[VIDEO] World Gold Council releases Q1 2015 Gold Demand Trends report
World Gold Council--In a generally quiet quarter, global demand dipped one percent to 1,079 tons. However, the gold market’s complex eco-system was well balanced in Q1 2015. Conditions differed from market to market but at an aggregate level, these differences broadly cancelled out. Growth in India and the US could not prevent a modest downtick in jewelry demand; light inflows into ETFs, the first since 2012, led to growth in investment.
The contrast between the global picture and the more granular demand data clearly demonstrates the multi-faceted nature of the gold market. The numerous and varying roles that gold plays means it responds to different cues in different ways, smoothing out the fluctuations occurring at a more localized level. Some of those localized fluctuations during the first quarter were challenging. Weaker economic growth, higher prices and rallying stock markets gave consumers in some markets reason to reappraise their gold buying intentions.
First quarter 2015 in summary:
Jewelry demand dipped by three percent in Q1 2015 to a shade above 600 tons
Jewellery demand for the first quarter totaled 601 tons, a level it has adhered to reasonably firmly since Q3 2013. Demand began the year by responding, in varying degrees according to specific local market conditions, to economic growth and price movements.
Investment demand rose four percent as ETF inflows offset a decline in bar and coin demand
Total investment demand grew moderately to 279 tons in Q1, slightly above Q1 demand in both 2013 and 2014 (at 260 tons and 268 tons respectively). The first quarterly inflow into ETFs since Q4 2012 outweighed a contraction in bar and coin investment.
Central bank net purchases of 119 tons extend buying run to 17th consecutive quarter
Central banks and other official institutions continued their buying momentum in Q1 with net purchases totalling 119 tons. This was virtually unchanged compared to the same period in 2014. Diversification continues to be the primary driver for the accumulation of gold reserves.
Technology slipped two percent to 80 tons as longer-term substitution trend continues
Demand for gold in technological uses slipped by two percent to 80 tons, the lowest quarterly level in our records (back to 2000). Substitution and thrifting in this sector continue to weigh on gold demand, as manufacturers seek out cheaper alternatives.
Total supply was virtually unchanged year-on-year at 1,089 tons; lower recycling offset growth in mine supply.
Mine production increased by two percent year-on-year to 729 tons in the first three months of 2015, with growth coming from a number of markets. This was offset by recycled gold supply, which fell by three percent to 355 tons in Q1. Overall, this left total supply virtually unchanged at 1,089 tons.
Global gold demand was down just 11 tons compared with Q1 2014. Moderate changes in demand at the sector level broadly cancelled out, as did variations in demand across different markets.
Mine production grew by two percent year-on-year to 729.2 tons, but is expected to tail off in the second half of 2015. The three percent drop in recycling was largely due to continued shrinkage in western markets.
ETFs (+26t) benefited from improved Western investor attitudes towards gold; Q1 2015 was the first quarter of positive net purchases since Q4 2012. Bar and coin demand, 10 percent weaker year-on-year, remains elevated compared with historical levels.
Alistair Hewitt, Head of Market Intelligence is interviewed on the findings of the World Gold Council’s Q1 2015 Gold Demand Trends report.
Read the full report here.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.