Gold & Silver Ore Mining in The US Industry Report

Gold & Silver Ore Mining in the USFebruary 2015 1
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Fools gold: Lower prices have discouraged

production, limiting industry growth
IBISWorld Industry Report 21222
Gold & Silver Ore

Mining in the US
February 2015
Leah Goddard
2 About this Industry
16 International Trade
31 Regulation & Policy
Industry Definition
18 Business Locations
32 Industry Assistance
Main Activities
Similar Industries
20 Competitive Landscape
33 Key Statistics
Additional Resources
20 Market Share Concentration
33 Industry Data
20 Key Success Factors
33 Annual Change
20 Cost Structure Benchmarks
33 Key Ratios
4 Industry at a Glance
22 Basis of Competition
5 Industry Performance
23 Barriers to Entry
Executive Summary
23 Industry Globalization
Key External Drivers
Current Performance
25 Major Companies
Industry Outlook
25 Barrick Gold Corporation
11 Industry Life Cycle
34 Jargon & Glossary
26 Newmont Mining Corporation

27 Kinross Gold Corporation
13 Products & Markets

13 Supply Chain
29 Operating Conditions
13 Products & Services
29 Capital Intensity
14 Demand Determinants
30 Technology & Systems
15 Major Markets
30 Revenue Volatility
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About this Industry

Industry Definition
Operators in this industry mine gold

and silver-bearing ores. Mining
activities include the development of
mine sites and the on-site processing of
ore into a concentrate or bullion.
Companies typically retain ownership
Main Activities
The primary activities of this industry are
of the semi-processed gold or silver

products and pay for further refining on
a toll-charge basis. The refining process
is included as part of the Copper, Zinc
and Lead Refining industry (IBISWorld
report 33141).
Gold ore mining

Silver ore mining
Gold ore beneficiation
Silver ore beneficiation
Production of gold and silver bullion, ore and concentrates
The major products and services in this industry are

Gold bullion
Gold dore
Gold ore and concentrates
Silver bullion
Silver dore
Silver ore and concentrates
Similar Industries
21221 Iron Ore Mining in the US

Operators in this industry mine iron ore.
21223 Copper, Nickel, Lead & Zinc Mining in the US
Operators in this industry mine base metals.
21229 Molybdenum & Metal Ore Mining in the US
Operators in this industry mine a range of metallic minerals, including molybdenum.
33141 Copper, Zinc & Lead Refining in the US
Operators in this industry smelt and refine base metals.
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About this Industry
Additional Resources
For additional information on this industry

www.nma.org
National Mining Association
minerals.usgs.gov
The US Geological Survey Mineral Resources Program
www.usitc.gov
US International Trade Commission
www.sec.gov
US Securities and Exchange Commission
IBISWorld
writes over 700 US

industry reports, which are updated
up to four times a year. To see all
reports, go towww.ibisworld.com
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Gold & Silver Ore Mining in the US February 2015
Industry at a Glance
Gold & Silver Ore Mining in 2015
Key Statistics
Snapshot
Revenue
Annual Growth 10-15
Annual Growth 15-20
Profit
Exports
Businesses
$10.2bn -0.5%
2.4%
$224.2m 177
$3.3bn
World price of gold
Revenue vs. employment growth
Market Share
Barrick Gold
Corporation
30.1%
60
2000
% change
Newmont Mining
Corporation
21.7%
$ per troy ounce
40
20
0
Kinross Gold
Corporation
7.5%
20
Year 07
09
Revenue
11
13
15
17
19
1500
1000
500
Year 06
21
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 25
Products and services segmentation (2015)
4.8%
World price of gold
Silver bullion
1.2%
Gold ore and

concentrates
1.4%
Investor uncertainty
Silver dore
Industrial
production index
1.3%
17.3%
Silver ore and

concentrates
Gold dore
World price of silver

Regulation for the
Mining sector
74.0%
Gold bullion
p. 5
SOURCE:
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SOURCE:
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Industry Structure
Life Cycle Stage
Mature
Regulation Level
Heavy
Revenue Volatility
High
Technology Change
Capital Intensity
High
Barriers to Entry
High
Industry Assistance
Low
Industry Globalization
Low
Concentration Level
Medium
Competition Level
High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 33
Medium
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Industry Performance
Executive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage
Executive
Summary
While a steep drop in mined silver ore

caused domestic production of industry
metals to sharply decline in 2011, the
Gold and Silver Ore Mining industry still
recorded double-digit revenue growth for
the year. This contradiction reflects the
influence on industry performance
exerted by prices for gold and silver,
which are traded on world financial
markets. For examples, investors seeking
safe assets following the financial crisis
drove growth in global demand for gold
and silver in 2011. However, prices for
these metals thereafter declined along

with investor uncertainty, leading
revenue to decrease in 2013 and 2014.
Industry revenue is projected to
marginally rise by 0.9% in 2015 as
domestic production and world prices of
gold and silver remain constrained. As a
result of this volatility, industry revenue
is expected to modestly decline at an
annualized rate of 0.5% to $10.2 billion
over the five years to 2015.
As the global economy stabilizes,
investors will seek higher returns from
equities and bonds at the expense of gold
and silver, causing investment demand

to slow in 2015. Meanwhile, demand
from manufacturers of electrical
equipment, electronic products and
jewelry, which comprise the industrys
primary markets, has stagnated or even
declined over the past five years as a
result of high import penetration and
input costs. In particular, jewelry
manufacturers share of industry revenue
has decreased dramatically over the past
five years. In 2015, demand from this
market is anticipated to remain weak as
a stronger dollar contributes to growth in
imported jewelry.
Gold production dropped consistently
in the decade leading up to the recession
before briefly rising in 2010 and 2011
due to a surge in demand and prices. US
gold production has since declined,
hindered by lower prices. However, the
largest industry participants invested in
mine expansion projects to take
advantage of high gold and silver prices
following the financial crisis; increased
output in coming years will thus
suppress growth in prices. Furthermore,
investors diversification into higherreturn assets will alleviate upward
pressure on gold and silver prices.
Consequently, industry revenue is
projected to grow at a fairly slow
annualized rate of 2.4% over the next
five years to reach $11.4 billion in 2020.
World price of gold

As the industrys highest-grossing
product, increases in the price of gold
drive revenue growth, while declines in
the price of gold hurt revenue prospects.
The world price of gold follows
fluctuations in the global supply and
demand for the metal. After two years of
sharp drops, the world price of gold is
expected to rise marginally over 2015,
although ongoing volatility represents a
potential threat to the industry.
Gold has long been regarded as a safe
and secure investment. When economic
uncertainty rises and investors seek to
transfer funds from riskier assets into
safer assets, demand for gold increases.
While investors flight to gold following
the financial crisis has subsided in
recent years, investor uncertainty is
expected to increase in 2015,
representing a potential opportunity for
the industry.
As
the economy stabilizes, investors will seek

higher returns from equities and bonds at the
expense of gold and silver
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Industrial production index

Gold and silver are primarily used in
electrical and jewelry applications. The
industrial production index provides a
measure of manufacturing activity,
including in the industrys major
markets. As industrial production
increases, demand for gold and silver
inputs rises, driving up the prices of
these commodities and boosting
industry revenue. The industrial
production index is expected to increase
in 2015.
World price of silver
As the industrys other primary
product, the world price of silver also
impacts industry revenue. The world
price of silver reflects trends in the

international supply and industrial
demand for the metal. Industrial users
account for the bulk of silver usage,
but investment demand is a growing
revenue source. Following years of
steep declines, the world price of silver
is expected to increase in 2015.
Regulation for the Mining sector
Industry performance is sensitive to
changes in government regulation of
mining. In particular, environmental
concerns may halt a mining project or
raise production costs, as operators
struggle to address such concerns.
Regulation for the mining sector is
expected to remain steady in 2015.
World price of gold

