With demand for gold currently off the charts, South Africa has a huge opportunity to recover gold from its surfeit of gold mine dump material at relatively high speed, a mining event in the Golden City has heard.

With gold supply only increasing 1.5% to 2% a year worldwide and being constrained, South Africa has the equivalent of half a dozen gold mines in the form of tailings available for turning to positive account.

“I invite you to go and try to buy some gold Krugerrands. Three months delivery, if you’re lucky. There’s no gold because the central banks are sucking it all up,” Shumba Energy cofounder, chairperson and director Alan Clegg told the Coal & Energy Transition Day chaired by mining luminary Bernard Swanepoel.

“In South Africa, we’ve got 800-million tons of gold tailings that contain approximately 30-million ounces of recoverable gold, equivalent to six Tier 1 gold mines,” Clegg highlighted during his presentation, covered by Engineering News & Mining Weekly.

Clegg put the worldwide gold tailings tonnage at 16-billion tons with a recovery potential of 450-million ounces of gold, which also presents an opportunity for South Africa’s well-versed tailings retreatment companies.

As South African gold mining has also taken place hand in glove with uranium mined as a by-product, simultaneous recovery of uranium also needs consideration.

“Uranium is coming to the fore again. Very few people realise that until the mid-eighties, South Africa was the biggest supplier in the world of uranium and today we have about 120-million to 150-million pounds of uranium in tailings. If the gold mines restart their uranium plants, they can produce uranium as a by-product, so there’s still a strong position for South Africa to re-enter the uranium market.

On an energy return on an energy-invested basis, it is 90% more energy efficient and 90% less capital intensive to process tailings than it is to start a primary mine, not to mention the shorter permitting cycle.

“If you consider technological advancements in process metallurgy today, tailings are a massive store of value,” said Clegg, who calculated that it takes 16 to 20 years to find and build a new mine today in most jurisdictions.

Today’s Gold Market

The bulk of gold production is in China, which does not export its gold, and other countries are starting to do the same to underwrite their economic futures.

Clegg described the bull market in gold as being decades in the making, extending back to 1971 when former US President Richard Nixon removed the gold standard, a monetary system where a country’s paper money had a value directly linked to gold. Nixon did so to address US inflation and to discourage foreign governments from redeeming their dollars for gold.

The Nixon shock led to the end of the Bretton Woods Agreement and the convertibility of US dollars into gold. It is seen as the catalyst for the stagflation of the 1970s as the US dollar devalued.

Owing in large part to the Nixon shock, central banks now have a greater degree of control over their own money, making it easier to manage variables such as interest rates and overall money supply.

“Look at the top ten billionaires. They’re buying gold,” said Clegg.