oid=24485&sn=Detail
LAWLOR, C. 2007. Why the Bank of England’s gold has lost
its shine. Metal Bulletin, 24 September 2007, 8.
MEG. 2007. Record-Setting Exploration Continues in 2007
[online]. Metal Economics Group Press Release, 13 November
2007 [cited 15 January 2008]. Available from
http://www.metalseconomics.com/default.htm
Sep-2007
Oct-2007
Nov-2007
Dec-2007