2000
35
30
1500
25
$ per troy ounce

continued
20
1000
15
500
Year 06
08
10
12
14
16
18
20
10
Year 06
08
10
12
14
16
18
20
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Current
Performance
The Gold and Silver Ore Mining

industry was one of the few industries
that benefited from the financial crisis.
Following years of strong growth,
industry revenue continued to rise
through 2012 as gold and silver prices
surged. The rapid rise in the price of
gold, which accounts for more than
90.0% of industry revenue, helped
propel sales and profit in the early part
of the period. In fact, strong demand
from domestic and international
investors drove gold prices to an
all-time high of $1,895.00 per troy
ounce in September 2011. An
undersupply of gold due to decreased
industry production between 2001 and
2009 further contributed to the spike in
prices. In 2010 and 2011, however,
mined gold output increased as
companies attempted to take advantage
of high prices.
Investment demand
Gold sales account for more than 90.0%

of industry revenue, making the price of
gold a significant driver for the industrys
overall performance. The price of gold
soared 28.1% in 2011, followed by
relatively low growth of 6.3% in 2012.
The global economic downturn and
resulting shift toward gold investment,
which is widely regarded as a safe haven
during periods of financial upheaval, are
largely responsible for the skyrocketing
prices in the early part of the period.
Moreover, geopolitical unrest in the
Middle East and North Africa, concerns
about spikes in crude oil and commodity
prices and economic uncertainty in US
and European markets also fueled much
of the growth of gold prices in 2011 and
2012. Since 2013, however, investors
have sought higher returns from equities
and bonds at the expense of gold and
silver, as uncertainty regarding the Euro
debt crises subsided and developed
economies recovered from the effects of
As the economy improved and

investors started to diversify investments
outside of gold and silver, prices
deteriorated, reducing industry revenue
in 2013 and 2014. Moreover, domestic
manufacturers of electrical equipment,
electronic products and jewelry, which
comprise the primary markets for gold
and silver, have struggled with high
import penetration and input costs over
the past five years. Consequently,
weakened demand from these markets
accelerated the contraction in industry
revenue. As these trends continue into
2015, reduced demand will suppress
prices for gold and silver and limit
industry revenue growth to 0.9% over the
year. As a result of tremendous
fluctuations, industry revenue is
estimated to modestly decline at an
annualized rate of 0.5% to $10.2 billion
over the five years to 2015.
Weakened
demand from
downstream markets
accelerated the contraction
in industry revenue
the recession. Consequently, with
deteriorating gold and silver prices,
industry revenue declined as well.
Silver is more closely linked to the
industrial sector and represents less
than 10.0% of industry revenue. Over
the period, industrial demand for silver
has modestly declined due to weak
economic activity, while investment
demand has increased. In fact, since
2010, growing investment demand
inflated gold and silver prices enough for
jewelry demand to drop, causing
domestic jewelry manufacturers share
of industry revenue to decline over the
period. Investment in gold and silver
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Investment demand
continued
exchange-traded funds (ETFs) have

become increasingly common because
most consumers do not have the
resources to physically purchase and
store gold and silver, which can be costly
due to insurance. Each share in an ETF
Decreasing
production
While gold and silver prices spiked in the

early part of the period, such growth has
failed to translate into a substantial
increase in output over the five years to
2015, due to a lack of prior exploration
and development activity. While
production increased in 2010 for the first
time in more than a decade, mined gold
output has declined since 2012 while
mined silver output decreased in 2011
and 2012 before modestly rising in 2013,
the latest year of available data. The
current downward trend in the price of
commodities has been discouraging
miners from boosting production
volumes. Consequently, mined gold and
silver output remains below 2010
production volumes.
Furthermore, low gold prices in the
late 1990s and early 2000s reduced
interest in domestic gold exploration and
the development of new mines.
Consequently, there have been
insufficient new projects to replace
depleted mine reserves. Nevertheless,
all-time highs for gold and silver prices
sparked renewed interest in new mining
operations, such as the extension of the
Cortez Hills mine in Nevada, which was
completed in 2010. These newly
developed mining operations helped
increase gold output in 2010 and 2011,
boosting exports. However, decreased
production, coupled with deteriorating
prices, has led international trade
represents one-tenth of an ounce.

However, as investment demand has
started to subside in recent years,
demand from jewelry manufacturing has
rebounded slightly because inputs have
become more affordable.
Price
increases have failed

to translate into substantial
growth in output
volumes to contract in recent years. Over
the five years 2015, exports are expected
to decline at an annualized rate of 4.1% to
$224.2 million. Meanwhile, imports are
projected to drop even more rapidly at an
average annual rate of 22.3% to $19.5
million. However, most of the trade in
precious metals occurs in the
downstream Copper, Zinc and Lead
Refining industry (IBISWorld report
33141). For this reason, exports typically
account for less than 4.0% of industry
revenue, while imports satisfy less than
1.0% of domestic demand, although
year-to-year values shift wildly.
As a result of the spike in gold and
silver prices in the early part of the
period, the number of industry
enterprises has increased as more
companies tried to cash in on the high
profit of mining gold and silver.
Therefore, the number of enterprises is
estimated to rise at an annualized rate of
2.0% to 177 companies, despite industry
exits since 2013 as commodity prices
dropped. Similarly, employment in the
industry is expected to increase 2.2% per
year on average to 12,692 workers over
the five years to 2015.
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Steady demand
Demand for gold, the Gold and Silver

Ore Mining industrys main product,
typically grows strongly in times of
economic uncertainty, as well as during
severe crises. Over the five years to
2020, uncertainty regarding the slow
economic recovery in Europe and the
United States as well as the slowdown in
China are likely to persist, leading
investors to maintain gold and silver
assets as a method of portfolio
diversification to minimize the risk from
another downturn. Additionally, revenue
and profit for the industry will continue
to heavily depend on the output and
price of gold, as it generates more than
90.0% of industry revenue. Gold and
silver prices are anticipated to rise
modestly over the next five years. As
such, industry revenue is projected to

increase at an annualized rate of 2.4% to
reach $11.4 billion.
The world economy is expected to

continue stabilizing and overcoming
lingering recessionary effects. In line with
this recovery, the Federal Reserve is
expected to raise interest rates over the
next five years to relieve inflationary
pressures, resulting in higher returns
from fixed-income assets such as bonds.
However, rising interest rates also
represent a destabilization of the existing
investing environment, generating
greater uncertainty. Consequently, many
investors will continue to hold gold and
silver ETFs in their portfolio to mitigate
the risk from another economic
downturn. Nevertheless, investors will
still seek assets with higher returns, such
as bonds, at the expense of gold and
silver, limiting investment demand.
Consequently, gold and silver prices are
anticipated to grow far less rapidly than
during and immediately after the
financial crisis.
Slowing growth in input costs will

boost demand from downstream
manufacturers of electrical equipment
and electronic products. However, the
US Jewelry Manufacturing industry
(IBISWorld report 33991) will
continue to structurally decline as
import penetration increases and
production shifts offshore. While this
will dampen revenue prospects
domestically, the value of industry
exports is projected to grow at an
average annual rate of 4.2% to total
$275.1 million over the five years to
2020, largely as a result of rising
manufacturing activity abroad. In
comparison, imports are anticipated to
decline in the early part of the period
as domestic production satisfies
demand. Over the next five years,
imports are projected to rise
marginally at an annualized rate of
0.5% to total $20.0 million.
Industry revenue
40
30
% change
Industry
Outlook
20
10
0
10
20
Year 07
09
11
13
15
17
19
21
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Heightened
competition
Total US gold production has declined in

recent years as weaker prices encouraged
producers to scale back production and
cut costs to maintain profit margins.
While new gold-mining projects are
anticipated to begin over the next few
years, they are not expected to
significantly offset the effect of mine
closures. Furthermore, depleting
resources nationwide will keep production
low and continuously drive industry
operators to invest internationally.
In addition, more aggressive gold
mining is anticipated in Mexico over the
next five years. This trend poses a threat
to the US industry due to the lower labor
and regulatory costs enjoyed by gold and
silver mining companies in Mexico, which
can pass on lower prices to customers.
Heightened competition will boost merger
and acquisition activity as companies
Depleting
resources will
keep production low and
drive industry operators to
invest abroad
attempt to expand operations to benefit
from economies of scale. Overall profit is
projected to rise slightly due to the stricter
implementation of cost-control measures.
Meanwhile, the total number of industry
participants is expected to grow
marginally at an average annual rate of
0.3% to reach 180 companies over the
next five years. Similarly, industry
employment is anticipated to increase at
an annualized rate of 1.3% to 13,521
workers as the growing size of mines
drives up demand for labor.
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Rising prices drive revenue growth
Life Cycle Stage
The volume of production is stagnating

due to reserve depletion
% Growth in share of economy
New technologies that boost output are few
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
High growth in economic

importance; weaker companies
close down; developed
technology and markets
15
Key Features of a Mature Industry

Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
10
Iron Ore Mining
Quantity Growth
Many new companies;

minor growth in economic
importance; substantial
technology change
Industrial Machinery & Equipment Wholesaling
Copper, Nickel,
Lead & Zinc
Mining
Inorganic Chemical Manufacturing
Gold & Silver Ore Mining
Jewelry Manufacturing
Decline
-5
Shrinking economic
importance
-10
-10
-5
10
15
20
% Growth in number of establishments

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Industry Life Cycle

This
industry
is M
ature
The Gold and Silver Ore Mining industry is

in the mature stage of its life cycle.
Domestic production of both metals is
decreasing. Although rapidly rising gold
and silver prices boosted profit margins in
2010, they have since declined. As such,
industry value added (IVA), a measure of
the industrys contribution to the economy,
is also estimated to decline at an
annualized rate of 0.4% over the 10 years to
2020. In comparison, US GDP is expected
to rise at an average annual rate of 2.5%
over the same period. However, IVA is
extremely volatile because high gold and
silver prices can inflate revenue and profit,
thereby masking factors that make this a
mature industry. Falling revenue and profit
during the five years to 2015 falsely indicate
the industrys decline, but slowing
enterprise growth and technological change
demonstrate its maturity.
Gold and silver are well-accepted

commodities and have established uses.
Downstream markets for these
products are also well defined and are
not expected to change much. Further,
the industry is limited by the amount of
gold and silver available for mining. In
fact, total industry production has
declined since 2010.
Gold mine production increased in
2010 and 2011 because the lower costs
associated with relatively new
production techniques, such as opencut mining and bacterial leaching, have
permitted previously uneconomic
deposits to be brought into production.
New technologies are currently being
sought to stabilize increasing costs
while meeting environmental
standards, but a major change in
direction remains unlikely.
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Products & Markets
Supply Chain | Products & Services | Demand Determinants

Major Markets | International Trade | Business Locations
Supply Chain
KEY BUYING INDUSTRIES

33141
Copper, Zinc & Lead Refining in the US

This industry purchases and refines gold bullion into products that meet world standards for
purity.
33991
Jewelry Manufacturing in the US

Jewelry manufacturers produce a range of decorative items from gold and silver.
52
Finance and Insurance in the US

Investment markets and firms that manage investment funds purchase and hold gold and
silver for use in commodities trading.
99
Consumers in the US
Consumers purchase gold and silver for decorative and investment purposes from retail
markets.
KEY SELLING INDUSTRIES
Products & Services
32518
Inorganic Chemical Manufacturing in the US

This industry provides chemicals used in the processing of gold and silver bearing ore.
42383
Industrial Machinery & Equipment Wholesaling in the US

This industry provides heavy earth moving equipment used in gold and silver mines.
42469
Chemical Wholesaling in the US

Firms in this industry supply chemicals used in operations.
42472
Gasoline & Petroleum Wholesaling in the US

Firms in this industry supply fuel.
Gold and silver are sold in three forms:

ore and concentrates, dore, and bullion.
Gold bullion represents the largest share
of industry revenue at 73.9%, and total
gold sales account for about 92.5% of
industry revenue. Silver products make
up an estimated 7.5% of industry
revenue despite exceeding gold fivefold
in output metric tons (the much higher
value of gold accounts for its significant
share of revenue).
Silver versus gold
The industrys two primary products,
gold and silver, have shifted slightly as
percentages of revenue over time, with
silvers share dropping in response to
golds quick rise in price. Currently,
silver accounts for about 7.5% of
revenue. In the past five years, silvers
share of revenue is expected to remain
stable as increased industrial demand
for the metal will be mitigated by
continued growth in the price of gold.

Bullion segments largely dominate the
changes in share of industry revenue
from both metals because bullion is the
primary metal form used in jewelry and
coin manufacturing, industrial markets
and investments.
Bullion, dore and concentrates
Bullion, dore and concentrates have
changed minimally as share of revenue in
the past five years. Major mining
companies must pay a toll charge to
refine unpurified forms of gold and silver
into bullion. Companies may also sell
extra concentrate and dore inventory to
refineries. Despite fluctuating precious
metals prices, refinement charges have
remained relatively stable; therefore,
some producers are more willing to pay
these charges. As a result, bullion sales
have gone up in relation to concentrates
and dore because demand for gold and
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Products & Markets
Products & Services

continued
Products and services segmentation (2015)
4.8%
Silver bullion
1.2%
Gold ore and

concentrates
17.3%
Gold dore
1.4%
Silver dore
1.3%
Silver ore and concentrates
74.0%
Gold bullion
Total $10.2bn
silver bullion from downstream
industries is greater than demand for
unpurified forms. This trend is minimal,
however, and has primarily been evident
in gold dore.
Demand
Determinants
Output
Mine output for both metals has
experienced long-term declines due to
resource depletion and decreased
infrastructure investment. However, US
gold production increased in 2010 and
2011. Before 2010, gold production in the
United States had declined consistently
since 2001. The recent jump in production
can be attributed to mine exploration and
development in response to rising metal

prices that have made mining activities
more profitable. However, total gold
production has declined from 231 metric
tons in 2010 to 227 metric tons in 2013
(latest data available).
Silver production has also declined in
the past five years, falling form 1,280
metric tons in 2010 to 1,090 in 2013
(latest data available). In spite of weak
output, rising prices for both metals in
the early part of the period bolstered
revenue, creating a rush for firms to
invest in further mine exploration and
development in hopes of reaping the
benefits of increased value.
The demand for gold, either in bar form or

fabricated into jewelry and coins, rests
strongly on its traditional role as a store of
wealth for individuals and nations.
Demand fluctuates in response to
consumer and investor confidence because
gold is an investment commodity. Periods
of economic decline and uncertainty
produce an increase in demand for gold;
this negatively correlated relationship is
evident through golds soaring prices and
revenue throughout the economic
turbulence of recent years.
Demand for gold and silver in jewelry

manufacturing moves largely in response
to consumer demand and disposable
incomes, domestically and abroad. The
price of these metals, however, is
determined in investment markets. As a
result, large increases in the price of
these metals can limit demand for gold
and silver from jewelry manufacturers
and consumers. For instance, during the
recession, many investors fled to gold
and silver as safe commodity
investments, causing their prices to
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Products & Markets
Demand
Determinants
continued
Major Markets
spike. This trend significantly hurt

jewelry manufacturers profit margins
because operators were unable to pass on
added costs to downstream industries
due to already low demand for jewelry.
Industrial, dental and electrical uses for
gold are minimal and demand fluctuations
within these segments tend to be equally
small. Therefore, these segments do not
have a significant effect on overall demand
for gold. In case of silver, industrial
applications have historically driven
demand, but demand for investment

purposes has seen a rise. Rising
investment demand for silver began in
2006 when a silver exchange-traded fund
was first established. Like gold, economic
uncertainty has driven some of the recent
investment demand for silver. This new
source of demand has helped raise the
price of the metal, but its connection to
the industrial sector is undeniably
stronger, as prices experienced a drop
during the 2009 recession.
Major market segmentation (2015)
9.0%
Other
19.5%
Coin production and

investment bullion
37.8%
Electrical equipment and

electronic product manufacturing
33.7%
Total $10.2bn
Jewelry manufacturing
Mined gold and silver ore is typically sold

