Gold Profile Final

8/3/2019 Gold Profile Final

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Dr. Luis A TERCERO ESPINOZA

Gold

A raw material profile compatible with the assessment

of the EU Ad-hoc Working Group on Defining Critical

Raw Materials

Karlsruhe, 9 November 2011



2 Gold

This work was commissioned by the European Association of Mining Industries, Metal

Ores & Industrial Minerals (euromines), Brussels/BE.

Contact:

Dr. Luis A. TERCERO ESPINOZA

Coordinator of Business Unit Systemic RisksCompetence Center Sustainability and Infrastructure SystemsFraunhofer Institute for Systems and Innovation Research ISIBreslauer Straße 4876139 KarlsruheGermany

Tel. +49 721 6809-401 | Fax +49 721 [email protected]://www.isi.fraunhofer.de



Gold 3

1.1 Introduction

Gold (Au, atomic number 79) was one of the first metals to be worked by man. As a

noble metal, it is resistant to air, humidity and a variety of acids. 197Au is the only natu-

rally occurring isotope and it is found almost exclusively in its elementary state. Withhardness on the Mohs’ scale of 2.5, pure gold is relatively soft compared with other

metals. It is also the most ductile of all metals. To increase hardness and other me-

chanical properties gold is often alloyed with other metals, for example silver, copper,

nickel and platinum among others. Due to its softness, gold can be highly polished

which, together with its color and noble characteristics, makes it a treasured material

for jewelry.1 The melting point lies at 1064°C and the density of 19.32 g/cm3 is very

high.2 Besides the naturally occurring stable isotope, the radioactive isotope 198Au

(half-life 2.7 days) plays an important role for medical radiology.3

1.2 Basic Supply & Demand Statistics

Gold is one of the rarest metals in the earth ’s crust. Estimations about quantities are

difficult since the metal is distributed widely, but very unevenly. Reported figures for the

average gold concentration in the earth’s crust vary around 4 to 5 ppb.1 Gold occurs

almost all over the world and is produced in a large number of countries. This low re-

gional concentration is shown by a comparatively low Herfindahl-Hirschmann index

(HHI) < 1000 (see time series plot at the end of this profile).4

Gold occurs in different sorts of deposits. These are classified into primary deposits,secondary deposits (also called placers) and conglomerate deposits. The secondary

1 Ullmann’s Encyclopedia of Chemical Technology: Gold, Gold Alloys and Gold Compounds .Wiley-VCH Verlag, Weinheim, 2005

2 By comparison, the density of iron is 7.87 g/cm 3 (Ullmann’s Encyclopedia of ChemicalTechnology: Iron . Wiley-VCH Verlag, Weinheim, 2009)

3 Römpp Online: Gold. Georg Thieme Verlag, Stuttgart, 2011

4 Weber et al.: World Mining Data, Volume 25. Vienna 2010.



4 Gold

deposits are deposits of gold particles where the gold was enriched by flowing water

after weathering of primary rocks. They occur all over the world as they accompany

hard rock deposits and have been the easiest available source of gold since ancienttimes. Recent studies imply that gold placers can be economic at a grade of 0.1 g/m3 or

even lower depending on size and recovery. In primary deposits the gold particles re-

mained in the place where they originally formed (presummably by hydrothermal

processes). Such deposits have a greatly varying gold content and are related to al-

most all types of orogenic and volcanic processes all over the world. Conglomerate

deposits are deposits formed by lithification and/or hydrothermal overprint of former

placer deposits, where gold is distributed as fine particles. The most prominent con-

glomerate deposits are the Witwatersrand goldfields in South Africa, where a large

fraction of today’s worldwide gold pr oduction comes from.5, 6

Gold is also produced as a byproduct of copper and silver smelting. Sea water contains

gold in concentrations between 0.008 to 4 ppb, but this source is not economical yet.4

The gold reserves, i.e. the known and economically exploitable deposits (assuming

current prices and technology) are estimated to be 51,000 tons, which is approximately

20 times the world production in 2008. The largest reserves are found in Australia

