TOKYO -- World gold production may peak this year, as plummeting prices for the precious metal make it difficult for companies to develop new mines.
According to a report by the World Gold Council, the industry's market development organization, production rose 2% to 3,114 tons last year from the previous year, setting a new record for the sixth straight year.
However, the report also said gold production will reach its highest point in 2015 and then slow. Given the WGC was established by mining companies, the report could be seen as a message from gold producers that they will reduce output.
In March, U.S. investment bank Goldman Sachs forecast world gold production to peak this year, with reserves to be depleted in 20 years. In its annual gold survey published earlier this month, Thomson Reuters said output will remain flat this year, due in part to scaled back development plans.
About 177,000 tons of gold have been mined throughout history -- enough to fill three and a half Olympic-size swimming pools. However, 20 years after the peak in gold discoveries in the mid-1990s, gold production is expected to decline.
Falling gold prices are also holding back companies from developing new mines. After hitting a record $1923.7 per troy ounce in September 2011, gold futures prices are now at about $1,200 in New York.
When gold prices were high, major mining companies grew through acquisitions. However, as the boom fades, their profits are eroded by impairment charges on mines. The world's largest gold mining company, Canada's Barrick Gold which produces about 200 tons of gold annually, posted a net loss of $2.9 billion in fiscal 2014 for the third consecutive year.
The cost to produce gold at major mines around the world is around $1,000-$1,200 per troy ounce, nearly the same as current gold prices. The tough business environment has meant "there have been no new development plans during the past three years," said market analyst Itsuo Toshima.
Meanwhile China's mining companies are likely to take advantage of the low production costs and increase their gold output. Chinese mining companies, which are about a tenth of the size of big companies such as Barrick Gold, can produce gold for about $700-$800 per troy ounce. Miners usually need to dig about 500-1,000 meters underground to strike gold, but in China it can be struck as shallow as 100 meters.