The gold price has been showing strength this past week. Once again pushing toward $1,300 per ounce.
And news from one of the world’s key producing countries may help support that drive.
That’s Ghana. Where government officials said over the weekend that recent regulatory changes are about to have a major impact on gold production.
Those comments came from Ghana’s deputy minister of land and mines, Barbara Oteng-Gyasi — speaking to Reuters at a gold industry conference in India. With the deputy minister revealing that recent attempts to curb artisanal mining in Ghana are likely to cause a big fall in production this year.
Oteng-Gyasi went on record estimating that the crackdown will reduce artisanal mining output by 50 percent for 2017. With illegal operations across Ghana being shut down to prevent environmental impacts.
Adding another key data point, Oteng-Gyasi said that such artisanal production accounts for about 30 percent of Ghana’s total gold output — which came in at 4.1 million ounces in 2016.
Here’s how the math breaks down: artisanal mining’s 30 percent of production equates to about 1.2 million ounces yearly. So this year’s 50 percent reduction in artisanal output would mean over 600,000 ounces of production gone.
That’s 15 percent of Ghana’s total production vanished into thin air, nearly overnight. A major happening in gold supply, given that Ghana is currently Africa’s #2 gold-producing nation — and the world’s 11th-largest supplier.
Deputy minister Oteng-Gyasi did suggest that a reduction in artisanal activity may help larger gold producers expand their operations. Potentially opening up new ground to development.
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Whatever the case, this is an important development for observers in the gold space. Both because of potential supply reductions — and the possibility for new project opportunities in parts of Ghana cleared of illegal miners.
Watch for official numbers on Ghana’s production, and for new projects announced by established miners here like AngloGold Ashanti — or perhaps from new players entering this proven gold terrain.
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Here’s to moving out and moving in.
By Dave Forest
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