to refineries in the Copper, Zinc and Lead
Refining industry (IBISWorld report
33141), which then sell refined bullion,
concentrates and dore to downstream
demand markets. Gold and silver use in
the United States is largely dominated by
electrical equipment and electronic
product manufacturers, which represent
about 37.8% of domestic demand;
jewelry manufacturers account for about
33.7%; coin production and investment
bullion represent about 19.5%; and the
remaining 9.0% of domestic demand
comes from multiple markets (e.g.
photography and dentistry). Because of
golds dominant share of total industry
revenue, its market segmentation closely

resembles that of the industry as a whole.
Silver, however, has its own unique
market segments.
Refinement of gold and silver for
jewelry has dropped in the past five years
because of diminished interest in jewelry
as a decorative item; however,
investment interest in gold and silver
through jewelry sales has offset the drop
in its revenue share. Gold and silver sales
for coin production and investment
bullion have grown greatly in recent
years in conjunction with investment
interest in both metals. Nevertheless, the
volume of these metals traded on
investment markets far exceeds the
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Products & Markets
physical volume sold, and even exceeds

the volume of gold mined. Because of
their excellent electrical and thermal
conducting properties, gold and silver are
used in conductive adhesives, fuses and
switches. Dentistrys share of revenue has
remained stable despite gold facing
International Trade
The United States is the worlds thirdlargest gold producer, behind China and
Australia. Recent declines in total US
production, coupled with increases in
Australian production in the past five
years, have caused it to drop from the
second-place rank it held in 2008. The
United States is also a major silver
producer, ranking ninth in total global
production. Traded gold and silver ores
are usually sent to refineries within the
copper, zinc and lead refining industry
(IBISWorld industry report 33141);
hence, most refined traded gold and
silver is not accounted for in the Gold and
Level & Trend

xports in the
E
industry are L ow

and D
ecreasing
Imports
in the
industry are L ow
and D
ecreasing
Exports To...
growing competition from plastics and

ceramics, which are replacing gold for
dentistry uses in developed economies.
Photography is also a major user of silver,
accounting for about 25.0% of its use,
though that share is expected to decline
with the proliferation of digital cameras.
Industry trade balance

600
400
$ million
Major Markets
continued
200
0
200
Year 07
Exports
09
11
13
Imports
15
17
19
21
Balance
Imports From...
7%
All others
3%
Belgium
1%
Peru
13%
6%
Dominican Republic
Mexico
52%
China
26%
93%
Japan
Canada
Year: 2015
Total $224.2m
SIZE OF CHARTS DOES NOT REPRESENT ACTUAL DATA
Total $19.5m
SOURCE: USITC
WWW.IBISWORLD.COM
Products & Markets
International Trade
continued
Silver Ore Mining industry. Exports

regularly account for less than 4.0% of
revenue, and imports regularly account
for less than 1.0% of domestic demand.
Exports
The value of exports within the Gold and
Silver Ore Mining industry has fallen in
the past five years. China, Japan, the
Dominican Republic and Belgium are the
main destinations for gold and silver
exports due to the number of firms
specializing in gold refining processes in
these countries. In fact, in 2010 China
became a major export destination due to
rigorous investment activity by its central
bank. Despite the rapid growth of exports
in 2011, total industry exports still make
up a small portion of industry revenue,
which is expected to remain the case in

the next five years.
Imports
The primary sources of gold and silver
imports to the United States are Canada
and Mexico because of major mining
activities located in these countries, in
addition to the North American Free
Trade Agreement and proximity to
manufacturing and investment markets
in the United States. Imports have swung
wildly in the past five years, more than
doubling in 2011 and dropping by more
than half in 2012 and 2013. Still, during
the past five years imports have not risen
above 1.0% of domestic demand. This
proportion is expected to remain similar
in the next five years.
WWW.IBISWORLD.COM
Products & Markets

Business Locations 2015
West
New
England
AK
10.7
Great
Lakes
WA
ND
MT
2.4
Rocky
Mountains
ID
OR
0.0
West NV
71.9
0.0
SD
1.0
WY
0.0
MN
0.0
1.0
Plains
CO
8.1
0.0
0.0
0.0
KY
2.2
OK
0.0
AZ
NM
0.0
0.0
Southwest
TX
0.0
HI
0.0
Additional States (as marked on map)

1 VT
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.0
0.0
0.0
0.0
0.0
0.0
NC
0.0
SC
Southeast
MS
AL
0.0
0.0
GA
0.0
0.0
LA
0.0
FL
0.0
Production (%)
0.0
0.0
0.0
0.0
TN
AR
WV VA
0.0
0.0
CA
West
OH
0.0
MO
KS
3.0
0.0
0.0
0.0
IN
IL
0.0
UT
PA
0.0
0.0
0.0
1 2
3
NY
0.0
5 4
MI
0.0
IA
NE
0.0
WI
ME
MidAtlantic
9 DC
0.0
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
WWW.IBISWORLD.COM
Products & Markets
The geographic spread of industry

production reflects the location of gold and
silver deposits. Production distribution does
not correlate with establishment
distribution because mineral reserves and
output vary drastically from mine to mine.
Almost all US gold production comes from
the West and Rocky Mountain regions. The
same regions also dominate silver
production in the United States, though the
West is less dominant. According to the US
Geological Survey (USGS), Nevada leads the
countrys gold output, accounting for 73.9%
of the total in 2013 (latest data available).
Other important producing states are
Alaska, Utah, Colorado and California.
In 2013, gold was produced at about 50
lode mines, at a few large placer mines in
Alaska, and at numerous smaller placer
mines (mostly in Alaska and other states in
the West). In addition, a small amount of
domestic gold was recovered as a byproduct
of processing base metals, chiefly copper.
According to USGSs latest production
report, thirty operations yielded more than
99.0% of the gold produced in the United
States in 2011. Establishments in the
industry, however, also include processing
Distribution of production vs. population
and loading centers and operations offices.

Despite the inclusion of these locations, the
distribution of the establishments remains
limited to the West and Rocky Mountains.
The largest gold-producing mines in the
industry in order of production are:
Goldstrike in Nevada, operated by Barrick
Gold Corporation; Eastern Nevada
Operations, operated by Newmont Mining
Corporation; Bingham Canyon in Utah,
operated by Kennecott Utah Copper, a
subsidiary of Rio Tinto Group; Cortez in
Nevada, operated by Barrick Gold
Corporation; Twin Creeks in Nevada,
operated by Newmont Mining; and the
Smoky Valley Common Operation in
Nevada, operated by Kinross Gold
Corporation. Together, these six mines
account for the majority of total gold
production in the United States.
Because gold accounts for the majority of
this industrys revenue, and silver is usually
mined in conjunction with gold and other
metals, the production profile for gold
provides a thorough guide to the geographic
distribution of the industry. The Wests
importance in gold production has
increased in recent years.
Distribution of production vs. establishments
100
80
80
60
60
Production
Production
Population
Establishments
Southwest
Southeast
Rocky Mountains
Plains
New England
Mid-Atlantic
West
Southwest
Southeast
Rocky Mountains
0
Plains
0
New England
20
Mid-Atlantic
20
Great Lakes
40
West
40
Great Lakes
100
Business Locations
WWW.IBISWORLD.COM
20
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks

Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level
Concentration in this
industry is M
edium
Key Success Factors

IBISWorld
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
Concentration in the Gold and Silver Ore

Mining industry is moderate. The six
largest gold-producing mine sites in the
United States, which account for the
majority of domestic gold production, are
operated by the four largest players:
Barrick Gold Corporation, Newmont
Mining Corporation, Kinross Gold
Corporation and Kennecott Utah Copper
(Rio Tinto Group). Industry
concentration reflects the relatively small
amount of mineral resource locations,
where the largest and highest-volume
producing mines are controlled by a few
large companies, and multiple firms often
operate at the same mine establishments.

