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After years of focusing heavily on cost reduction, asset and portfolio optimization and deleveraging, gold mining companies are in a position to start thinking about growth again, according to BNamericas' latest Mining Intelligence Series report Gold Mining in Latin America: Time to Return to Growth?
World gold production fell for first time in eight years in 2016 and Latin America contributed to the decline despite the startup of several new mines. The drop was a natural consequence of the lack of capital investment in recent years, a reaction to lower gold prices.
But while many miners have positioned themselves for growth and indeed there is a widespread understanding that investment is needed to grow, it is unlikely that an equally widespread return to spending will take place this year.
The five biggest gold miners in Latin America - Goldcorp, Barrick Gold, Yamana Gold, Fresnillo and AngloGold Ashanti - are set to report an aggregate production decline at their operations in the region of 8%, or more than 500,000oz in 2017, according to figures compiled by BNamericas.
And while the industry has come a long way from the plummeting prices, project deferrals and impairments of 2013-14, the mentality regarding how to create value has changed and the price outlook is still not particularly exuberant. Major investment decisions are not expected in the near term, and indeed the mega projects that looked so attractive when prices were at their peak will perhaps never be developed as originally envisioned.
Much of the investment that will take place in the short term is aimed at maintaining production levels, such as at projects by Newmont Mining or Barrick Gold in Peru. Mega projects continue to be resized, a prime example being Barrick's Pascua Lama.
With no major gold startups expected in Latin America in 2017, it will be worth watching the progress of the next generation of projects set to expand the region's production profile in the medium term, including Fruta del Norte, Buriticá, Cerro Moro and Volta Grande.
For more analysis of Latin America's gold mining sector, read the full report here
Pictured: Barrick's Lagunas Norte mine in Peru