Gold prices rose in 2024: What does this mean for mining and the supply of metal?
09. 04. 2025There is no doubt that gold is doing well on the demand side. Central banks have completed their third consecutive year of record purchases, and investors are seeking a long-term safe haven. But what about the supply side? What challenges do mining companies face, and how do their cost developments relate to gold prices?
The rising price of gold indicates its strength and attractiveness among investors. By the end of Q3, the price of gold had stabilized above $2,600. However, average total all-in sustaining costs (AISC) have also increased (AISC includes all direct mining costs, labor costs, materials, energy costs, taxes, and royalty payments). Lower production, compounded by higher royalty payments and increased sustaining capital expenditures, has contributed to the rise in AISC.
In the third quarter of 2024, global average licensing and tax costs rose to $90 per ounce. This represents a 5% increase compared to previous quarter and a 31% increase year-over-year. Sustaining capital expenditures also rose to $303 per ounce. While this represents only about a 3% increase between quarters, it is a 50% increase overall. Currently, AISC averages $1,456 per troy ounce, the highest level according to the World Gold Council's data series (since Q1 2010).
How do rising costs relate to gold prices?
Rising gold prices and increasing AISC often go hand in hand. When gold sells at a higher price, even lower-quality ore becomes economically viable. The higher costs associated with more complex mining can be more easily offset. On the other hand, royalty fees, taxes, and sustaining capital expenditures also rise.
However, the higher sustaining capital expenditures also reflect investments in modernization and the development of new projects, which miners pursue in connection with rising revenues and profits.
Costs are rising everywhere, but at different rates.
In Africa, AISC reached $1,532 per troy ounce, reflecting a 4% quarter-over-quarter increase and a 14% year-over-year jump. This rise was largely influenced by reduced production (such as in Ghana) and operational challenges, including the suspension of some operations in Mali.
In Oceania, AISC increased to $1,464 per ounce, with the key factors being higher sustaining capital expenditures and lower production in certain operations, such as in Papua New Guinea and Australia.
A similar trend was observed in South America, where the World Gold Council reported an AISC increase to $1,197 per ounce. This was driven by adverse weather conditions and ongoing project development work.
A particularly interesting case is North America - Canada and the United States. In this region, mining costs held steady at $1,508 per troy ounce, with only a 2% year-over-year increase. While some Canadian mines achieved record throughput, the United States faced higher costs due to lower ore quality.
Overall, despite rising costs, 97% of primary gold mining operations remain profitable. The combination of mixed regional results and increasing AISC suggests that the mining sector is entering a new phase, where higher costs are being offset by near-record gold prices. These trends present both challenges and new opportunities for gold producers, who must adapt to an increasingly dynamic market environment.
