Covid-19 lockdowns and suspensions during Q2 to drive drop in global gold output by 1.7% in 2020

The shutdown of mines due to Covid-19 restrictions, primarily during the second quarter, is expected to result in a 1.7% decline in global gold output in 2020. A decline in the production levels from almost all of the top producers is expected during this year due to the pandemic and ensuing lockdowns in several key markets, such as South Africa.

The widespread uncertainty due to the fear of a possible global economic downturn, however, pushed gold prices to an all-time high in August. Prices currently remain approximately $2,000/oz, supporting profit growth for a number of gold miners, despite the falling output.

Following the outbreak, the two largest producers, Newmont and Barrick Gold, reduced their guidance from a collective 11.6 million ounces (moz) to approximately 11moz. Production from these companies more than halved in the second quarter, from a collective 2.9moz in Q2 2019 to 1.4moz in Q2 2020. Operations at Barrick’s Veladero and Porgera mines and Newmont’s Cerro Negro, Yanacocha, Eleonore, Penasquito, and Musselwhite operations were temporarily suspended for most of April and May due to the outbreak.

Meanwhile, Anglogold Ashanti and Kinross have suspended their outlook for 2020; Polyus Gold’s guidance remains the same however. Covid-19 restrictions on AngloGold Ashanti’s South African operations led to a 63koz year-on-year drop in output in H1 2020, while the company’s overall decline for H1 2020 was 85koz.

Other factors that have impacted the leading companies’ gold output during 2020 have been lower ore grades and sale of assets. In Newcrest’s case, output was lower due to the sale of the Gosowong mine to Indotan Halmahera in March, while Newmont sold its Red Lake project in April and Kalgoorlie projects at the beginning of 2020.

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