UK-based precious metal consultancy group, Metals Focus, has estimated that at the current gold price of below US$1,100/oz, some 24%, or around 400 t, of annual gold production is being mined at a loss, using the all-in sustaining cost (AISC) measure. The consultancy bases its conclusion on its annual global cost curve, which represents some 1,650 t of production.
Much of the loss-making production (20%) is in South Africa but the consultancy cautions that production is unlikely to fall dramatically because of the high costs involved in shutting down a mining operation. Miners prefer to try and weather periods of low prices in the hope that prices will recover within a short time.
Average AISC in Q1 2015 were US$878/oz according to Metals Focus.
20% of global gold production loss-making: Metals Focus