(14%), South Africa (12%) and Russia (10%).7 However, China was the leading gold

producer in 2008, with a share of 12% of the worldwide production, followed by the

USA (10%), Australia and South Africa (both 9%).8

Reserves in t, 2010(USGS 2011)

Production in t, 2008(WMD 2010)

Imports to EU in t, 2009(Eurostat)

USA 3.000 5,9% 233 10,2% 0,1 0,1%

Australia 7.300 14,4% 214 9,4% 0,0 0,0%

Brazil 2.400 4,7% 55 2,4% 1,9 1,3%

Canada 990 2,0% 95 4,2% 0,0 0,0%

Chile 3.400 6,7% 39 1,7% 34,0 23,4%

China 1.900 3,7% 275 12,1% 1,6 1,1%Ghana 1.400 2,8% 79 3,5% 2,4 1,7%

Indonesia 3.000 5,9% 64 2,8% 0,0 0,0%

5 Ullmann’s Encyclopedia of Chemical Technology: Gold, Gold Alloys and Gold Compounds .Wiley-VCH Verlag, Weinheim, 2005.

6 EUROMINES (2011).

7 M. W. George. US Geological Survey Mineral Commodity Summaries 2011: Gold.




Gold 5

Mexico 1.400 2,8% 40 1,8% 4,2 2,9%Papua NewGuinea 1.200 2,4% 67 2,9% 2,7 1,9%

Peru 2.000 3,9% 180 7,9% 8,2 5,7%Russia 5.000 9,9% 184 8,1% 0,7 0,5%

South Africa 6.000 11,8% 213 9,3% 37,1 25,6%

Uzbekistan 1.700 3,4% 73 3,2% 0,2 0,1%

Burkina Faso NA NA 2 0,1% 2,5 1,7%

Switzerland NA NA 0 0,0% 27,9 19,2%

Kazakhstan NA NA 21 0,9% 2,7 1,9%

Norway NA NA 0 0,0% 2,3 1,6%

Singapore NA NA 0 0,0% 2,5 1,7%

Suriname NA NA 10 0,4% 7,5 5,2%

other coun-tries 10.000 19,7% 437 19,2% 6,5 4,5%

Total 50.690 100,0% 2.281 100,0% 145,0

There is a large number of import sources for the EU, and the source countries vary

strongly from year to year. Between 2004 and 2009, the EU imported gold from more

than 40 different countries. The most important source among the gold producing coun-

tries was South Africa, which supplied constantly high shares of the EU’s gold imports

(between 20% and 50%) in the last years. Smaller, but nearly constant quantities came

from Suriname (around 5%). Chile and Russia are examples for countries with ex-

tremely changing trading rates. Chile accounted for 23% of the imports in 2009, butexported no gold at all to the EU in the three previous years. Russia, on the other hand,

accounted for up to 18% of imports in 2005, but did not export gold to the EU in 2009.

Switzerland plays an important role as a reseller for gold. Although Switzerland has no

primary gold production, the EU imports large quantities (e. g. 47% in 2008) from this

country.

Smaller quantities are also produced within the EU. Most of the metal is produced in

Sweden, Bulgaria and Finland (together accounting for more than 90% of EU produc-

tion). The EU accounts for well under 1% of the world production and imports more

than > 90% or the gold it requires. 9, 10


10 British Geological Survey: European Mineral Statistics 2005-09. Keyworth, Nottingham,2011.



6 Gold

1.3 Economic Importance

Gold has both monetary and non-monetary uses. The distribution according to the

World Gold Council is approx. 62% industrial use with the remainder being used for

investment (excluding central banks).11 As an investment tool, gold is stored in the

form of coins and bars. National banks of many industrialized countries possess large

stores of gold, although gold is no longer (since 1978) an official part of national mone-

tary reserves.12 The demand for gold as an investment tool increased with the rising

price and the slowdown of the worldwide economy in the past years.13

62% 38%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Gold uses 2010

Industrial 62%

Investment excluding central

banks38%

In the context of this evaluation of criticality, only the industrial/manufacturing use is of

interest. Thus, the relevant end-use structure of gold is as follows:

