The gold industry will need to bring on line eight-million ounces in the next five years to maintain 2019 levels of production, consultancy firm Wood Mackenzie (Woodmac) said on Wednesday, warning that the gold supply summit was in sight.

This equated to about 44 projects and based on the average project capital intensity of $4 610/oz, it would require an investment of about $37-billion in greenfield and restart projects by 2025.

Prior to the coronavirus outbreak, peak gold supply was becoming a real possibility. Now, with exploration programmes paused or cancelled and project disruptions hampering production, the summit is in sight, Woodmac noted.

“If all our probable projects were to come on line before 2025, this would almost meet the requirement to maintain 2019 production levels. The likelihood, however, is that we see some degree of slippage among a number of these assets due to permitting delays, prioritisation of other capital projects and changes in scope,” Woodmac head of gold research, Rory Townsend, said in a statement.

He added that social and governance considerations were dissuading the exploration of certain jurisdictions and the progression of identified deposits, citing electricity-constrained South Africa as an example.

Woodmac has identified around 260 projects that gold miners and investors could turn to.

“Given the size of the resource that is available to be developed, talk of peak gold supply may seem a little surprising. Crucially, however, it is not the lack of gold that is the constraint. Gold miners and investors are carefully searching for the deposit that is ‘just right’ in order to allocate capital,” said Townsend.

At a time of heightened economic uncertainty, the largest gold projects might struggle to secure financing until there was more clarity.

Miners wishing to benefit from this period of elevated prices might have to consider joint ventures and phased approaches to commission these larger deposits or risk missing the window of opportunity.

If miners did not capitalise on gold’s heightened allure through the bull cycle, Woodmac said these projects would either continue to trudge toward production for years to come, or be rescoped.

Meanwhile, smaller projects are proving an exciting proposition, the consultancy said, noting that they had the advantage of a lower initial capital outlay and could typically be brought on line with speed and efficiency.

The drawback to these projects, however, was the fact that they would struggle to nudge the needle for a material gold producer.