Nevada gold puts US ahead of Canada
For the second year in a row, gold production in Canada has slipped behind output in the United States. Canada is now in fourth place and it will probably stay that way. Canada has long been the third-largest gold producer in the world, after South Africa and the Soviet Union; now the US is solidly in third place, with mine production of 154.9 tons in 1987, compared with 120.3 tons in Canada. The reason is increased strip mining in Nevada.
``The discovery of gold in the Carlin area of Nevada is the reason for the upsurge of production in the United States,'' says Fred Knight, gold analyst with Canarim Investments, based in Vancouver, British Columbia. ``The US will stay ahead of Canada because these new open-pit mines operate at a low cost per ounce produced, say $140 to $200 per ounce.''
Many of the mines operating in the Nevada Canadian, such as Echo Bay, Lacana, and American Barrick, which, despite the name, is listed on the Toronto Stock Exchange and is controlled by a Toronto-based group. American Barrick has extensive mining interests in Nevada and has seen its share price rise dramatically over the past couple of years.
The largest gold mine in Nevada, Newmont Mining, produced 18 tons in 1987, making it the largest gold mine in the US. Gold mining analysts say production there could go to 50 tons a year by 1990.
The figures on gold mining production come from the annual gold survey of Consolidated Gold Field PLC, a London group representing South African mining interests. Its annual report on gold mining around the world is thorough and considered to be the top reference work in the gold industry.
While gold production in the US, Canada, and Australia increased over the past year, gold production in South Africa was down dramatically to 607 tons, from 640 in 1986, and off from a 1983 peak of 683.3 tons. One of the key reasons, according to the Consolidated report, was labor trouble in South Africa, mainly a 21-day strike by the National Union of Mineworkers.
But Canadian analysts say there were other troubles as well. ``The South Africans have older mines and they have to drill deeper to get the ore, so it is harder to increase production.''
South Africa still accounts for 44 percent of noncommunist-bloc gold production; as recently as 1983, South Africa's share was 61 percent, according to figures in the Consolidated report. The Soviet Union is not included in the tally because, while it is almost certainly the world's second-largest gold producer, its production figures are unreliable.
The US is the biggest user of gold in the world, at 236.1 tons; the second largest is Italy, at 221.8 tons; No. 3 is Japan, at 175.3 tons. Italy uses almost all its gold to make jewelry, while the US and Japan use it mainly for industrial purposes, especially electronics.
Use of gold in Japan dropped in half last year, from 342.5 tons to 175.3 tons, and part of that was because less gold was used in electronic goods. The rising yen has made those goods more expensive for the Japanese to export. The Japanese also minted gold coins in 1986 to honor the 60th anniversary of Emperor Hirohito's accession to throne, and that caused an extraordinary rise in Japanese consumption.
Finally, Canada and the US are 1-2 in the production of gold coins. The US produced 65.6 tons of American Eagles in 1987; the Royal Canadian Mint used 42.7 to produce the gold Maple Leaf.
Until 1984 South Africa, with its Krugerrand, was the dominant force in gold coins. In the peak year of 1981 the country produced 112.2 tons of Krugerrands. But the voluntary and government boycott of South African products, especially in Europe and North America, has done in the Krugerrand. Only about half a ton of the South African coins were produced last year.
The top 10 gold producers in the noncommunist world
1987 production, in tons South Africa 607.0 United States 154.9 Canada 120.3 Australia 108.0 Brazil 83.8 Philippines 39.5 Papua New Guinea 33.9 Colombia 26.3 Chile 19.2 Venezuela 16.0
Worldwide use of gold
1987 use, in tons Jewelry 1,138.2 Electronics 123.7 Dentistry 48.0 Other industrial uses 57.1 Medals and imitation coins 15.1 Official coins 241.3