11 World Gold Council: Gold Demand Trends, Second Quarter 2011. London, 2011.





Gold 7

Jewelry: The majority of manufacturing gold consumption (83%) is used for je-

welry.14 Because of its softness, gold is almost always alloyed with silver, cop-

per or platinum group metals. Cheaper jewelry is often gilded using electro-

chemical processes.15 Gold consumption in this sector dropped in the last

years due to rising prices.16

Electronics: this use represents 12% of gold consumption, together with elec-

trical engineering.17 Its high resistance against oxidation and corrosion and its

good conductivity are important properties for gold as a contact material in

many electronic applications. Gold is used e. g. in diodes, transistors, integrated

circuits and semi-conductor memories as well as in capacitors and resistors.

Due to its high cost, gold is used in very thin layers in highly reliable compo-

nents where other materials can cause problems by current-induced ion migra-

tion.18

14 World Gold Council (2009)







8 Gold

Electrical engineering: High oxidation resistance, low ohmic resistance and low

micro migration of gold and gold alloys are important properties for low voltage

contacts in communication and information transfer applications. Other alloysare used as resistor material in corrosive environments, in potentiometers or in

thermometers.19

Dental materials: Gold alloys are used in dentistry where they are valued for

their resistance to normal conditions in the mouth, their homogenous structure

and their workability.20 Nevertheless, gold consumption in this sector is slowly

declining due to the development of new ceramics and cheaper base metal al-

loys.21

Coatings: Gold coatings are used on a variety of substrates, such as base met-als, glass, ceramics or plastic to prevent corrosion and gas diffusion or for de-

corative purposes.22 Moreover, gold coatings are used in sunglasses.23

Gold leafs: Because of its ductility, gold can be formed to extremely thin gold

leafs of a thickness of 0.2 μm. They are used for decorative purposes and for

visual effects in beverages and food.24

The use of gold in homogeneous and heterogeneous catalysis is currently under study

but does not constitute a significant fraction of demand.25,26

1.4 Resource Efficiency: Recycling & Substitution

As gold is a valuable raw material, it is recycled from nearly all the mentioned products.

The technically easiest source for recycled gold is to remelt old jewelry and dental gold.

Moreover, gold is recycled from old and new electronic scrap as well as from metal


20 M. W. George. US Geological Survey Mineral Commodity Summaries 2011: Gold. 21 Ullmann’s Encyclopedia of Chemical Technology: Gold, Gold Alloys and Gold Compounds .

Wiley-VCH Verlag, Weinheim, 2005








Gold 9

coatings.27 About one third of the current demand is covered by recycled gold (old and

new scrap).28 The largest fraction of recycled gold comes from jewelry and coins,

which represent the largest use of gold (see Section 1.3) and have a 90-100% end-of-life recycling rate. The end-of-life recycling rate is also high in industrial applications. All

other uses have recycling rates below 20% and represent a small portion of gold use.29

Besides recycling, the reduction of used quantities without losing performance is an

important factor for economical and sustainable use of the precious metal. Especially in

electrical and electronic applications, but also in jewelry, thinner coatings are used to

reduce costs without losing the favorable properties of gold.30

Substituting gold in its main applications is rather difficult for different reasons. In jewe-

lry, gold can be replaced by other precious metals or by cheaper alloys since it has notechnical function. However, considering its status as a symbol of luxury, it can be ex-

pected that a large scale replacement of gold in this sector would be difficult regarding

consumer acceptance. A substitution in electronic and electrical applications is often

not possible or difficult because of the unique surface properties mentioned above.

Palladium and platinum may come into consideration31, but were not considered eco-

nomical in the past as the prices for these metals were higher than for gold. This has

changed recently due to the large increase in gold price and may lead to substitution in

the electronics sector. Silver is often not a good substitute because of ion migration

leading to a reduced reliability of the device. In many smaller industrial applicationsgold is also indispensable. Only as a dental material, gold is increasingly being re-

placed by ceramics and cheaper base metal alloys.32

27 http://www.edelmetall-recycling.de/goldrecycling/


29 UNEP (2011) Recycling Rates of Metals – A Status Report, A Report of the Working Groupon the Global Metal Flows to the International Resource Panel. Graedel, T. E.; Allwood, J.;Bilrat, J.-P.; Reck, B. K.; Sibley, S. F.; Sonnemann, G.; Buchert, M.; Hagelüken, C.