Additionally, producers have an incentive
to merge due to the cost benefits of
having larger operations. Large
producers also have greater capital
availability necessary to invest in mine
exploration and development. All these
factors give major players an advantage,
making it difficult for smaller firms to
compete and lead some to consolidation.
Most mergers and acquisitions in the
industry occurred in the early 2000s,
with consolidation accelerating in recent
years as a result of deteriorating gold and
silver prices.
Ability to forward sell production

when appropriate
The ability to forward-sell production
when gold or silver prices are high
effectively locks in those prices.
against negative fluctuating output and

regional economic downturns.
The ability to comply with

environmental laws
Firms must be able to meet
environmental laws and regulations to
successfully develop and operate mines.
Degree of globalization in the firm
Geographic diversity of assets and
markets, including mine locations and
exporting countries, creates a buffer
Cost Structure
Benchmarks
Profit
Industry profit margins are high because
there are few companies with the ability
to mine gold and silver, and therefore
industry operators wield some pricesetting power. This power is furthered by
the fact that there are few companies in
the industry and therefore there is
limited competition. In 2015, profit
margins stand at an estimated 32.0% of
revenue. Nevertheless, profit can be
extremely volatile. Revenue has soared
Ability to expand and curtail operations

rapidly in line with market demand
Successful producers have a capacity to
read future trends in demand and alter
production accordingly.
Availability of resource
Access to large, high-grade reserves is
important. A larger deposit generally
permits economies of scale and also
provides greater flexibility in scheduling
output, while high-grade reserves usually
result in lower unit-operating costs.
and fallen during the past five years in

conjunction with gold and silver prices,
while input costs for fuel, labor and other
consumables have risen at a faster pace,
causing profit margins to contract from
43.9% in 2010.
Purchases
Material purchases for gold and silver
producers include fuel, explosives and
chemicals for metal extraction. Fuel
represents a considerable portion of
WWW.IBISWORLD.COM
21
input costs; therefore, oil prices can

severely affect industry profit. Because oil
is subject to sudden price changes,
material costs can be volatile, sometimes
making production at certain operations
less profitable. The share occupied by
purchase costs has declined in recent
years due to deteriorating oil prices.
Wages
Labor costs also absorb a significant
portion of revenue. Although companies
have increased employment since 2010,
wages have failed to keep pace. This has
occurred because the marginal increase
in labor required for an additional unit of
output is minimal, though revenue
growth is driven by prices and has
ballooned in comparison to the cost of
wages. In the five years to 2015, total
wages are estimated to modestly decline
at an annualized rate of 0.7%.

Employment has been on the rise as
companies began new operations and
attempted to increase production to
benefit from then quickly rising gold and
silver prices.
Depreciation and other costs
Depreciation is a major cost for the
industry, representing about 14.4% of
revenue and displaying the large amount
of capital investment required to develop
gold and silver mines. Mining companies
invest heavily in major large-scale
machinery for activities such as digging,
drilling, blasting, loading, crushing and
conveying. New machines (e.g. electric
shovels, dump trucks and conveyors) and
equipment are purchased on an ongoing
basis. In addition, the sequence of drilling,
blasting, loading, hauling, crushing and
Sector vs. Industry Costs

Average Costs of
all Industries in
sector (2015)
Industry Costs
(2015)
100
17.2
80
Percentage of revenue
Cost Structure
Benchmarks
continued
60
22.1
40
17.3
1.9
20
32.0
9.6
11.1
20.7
3.3
28.6
Profit
Wages
Purchases
Depreciation
Marketing
Rent & Utilities
Other
14.4
2.3
5.8
13.7
0
WWW.IBISWORLD.COM
22
Cost Structure
Benchmarks
continued
conveying is, at some large mines (e.g.

Bingham Canyon), carried out 24 hours
per day throughout the entire year. This
continuous use of machinery requires
companies to regularly replace equipment,
maintaining steady depreciation charges.
Other expenses for the industry

include costs for depletion,
maintenance and shipping, utilities,
contractors, administrative activities,
marketing, and royalties paid to mine
owners and state governments.
Basis of Competition
Gold and silver are traded on the basis of

price, which in turn is set by the
interaction between supply and demand.
Individual producers are unable to
influence either gold or silver prices and
both commodities are also traded on
futures exchanges. The undifferentiated
nature of the two commodities makes for
a high level of competition, which has
remained steady despite consolidation of
large and small firms.
government funds, and are therefore

better able to attain financing and survive
periods of high input costs.
Level & Trend

ompetition
C
in this
industry is H
ighand
the trend is S
teady
Internal competition
Individual producers primarily compete
on the basis of cost because they are
unable to influence gold or silver prices.
The lowest-cost mining operations are
better able to survive periods of low gold
and silver prices or increases in input
costs. Low-cost operations also find it
easier to secure financing, attract labor
and are better able to pursue
technological development.
Competition among major players is
also centered on the acquisition of
attractive mineral properties. Acquiring
or holding rights to properties with high
gold or silver deposits determines the
level of company production, which
highly influences financial results.
International gold and silver mining
activities are a major source of
competition for US producers. While
many US producers also operate abroad,
companies with greater operations
outside the United States can sometimes
gain an advantage through lower labor,
material and energy costs. Furthermore,
government-owned mining operations in
many African countries are backed by
External competition
Gold and silver both face competition in
end-use markets from other materials. In
its major market, jewelry, gold and silver
compete with other precious metals,
including platinum, and, to a lesser extent,
with metals such as stainless steel. This
competition is, however, limited and
declining as demand for gold jewelry has
dropped while demand for gold as an
investment item has greatly increased.
Gold faces competition in the small
dentistry market from substitute
products, such as stainless steel and
various types of plastics and ceramics.
While competition from these products is
rising in developed countries, primarily
for aesthetic reasons, the growth of
improved dentistry in less-developed
countries still relies heavily on gold.
As a precious metal investment option,
gold and silver primarily face competition
from platinum, with gold representing
the greatest portion of this investment.
These metals also face competition from
the general investment market because
many investors focus on precious metals,
especially in difficult and uncertain
economic times. In recent years, the US
economy has seen interest in gold
investments increase in relation to
interest in stocks and bonds and currency
movements. An example of this
relationship is the decreasing ratio of the
Dow Jones Industrial Average value over
the unit price of gold.
WWW.IBISWORLD.COM
23
Barriers to Entry
Level & Trend
arriers to Entry
B
in this industry are

Highand S
teady
Industry
Globalization
Level & Trend
lobalization
G
in
this industry is
Lowand the trend
is I ncreasing
There are substantial barriers to entry

into the Gold and Silver Ore Mining
industry, including the capital
expenditure necessary to undertake
exploration programs and fund mine
development. Furthermore, obtaining the
rights to operate at a mine owned by a
competitor can also be difficult and
require large royalties. The high
concentration of the four largest players,
which control most of the high
production mines in the United States,
complicates conditions for new entrants,
especially if they are small. Competition
for mine properties is nonexistent as the
major players own and control most
higher-grade mines. New players are left
to compete by operating at lower-grade
mines which have higher operating costs.
Because the high level of competition is
focused on cost reduction, new players
are essentially fighting a losing battle.
Another barrier to entry includes the
difficulty in acquiring permits and
leases. Legislative procedures, such as
supplying comprehensive environmental
impact statements, require significant
research and legal costs. Any changes in
regulations or laws can halt or cancel
operations, and any environmental
contamination at mining properties
could result in significant fines. These
issues can harm production, revenue
and profit. Operating many mines at
The Gold and Silver Ore Mining industry

has a relatively low level of globalization.
Numerous major firms operating in this
industry in the United States are based
in other countries, while US firms also
have substantial overseas interests in
gold and silver ore mining. The largest
industry player, Barrick Gold
Corporation operates mines in seven
countries outside the United States,
Barriers to Entry checklist

Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
Level
High
Medium
Mature
High
Medium
Heavy
Low
once can mitigate the risk of policy

changes, but new entrants usually do not
have the high amount of capital
necessary to enter the industry
operating multiple mines at once.
The factors forcing this industry into
a mature life cycle stage also create
barriers to entry. Weakly growing
production in the face of rising
demand is a prime example of its
maturity. Production drops have been
due to depleting US mineral reserves,
as gold and silver ore are finite
resources. New technologies to
increase low production have been
absent for almost two decades, forcing
many mines to close. As resources are
diminishing, producers are going
abroad to find untapped reserves;
thus, obtaining scarce resources (i.e.
mine reserves) makes entry into the
industry extremely difficult.
including Argentina, Australia and

