Finance

The cost of producing gold

Gold is a rare metal but it is one of the most widely used metals especially in this day and age of technology. This makes this yellow metal valuable and most sought after. A simple fix would be to increase production to meet demand. The problem is there isn’t enough gold in the ground to begin with. The best way to make sure that there is gold is not to go further underground but to recycle the gold that is already above-ground. Mining gold is already an expensive endeavor.

Mining companies estimate the cost of mining gold at $500 to $800 an ounce. This depends on the mining company and the location of the mines. According to the World Gold Council’s, the real cost of mining an ounce of gold is just a little over $1,000 an ounce considering that the price of gold has stayed under $2,000 means that the real cost of gold is often underestimated and mining companies don’t always make great profits.

The cost of mining gold also depends on the region that is being mined. It depends on many factors like the type of mine, the regulations, taxation, security, the cost of labour, etc.

In order to come up with the cost of mining gold, one has to look at all the stages of mining:

  1. Exploration – gold is discovered and the area is studied. The studies will include drilling, geochemical analysis, etc. The mining company acquires the land and procures all the necessary licenses to start work on that particular piece of land.
  2. The mining has to establish the site by constructing roads and buildings. They procure equipment and recruit employees.
  3. Most countries have environmental laws they expect mining companies to abide by. They may require the mining company to have a rehabilitation plan to restore the area to pre-mining conditions once the mine has tapped out. When the area has returned to its natural state, the mining company may have to relinquish the lease and its liability as well.

However, the process doesn’t end there. Once the gold is brought above ground, it has to be extracted from the ore. The process involves some chemical processes that extracts most of the gold along with some other metals in the mined or. These is then cast into moulds known as dore. This dore and sent to a refinery where it is melted and taken through a process to separate the gold and the impurities. What refineries produce is the purest form of gold that are then bought by jewellers, industrial manufacturers and investors.

So, the cost of mining gold goes well beyond just the pulling out of the metal from the ground. Fortunately, not all gold has to come from the ground. A lot of the gold that is above ground comes from recycling old jewellery and other consumables produced from gold. This is where cash for gold buyers come in. They procure gold from other people and send it to refineries where it is melted and turned into other gold products.

Most of the gold that is found on earth was mined years ago. It is already challenging to find new sources of gold. The mining techniques that are used these days are more sophisticated they make mining gold easier. However, because they are so advanced they cost a lot more money and the scarcer gold becomes the scarcer gold is the higher the prices are likely to go. This is good for those people who already have gold, they can sell their gold to cash for gold buyers they have for a good price. If you have any gold to sell, there are a lot of gold buyers in Australia.