Commodities Buzz: Gold Miners Sustaining Costs Up 22% In Last Two Years

Year to date gold has gained just under 4% as the metal extends a bull run in place since end-2015. Gold bottomed at a whisker under $ 1,050 after a four-year slide from all-time highs in 2011 above $ 1,900.New York-based CPM Group in its 2018 Gold Yearbook points out that the best indicator of trends in gold mining costs is, quite simply, the price of gold.The 32-year old independent commodities researcher in its 221-page industry says all-in sustaining costs (AISC takes into account administrative, exploration, reclamation and other costs) bottomed out in the first quarter of 2016.

Based on its production-weighted data calculated from 41% of annual global gold production of 97 million ounces, AISCs averaged $ 871 during that quarter, down some 27% from the peak AISC of $ 1,187 touched in Q3 of 2012. AISCs have risen since then to average $ 949 during the third quarter of last year, up around 9% from Q1 2016.

AISCs had been declining alongside gold prices almost entirely as a result of reduced sustaining costs, with cash costs remaining mostly stable. But since the turnaround in the price of gold since Q1 2016 both sustaining and cash costs have risen with the former up a whopping 22%.