Canada. The next three largest industry
players also have extensive overseas
mining operations.
Despite operating on a global market,
industry exports and imports are
relatively low and steady. Export and
import values have increased in recent
years primarily due to the large increases
in the price of gold. In addition, most
WWW.IBISWORLD.COM
24
Exports offer growth

opportunities for firms.
However there are legal,
economic and political risks
associated with dealing in
foreign countries.
Import competition can
bring a greater risk for
companies as foreign
producers satisfy domestic
demand that local firms
would otherwise supply.
Trade Globalization
200
Going Global: Gold & Silver Ore Mining 20052015

Global
Export
150
100
50
0 Local
0
33141). Exports of raw gold and silver

ore supply the Gold and Silver Ore
Mining industry with an estimated 2.2%
of its revenue while imports account for
about 0.2% of domestic demand.
200 Export
Exports/Revenue
International trade is a
major determinant of
an industrys level of
globalization.
globally traded gold and silver is refined,

and as a result, the international trade of
refined gold and silver is generally
handled by the copper, zinc and lead
refining industry (IBISWorld report
Exports/Revenue
Industry
Globalization
continued
Import
40
80
120
Imports/Domestic Demand
160
Global
150
100
50
2015
0 Local2005
0
40
Import
80
120
160
Imports/Domestic Demand
WWW.IBISWORLD.COM
Major Companies
Barrick Gold Corporation | Newmont Mining Corporation

Kinross Gold Corporation | Other Companies
Major players
Newmont Mining Corporation

21.7%
(Market share)
40.7%
Other
Kinross Gold Corporation 7.5%
Player Performance
Barrick Gold
Corporation
Market share: 30.1%
Barrick Gold Corporation 30.1%
Barrick Gold Corporation of Canada is

involved in the production and sale of
gold, copper and silver, including the
related activities of exploration and
mine development. It operates
internationally and generates about
one-third of its revenue from US gold
mining activities. The company divides
its gold mining operations into segments
based on region, including North
America, South America, Australia
Pacific and Africa. Aside from US mines,
its North American operations comprise
a mine in the Dominican Republic and
one in Ontario, Canada.
Of the seven US mines in operation,
Barrick wholly owns five and is part
owner of Turquoise Ridge (75.0%) and
Round Mountain (50.0%). As of its most
recent annual report (2013), the
companys highest-producing mine is
Cortez, followed by Goldstrike and
Round Mountain, all of which are in

Nevada. Despite its third-place ranking,
Round Mountain is notable for being the
largest open-pit mining operation in
North America. In 2014, Barrick finalized
the sale of its 33.0% ownership stake in
Marigold, another Nevada mine.
In February 2010, Barrick completed
an extension of the Cortez mine called
Cortez Hills, leading to an estimated
176.0% production increase for the site.
By 2011, production for the North
America region grew to an estimated 3.4
million troy ounces, driven largely by
higher production at Cortez.
Consequently, Barrick produced 40.0%
more gold than its nearest competitor in
2011, increasing company revenue as
gold prices continued to surge. Increased
production and growing demand from
jewelry manufacturing positioned Barrick
as the industry leader.
Barrick Gold Corporation (US gold-mining operations) financial

performance
Year
Revenue
($ million)
(% change)
Operating Income
($ million)
(% change)
2010
3,524.0
37.7
1,691.6
89.3
2011
4,914.0
39.4
2,947.7
74.3
2012
5,373.0
9.3
3,051.8
3.5
2013
4,117.0
-23.4
2,161.0
-29.2
2014*
3,215.5
-21.9
1,755.7
-18.8
2015*
3,093.3
-3.8
1,639.0
-6.6
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Financial performance
In the five years to 2015, company
revenue from US gold mining is
forecast to fall at an average annual rate
of 2.6% to $3.1 billion. Despite strong
growth in the early part of the period,
revenue has decreased in recent years
due in part to the divestment of loweryield assets. Retrospectively, revenue

skyrocketed in 2011 and continued to
grow in 2012 as a result of quickly
rising gold prices. Subsequent price
drops since then have also contributed
to a decline in revenue.
Player Performance
Headquartered in Denver, Newmont

Mining Corporation is one of the worlds
largest gold producers, with significant
assets and operations in the United
States, Australia, Peru, Indonesia, Ghana,
Canada, New Zealand and Mexico. The
company also produces copper primarily
in Indonesia and Australia.
Newmonts US mines are located in
Nevada and operate as an integrated unit.
Operations include a continually
fluctuating mix of open-pit mines,
underground mines and processing
facilities. The company holds a 25.0%
interest in the Turquoise Ridge mine, a
joint venture with Barrick Gold
Corporation, and wholly owns the rest of its
US properties. These Nevada operations
boast the widest variety of processing
methods of any gold-mining complex in the
world, allowing Newmont to extract gold
from a wide range of ore types and grades.
In April 2011, Newmont completed the

acquisition of Vancouver-based Fronteer
Gold, which holds interests in three
Nevada gold projects that currently have
5.7 million troy ounces of measured,
indicated and inferred resource. Its
flagship property, Long Canyon, holds an
estimated 2.2 million troy ounces.
Newmont is currently developing the site
with the intention of bringing the project
into production in 2017, with initial
estimated gold production of 300,000
troy ounces per year. In 2014, the
company began to sell off noncore assets
to minimize liabilities as the price of gold
falls, which has compromised margins.
Newmont Mining
Corporation
Market share: 21.7%
Newmonts US gold mining operations
generate about one-quarter to one-third
of the companys revenue each year.
This revenue has risen and fallen over
Newmont Mining Corporation (US gold-mining operations) financial

performance
Year
Revenue
($ million)
EBIT
($ million)
(% change)
2010
2,111.0
2011
2,700.0
8.6
738.0
32.5
27.9
1,213.0
64.4
2012
2,851.0
5.6
1,372.0
13.1
2013
2,413.0
-15.4
-1,227.0
-189.4
2014*
2,015.0
-16.5
594.3
148.4
2015*
2,232.6
10.8
657.3
10.6
(% change)
*Estimates
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
the past five years as the price of gold

has spiked and dropped. In 2013, the
price of gold fell to the point at which
the company realized an operating loss,
after which it began to divest noncore
assets to reduce costs. In the five years

to 2015, IBISWorld estimates that
Newmonts industry-relevant revenue
will modestly grow at an annualized rate
of 1.1% to $2.2 billion.
Player Performance
Kinross Gold Corporation is a Canadabased gold-mining company with mines

and projects in the United States, Brazil,
Canada, Chile, Ecuador, Ghana, Mauritania
and Russia. The company employs about
9,100 workers worldwide and produces
and sells silver, which amounts to about
10.0% of the companys revenue.
Kinrosss US operations comprise the
Fort Knox, Round Mountain and
Buckhorn mines, located in Alaska,
Nevada and Washington, respectively. It
owns Fort Knox and Buckhorn and
shares Round Mountain with Barrick
Gold Corporation. The company also
controls several additional deposits in the
Fort Knox mine area that are being
explored as possible future satellite
operations. Buckhorn operations began
in late 2008 after Kinross ceased mining
at the nearby Kettle River mine.
Retrospectively, US production
increased in both 2012 and 2013,
following a drop in production in 2011

at its Fort Knox and Buckhorn mines
due to a reduction in ore grades. Of its
US mines, only Round Mountain
achieved production growth in 2011 as
a result of increased processing levels.
Nevertheless, the company is
estimated to have increased overall
production in the past five years.
Kinross Gold
Corporation
Market share: 7.5%
Kinross US industry-relevant revenue
is projected to decrease at an
annualized rate of 3.2% to $768.3
million in the five years to 2015.
Overall, growing production in new
and existing mines and higher gold
prices resulted in impressive domestic
revenue growth in the early part of the
period. However, deteriorating gold
and silver prices in recent years have
reversed this trend, leading to steep
revenue declines since 2013.
Kinross Gold Corporation (US gold-mining operations) financial

performance
Revenue
($ million)
(% change)
Net Income
($ million)
(% change)
2010
903.0
38.3
349.7
123.8
2011
1,028.4
13.9
439.8
25.8
2012
1,133.6
10.2
502.3
14.2
2013
1,039.6
-8.3
197.9
-60.6
2014*
847.1
-18.5
175.4
-11.4
2015*
768.3
-9.3
145.4
-17.1
Year
*Estimates
WWW.IBISWORLD.COM
Major Companies
Other Companies
Merger and acquisition activity in recent

years has provided greater market share
to three major companies, but a notable
share of industry revenue is derived from
numerous smaller players. Some of these
smaller companies dedicate operations to
gold or silver mining, such as Goldcorp
Inc., AngloGold Ashanti and Quadra
Mining Corp. However, a substantial
number of operators either produce gold
and silver through minority holdings in
mines operated by the major players (e.g.
Rio Tinto and Sumitomo Metal Mining
Co.), or generate gold and silver as a
byproduct of other mining operations (e.g.
Teck Cominco and Freeport-McMoRan).
Rio Tinto
Estimated market share: 2.1%

