Gold mining contributed $171 bln to global economy in 2013 – WGC

Otmane El Rhazi from The Bullion Desk.

The gold mining industry contributed more than $171 billion to the global economy in 2013, according to a new report from the World Gold Council.

But weaker prices and lower production in 2015 do not necessarily mean that this figure will drop, the WGC’s John Mulligan said in an interview.

Large-scale commercial gold mining in the 47 countries that account for more than 90 percent of the world’s production contributed $81 billion to the economy in direct gross value added (GVA) and around $171 billion indirectly, the WGC said.

GVA measures the contribution to the economy of each individual producer, industry or sector.

“The economic contribution of the industry to the global economy has been growing fast over the last decade, and is now significant on a global scale,” Mulligan said.

“Our findings highlight that commercial gold mining is a major source of income and driver of economic growth, playing an important role in supporting the sustainable socio-economic development of host nations and communities,” he added.

Although the average gold price dropped to $1,219 in 2014 and to around $1,208.50 so far this year from $1,411.20 in 2013, gold mining’s contribution to the global economy will not necessarily fall, Mulligan said.

“Cost pressures will undoubtedly have an effect on the GVA, particularly in those countries that have higher cost producers,” he said. “But it isn’t purely a function of GVA.”

And while gold production is expected to plateau this year after years of underinvestment in mining, this will not necessarily put pressure on gold’s contribution to GVA, he also said.

“If you look at pan-African production, it has dropped some 20 percent since 2000 but GVA has still increased 400 or so percent during that time,” Mulligan said. “The size of the industry and the growth of developing countries have more of an impact.”

Globally, gold mining companies directly employed more than one million people in 2013, with more than three million more employed as industry’s suppliers and in support services, the WGC said. In most gold-producing countries, more than 90 percent of the industry’s employees are local workers.

“Although gold mining jobs are not as numerous as jobs in other industries, they are of high value as they consistently pay above-average wages – significantly above-average in less developed countries where each worker typically supports a high number of dependents,” it said.

Of the value that gold mining companies distribute in an economy, some 70 percent relates to payments to local suppliers and employees.

“Interestingly, the majority of government revenues from gold mining are derived from sources, such as corporate and income tax rather than from money relating to permits and royalties,” the WGC said.

The social and economic impacts of gold mining also shows its direct economic contribution to the global economy has increased seven-fold from 2000 to 2013, which is greater than the rise in value of gold over the same period.

(Editing by Mark Shaw)

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