10 Gold

1.5 Specific issues

The gold price has increased rapidly in recent years, from a level around 300 US$/oz at

the turn of the century to around 1500 US$/oz in mid 2011.33 This price increase has

reasons beyond the use of gold in manufacturing; i.e. there is a considerable influence

from the use of gold as an investment tool. An increasing relative importance of gold

use (on a tonnage basis) in investment is a particularly important aspect of global gold

demand, as shown below: 34

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

G l o b a l g o l d d e m a n d ,

t o n n e s

Investment

Technology

Jewellry

Unfortunately, this aspect of gold demand cannot be considered quantitatively within

the criticality framework used here, which measures the economic importance of a raw

material based on its manufacturing use. Concerning the manufacturing use of gold,

the declining demand for gold in jewellry and increasing demand for electronics have

led to an overall increase of the importance of technology demand, as shown below: 35

33 The quoted price is London PM fix. World Gold Council (2011):

http://www.gold.org/investment/statistics/prices/





Gold 11

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

G l o b a l g o l d d e

m a n d

Technology

Jewellry

The primary production of gold, which accounts for more than 70% of world supply, is

tied to the use of cyanide to extract gold from ores of different grades. This is currently

the preferred method worldwide, both for economical and environmental reasons.36 However, gold producers are directed to keep cyanide levels e. g. in tailings ponds to

the lowest possible level in view of its well-documented harmful and toxic effects.37 In

the wake of a large accidental spill of cyanide-containing tailings in northern Romania

in January 2000, the United Nations Environmental Programme and the former Interna-

tional Council of Metals and the Environment called a symposium with the goal of

creating a unified international management protocol for the use of cyanide in the gold

mining industry. Following this, a set of Principles and Standards of Practice were pub-

lished in 2003, and 14 companies became the first signatories to the “International

Cyanide Management Code for the Manufacture, Transport and Use of Cyanide in theProduction of Gold” in 2005.38,39 As of September 2011, 31 companies are signatories

to the “Cyanide Code”.40

36 COM(2000) 664 final: Safe operation of mining activities: a follow-up to recent mining acci-dents (Communication from the Commission). Brussels, 23 October 2000.

37 Directive 2006/21/EC of the European Parliament and of the Council on the managementof waste from extractive industries and amending Directive 2004/35/EC, 15 March 2006.

38 Mudder (2008): Doing the right thing. International Mining, September 2008, p.134.

39 Garcia (2009): An introduction to the International Cyanide Code. XXVIII Convención Mine-ra Internacional, AIMMGM AC, Veracruz/MX, 28-31 October 2009.

40 International Cyanide Management Institute (2011): Code Signatories.http://www.cyanidecode.org/signatorycompanies.php. Washington, DC/USA. Accessed 28September 2011 (Last updated: September 19, 2011).

http://www.cyanidecode.org/signatorycompanies.php





12 Gold

Use Share Megasector Subst.

Jewelry 83% Other Final Consumer

Goods

0,7

Electronics & Electrical engineering 12% Electronics & ICT 1,0

Dental materials 2% Pharmaceuticals 0,3

Other industrial (Coatings, Gold leaf) 3% Metals 1,0

Substitutability index 0,74

Recycling rate (recycled content from old scrap) 25%

Import Dependence 91%

Results

Economic Importance 4,2

Supply Risk 0,2

Environmental Country Risk 0,1

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

10.000

1 9 8 5

1 9 8 6

1 9 8 7

1 9 8 8

1 9 8 9

1 9 9 0

1 9 9 1

1 9 9 2

1 9 9 3

1 9 9 4

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

HHI-Development

Source: Weber et al.: World Mining Data, Volumes 25 and 26. Vienna 2010 and 2011

for 1994-2009. Previous data of similar quality courtesy of L. Weber / bmwfj.

Gold Profile Final

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