The gold sector is likely to continue to change through 2025 with the coming years likely representing something of an evolution amid a shifting landscape. As has long been the case, the cyclicality of the sector and depleting nature of the resource base will see old assets repurposed and new ones discovered and developed. While there are bound to be unexpected discoveries and closures, we expect the majority of the 175 assets we currently cover will still be producing in the middle of the coming decade.
There are four takeaways that emerged from this work that we believe will ultimately define the future of the Gold and Mining Industry through 2025 – Gold remains an important asset class, The Changing landscape of the gold industry, Strategic direction is imperative and Technology, exploration and other hard to predict factors. See below for the summary of the key takeaways.
Four Key Takeaways
- We’re positive that by 2025, gold is likely to remain a key investment asset, amid falling real rates in the US and a global backdrop of increased macro uncertainty.
- By 2025, we see a sector in better shape, with broadly flat output on an ounce basis, albeit in a somewhat changed landscape with production migrating towards North America from Australia.
- Portfolio turnover and new project commissioning mean that costs are (perhaps unexpectedly) set to decline at a sector level, improving margins and, dependent on prices, cash flow. However, there is likely no stopping the decline of reserves and companies that can deliver on successfully turning over and refreshing portfolios are likely to be relative winners. A combination of advances in innovation and technology (AI, big data, cloud, automation, etc.) are likely to accelerate by 2025, although we see little hard data of changes vs. the status quo and expect the benefits to be at the margins at best.
- The biggest impacts (positive or otherwise) are likely to arise from those events that we cannot predict such as discovery, M&A, technology, and innovation. A key takeaway is that the larger global companies seem better positioned on several fronts to weather the changing landscape.
By 2025, the events we can’t predict will likely have a more significant impact on the sector than the minutiae of our detailed production, cost, and financial models. However, we do think our analysis may help highlight those most likely to make “unexpected” strategic decisions. The first challenge is around portfolio optimization, something that is admittedly hard to predict. Also, we think currency is and remains important for the sector, but hard to forecast, and we expect volatility impacts to continue. However, the continued (or renewed) commitment to exploration across the sector is likely to pivot from brownfield to more greenfield and may result in new additional discoveries.
