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Gold Mining

Gold has been part of human civilisation for thousands of years, with some of the oldest gold artefacts known to man dated to around 4700 BC. The initial years of gold mining aren’t recorded, but by the time of the Roman Empire gold mines such as Las Medulas in Spain and Dolaucothi in Wales were well known, and Gold played a large part in the Empire’s expansion.

As time has moved on, the processes for mining gold have improved but ultimately remained similar to those employed by the first gold miners millennia ago.

For investors looking to buy gold, understanding a little more about the process of mining gold can be interesting, but also useful. Knowing how the precious metal is mined, and the way the market is changing, can help with recognising trends in supply and demand.


Where is Gold Found?

Despite how rare it is in comparison to other elements, Gold can be found on every continent on Earth, except Antarctica – and even that hasn’t been properly explored.

For much of the previous few centuries, Africa was the continent that supplied the most gold, with South Africa specifically mining tonnes of the precious metal. Johannesburg is built over the world’s largest gold deposit, and South Africa still has the largest concentration of gold to this day.

The Asian continent however also has a large amount of gold. India’s Kolar region has been closed for several years due to the diminishing returns on mining operations there, but the area is still believed to have rich gold deposits.

The Earth’s oceans contain huge amounts of gold but the difficulty of operating facilities at sea, and processing gold from seawater, currently make these deposits unfeasible for mining.

The Fimiston Open Pit aka 'Super Pit' gold mine in Kalgoorlie, Western Australia. The site is 50/50 owned by Barrick Gold and Newmont Mining.

As of 2017 the top five countries for gold production were as follows:

  1. China (426 tonnes)
  2. Australia (295.1 tonnes)
  3. Russia (270.7 tonnes)
  4. US (230 tonnes)
  5. Canada (175.8 tonnes)

Production has slowed down in recent years as costs have increased, and gold deposits become more difficult to find. Should a large, near-surface deposit be discovered though, or technology breakthroughs improve the cost efficiency of mining, then production could soon increase.


How is Gold Mined?

Gold mining can ultimately be divided into two main methods; ‘Placer Mining’ and ‘Hard-rock Mining’ - with both of these having varying methods within them.

Placer Mining: In looser deposits of earth or sand, gold – being so dense – can often collect together, making it easier to gather using water and gravity, but often yields small amounts. One of the most instantly recognisable forms of gold mining is ‘panning’. The prospectors of the Klondike gold rush in Canada, standing in the mountain rivers and streams, spring to mind. Using a small tray to gather sand and gravel that may contain gold, water is fed through forcing the denser gold to the bottom of the pan. Panning is popular with geologists and is used mostly for smaller operations. Sluicing, Dredging and Rocker Boxes are all variations of placer mining and some can trace their origins back thousands of years.

Hard-rock Mining: This is the process by which open, or underground mines, remove rock which contains gold ore. The ore can then be processed to remove the gold, traditionally using mercury (historically), and cyanide. This method has declined in recent years due to the costs and the environmental impact that the process of refining has.

Both Mercury and Cyanide are toxic to humans, even in relatively small amounts, and the waste product can be highly damaging to the environment. Since the Minamata Convention was implemented in 2017, Mercury usage has been reduced to small, and often illegal, mining operations. Cyanide is still used today but many countries have strict regulations over its use and the discharge of any leftover product (tailings).

By-product mining is also a common way of extracting gold. This is where gold is not the primary metal being mined. The Grasberg Mine in Indonesia for example is one of the largest gold mines in the world, and yet its principal metal is actually copper. The process of extracting the copper regularly means that enough gold is produced to be a valuable secondary source of income.


Ethical Gold Mining

Ensuring that gold is mined in ethical ways is a major concern for investors and the world at large. Exploitation of workers (especially in conflict zones), and the safe processing of gold, are both vital issues. It is imperative that the mining and refining of gold does not come at the expense of the wellbeing of people or the environment.

Examples of poor waste management from gold mining in Guyana, South America.

Companies such as the London Bullion Market Association (LBMA) set rigorous guidelines, and audit regularly, to ensure that refiners are doing their part to produce gold in a sustainable and ethical way.

At BullionByPost we only sell gold from LBMA-approved companies, so that our customers can rest assured their gold is ethically produced.