Rio Tinto explores, mines and
processes metals and minerals
worldwide, with total North American

sales accounting for nearly a quarter of
company revenue. The groups major
products include aluminum, copper,
diamonds, energy products, gold,
industrial minerals and iron ore. The
company also mines gold in the United
States through its subsidiary
Kennecott Utah Copper. Gold and
silver are primarily produced as
byproducts of Rio Tintos copper
operations, often extracted as
impurities in the final stage of refining
copper. Despite Rio Tintos
involvement in supporting industry
production and revenue, gold and
silver account for a small portion of its
North American sales. IBISWorld
anticipates that revenue from the
companys US-gold mining operations
will total $220.9 million in 2015.
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility

Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level
of capital
intensity is H
igh
The Gold and Silver Ore Mining industry

is highly capital intensive, as mining
companies must invest heavily in capital
equipment to increase production, while
labor requirements are relatively
minimal. Wage costs are typically lower
than depreciation charges, highlighting
the importance of capital investment in
the production process.
The industrys substantial capital
expenditure arises from the nature of the
mining process, which requires
considerable investment in large-scale
earth moving and processing equipment
such as electric shovels and conveyors.
Additionally, the industry requires steady
working capital because firms require
sufficient investment to survive during
Capital intensity
Capital units per labor unit

2.0
1.6
1.2
0.8
0.4
0.0
Economy
Mining
Gold & Silver

Ore Mining
Dotted line shows a high level of capital intensity

periods of low prices, when revenue may

temporarily be insufficient to cover costs.
Tools of the Trade: Growth Strategies for Success

Investment Economy
Recreation, Personal Services,

Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labor skills are key to
product differentiation.
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Traditional Service Economy

Wholesale and Retail. Reliant
on labor rather than capital to
sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Industrial Machinery &

Equipment Wholesaling
Capital Intensive
Labor Intensive
New Age Economy
Inorganic Chemical Manufacturing

Jewelry Manufacturing
Old Economy
Iron Ore Mining
Agriculture and Manufacturing.
Gold & Silver Ore

Mining
Change in Share of the Economy
Traded goods can be produced

using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
WWW.IBISWORLD.COM
Level
The level
of
Technology Change
is M
edium
Revenue Volatility
Level
The level
of
Volatility is H
igh
The technology and systems employed by

the industry have changed at a moderate
rate in recent years, after considerable
change in methods of gold production
during the 1980s and 1990s allowed for
greater output from previously lowproducing mines. Technology change
today is primarily concerned with
complying with environmental
regulations and reducing input costs.
Beyond mining equipment and methods,
technological change within the industry
has also concentrated on improved
information systems. With better
systems, companies can improve
production planning, equipment
monitoring and reserves estimations.
This, in turn, reduces long-term costs by
operating more efficiently.
The rapid growth in gold production in
the United States 30 years ago was based
on the open-cut (placer) mining of large,
low-grade deposits combined with the

use of chemicals for gold extraction. The
techniques marked a sharp change from
the traditional method of underground
(lode) mining, and helped boost output
significantly. Both methods involve an
initial process of ore removal, followed by
chemical gold extraction.
Silver is mined with gold and other
base metals including lead and zinc, with
only a handful of mines primarily
producing silver. Unlike gold, most silver
is produced at lode (underground) mines,
rather than from placer operations.
Most major companies within the
industry are constantly seeking to invest
and develop innovative technologies in
order to increase output and decrease
costs. Proprietary technologies are
especially sought after, as they can give
tremendous competitive advantage to
firms with access to them.
The Gold and Silver Ore Mining

industry is highly volatile, reflecting
fluctuations in the prices for gold and
silver. Metal prices are determined on
global markets and reflect the dynamic
nature of the supply and demand
balance, rising sharply in response to
supply shortfalls and falling just as

quickly if oversupply emerges. These
prices change in response to demand
for the metals, and demand is largely
determined by investor confidence.
With lower investor confidence and
greater economic uncertainty, many
A higher level of revenue

volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.
Volatility vs Growth
1000
Revenue volatility* (%)
Technology
& Systems
Hazardous
Rollercoaster
100
10
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
Five year annualized revenue growth (%)

* Axis is in logarithmic scale
WWW.IBISWORLD.COM
Revenue Volatility
continued
people turn to gold as an investment

option and a store of value. Poor
economic performance has drawn
investors toward gold, driving up
demand, price, and, ultimately,
industry revenue.
Production of gold and silver has had
a downward trend for more than a
decade, but demand for gold in the past
five years has helped stabilize this drop,

with production remaining mostly flat in
the past five years. These year-to-year
swings in output contribute to revenue
volatility, as even the slightest
fluctuations can drive trading markets to
extensively raise purchases or sell their
holdings, thereby allowing prices to
swing wildly.
Regulation & Policy
The industry is highly regulated, with state

governments overseeing virtually all
aspects of operation. The government
determines which land is open to
exploration and mining and issues leases
for both. In addition, the US Department
of the Treasury maintains a stockpile of
gold, and the US Department of Defense
administers a government-wide secondary
precious metals recovery program.
Federal land is open to mining claims
in 19 states: Alaska, Alabama, Arizona,
Arkansas, California, Colorado, Florida,
Idaho, Mississippi, Montana, Nebraska,
Nevada, New Mexico, North Dakota,
Oregon, South Dakota, Utah, Washington
and Wyoming. The US Bureau of Land
Management (BLM) manages the surface
of public lands in these states and the
Forest Service manages the surface of
National Forest System lands. The BLM
is responsible for the subsurface minerals
on both its public lands and National
Forest System lands.
Firms are also required to comply with
the US Environmental Protection Agency
regulations relating to air, water
pollution and land use. Mining
companies are subject to a high risk of
environmental liability and most
companies record an accrual for
environmental remediation liabilities
associated with particular mining
operations based on the probability of
liability being incurred. The mining
companies are expected to regularly

monitor their operations, procedures,
and policies for compliance with existing
regulations. Because of increasing public
environmental concerns, laws and
regulations are becoming more
restrictive. In response to this, producers
are investing in new, more
environmentally friendly technologies
which require less energy and produce
less waste.
Despite producers willingness to
comply with government policies, any
changes in regulations or laws can halt or
cancel operations, and any environmental
contamination at mining properties could
result in significant fines. These issues
can affect production, revenue and profit.
An example of one such issue is the
Cortez Hills mine expansion by Barrick
Gold Corporation, which was previously a
subject of legal action. Opponents of the
project had sought an injunction to stop
operations due to environmental
concerns. Operations continued as the
appeals process advanced, but a negative
decision by the court could have severely
impacted operations. The BLM issued a
Record of Decision (ROD) in March 2011
approving the Supplemental
Environmental Impact Statement for the
Cortez Hills mine. The ROD removed
restrictions in place due to the injunction
and enabled the operation to immediately
revert to its original scope.
Level & Trend

he level of
T
Regulation is
Heavyand the
trend is S
teady
WWW.IBISWORLD.COM
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is L owand the
trend is S
teady
Industry assistance for Gold and Silver

Ore Mining is light and steady. Most
imports of unwrought gold enter the
United States duty free and no duties are
imposed on imports of unrefined silver or
refined silver bullion.
National Mining Association
The National Mining Association is the
voice of the American mining industry
in Washington. The association
primarily focuses on lobbying Congress

for mining reform, clean energy laws
and tax legislation. The General Mining
Act of 1872, which gives mining
preferences over other uses on much of
the nations public land, was of major
concern in 2010 as Congress was seeking
to revamp it with higher royalty and tax
provisions. Due to other legislative
priorities, the bill to reform the Act was
dropped in January 2011.
WWW.IBISWORLD.COM
Key Statistics
Industry Data
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Industry
Value Added Establish($m)
ments
3,300.3
157
2,765.0
158
4,131.6
162
4,736.0
166
7,022.1
179
9,482.0
200
10,048.3
225
4,706.5
207
6,087.5
199
5,835.8
197
5,851.0
198
5,968.5
196
6,006.9
197
6,392.0
198
6,732.9
201
7/14
10/14
428/1329 1105/1329
Enterprises Employment
132
9,146
139
12,959
145
11,113
148
11,322
160
11,392
180
11,555
200
15,431
186
13,668
180
12,664
177
12,692
178
12,754
176
12,839
177
12,860
178
13,223
180
13,521
10/14
8/14
1065/1329
916/1329
Exports
($m)
58.1
75.6
284.3
228.6
276.3
448.4
342.4
390.0
222.8
224.2
232.5
239.1
248.2
264.1
275.1
10/11
297/409
Imports
($m)
16.6
11.2
20.6
40.6
69.0
169.3
60.7
26.1
20.5
19.5
18.9
18.6
18.3
19.1
20.0
11/11
393/409
Wages
($m)
753.4
895.3
1,009.2
1,074.8
1,154.9
1,157.1
1,425.1
1,222.5
1,112.0
1,117.0
1,125.8
1,136.9
1,141.1
1,182.6
1,217.3
9/14
746/1329
Domestic
Demand
6,349.0
7,001.7
7,398.5
7,861.2
10,242.3
13,200.0
13,279.0
10,902.7
9,876.9
9,966.4
10,093.7
10,242.0
10,313.0
10,784.6
11,189.1
7/11
174/409
Price of Gold
($ per ounce)
604.7
696.9
872.5
972.1
1,225.5
1,569.6
1,668.5
1,410.8
1,271.8
1,282.8
1,300.3
1,320.3
1,330.3
1,395.9
1,451.6
N/A
N/A
Industry
EstablishRevenue Value Added
ments
(%)
(%)
(%)
10.6
-16.2
0.6
8.4
49.4
2.5
5.1
14.6
2.5
29.8
48.3
7.8
29.0
35.0
11.7
0.6
6.0
12.5
-16.9
-53.2
-8.0
-10.5
29.3
-3.9
0.9
-4.1
-1.0
1.3
0.3
0.5
1.5
2.0
-1.0
0.8
0.6
0.5
4.6
6.4
0.5
3.8
5.3
1.5
11/14
14/14
12/14
1081/1329 1271/1329 1127/1329
Enterprises Employment
(%)
(%)
5.3
41.7
4.3
-14.2
2.1
1.9
8.1
0.6
12.5
1.4
11.1
33.5
-7.0
-11.4
-3.2
-7.3
-1.7
0.2
0.6
0.5
-1.1
0.7
0.6
0.2
0.6
2.8
1.1
2.3
11/14
12/14
1172/1329 1010/1329
Exports
(%)
30.1
276.1
-19.6
20.9
62.3
-23.6
13.9
-42.9
0.6
3.7
2.8
3.8
6.4
4.2
8/11
302/409
Imports
(%)
-32.5
83.9
97.1
70.0
145.4
-64.1
-57.0
-21.5
-4.9
-3.1
-1.6
-1.6
4.4
4.7
11/11
395/409
Wages
(%)
18.8
12.7
6.5
7.5
0.2
23.2
-14.2
-9.0
0.4
0.8
1.0
0.4
3.6
2.9
13/14
1044/1329
Domestic
Demand
(%)
10.3
5.7
6.3
30.3
28.9
0.6
-17.9
-9.4
0.9
1.3
1.5
0.7
4.6
3.8
8/11
321/409
Price of Gold
(%)
15.2
25.2
11.4
26.1
28.1
6.3
-15.4
-9.9
0.9
1.4
1.5
0.8
4.9
4.0
N/A
N/A
Revenue
($m)
6,390.5
7,066.1
7,662.2
8,049.2
10,449.6
13,479.1
13,560.7
11,266.6
10,079.2
10,171.1
10,307.3
10,462.5
10,542.9
11,029.6
11,444.2
10/14
637/1329
Annual Change
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Key Ratios
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
IVA/Revenue
(%)
51.64
39.13
53.92
58.84
67.20
70.35
74.10
41.77
60.40
57.38
56.77
57.05
56.98
57.95
58.83
1/14
161/1329
Imports/
Demand
(%)
0.26
0.16
0.28
0.52
0.67
1.28
0.46
0.24
0.21
0.20
0.19
0.18
0.18
0.18
0.18
11/11
405/409
Figures are inflation-adjusted 2015 dollars. Rank refers to 2015 data.
Exports/
Revenue
(%)
0.91
1.07
3.71
2.84
2.64
3.33
2.52
3.46
2.21
2.20
2.26
2.29
2.35
2.39
2.40
10/11
371/409
Revenue per
Employee
($000)
698.72
545.27
689.48
710.93
917.28
1,166.52
878.80
824.30
795.89
801.38
808.16
814.90
819.82
834.12
846.40
5/14
178/1329
Wages/Revenue
(%)
11.79
12.67
13.17
13.35
11.05
8.58
10.51
10.85
11.03
10.98
10.92
10.87
10.82
10.72
10.64
10/14
985/1329
Employees
per Est.
58.25
82.02
68.60
68.20
63.64
57.78
68.58
66.03
63.64
64.43
64.41
65.51
65.28
66.78
67.27
6/14
170/1329
Average Wage
($)
82,374.81
69,087.12
90,812.56
94,930.22
101,378.16
100,138.47
92,353.06
89,442.49
87,807.96
88,008.19
88,270.35
88,550.51
88,732.50
89,435.08
90,030.32
6/14
134/1329
Share of the
Economy
(%)
0.02
0.02
0.03
0.03
0.05
0.06
0.07
0.03
0.04
0.04
0.03
0.03
0.03
0.03
0.04
7/14
428/1329
WWW.IBISWORLD.COM
Jargon & Glossary
Industry Jargon
BULLIONGold cast into ingots or coins, typically with a

purity of 99.9% gold, valued by its mass and purity.
CONCENTRATEA very fine, powder-like product
containing the valuable ore mineral from which most of
the waste mineral has been eliminated.
TROY OUNCEA unit of imperial measure most

commonly used to gauge the weight of precious metals
and defined as 0.0311034768 kg = 31.1034768 g.
DOREAfter being mined, this first stage in the

purification process of the gold ore produces a cast bar
(gold dore) that is about 90.0% gold.
IBISWorld Glossary
BARRIERS TO ENTRYHigh barriers to entry mean that new

companies struggle to enter an industry, while low barriers
mean it is easy for new companies to enter an industry.
CAPITAL INTENSITYCompares the amount of money
spent on capital (plant, machinery and equipment) with that
spent on labor. IBISWorld uses the ratio of depreciation to
wages as a proxy for capital intensity. High capital intensity
is more than $0.333 of capital to $1 of labor; medium is
$0.125 to $0.333 of capital to $1 of labor; low is less than
$0.125 of capital for every $1 of labor.
CONSTANT PRICESThe dollar figures in the Key Statistics
table, including forecasts, are adjusted for inflation using the
current year (i.e. year published) as the base year. This
removes the impact of changes in the purchasing power of
the dollar, leaving only the real growth or decline in
industry metrics. The inflation adjustments in IBISWorlds
reports are made using the US Bureau of Economic Analysis
implicit GDP price deflator.
DOMESTIC DEMANDSpending on industry goods and
services within the United States, regardless of their country
of origin. It is derived by adding imports to industry revenue,
and then subtracting exports.
EMPLOYMENTThe number of permanent, part-time,
temporary and seasonal employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists of
one or more establishments that are under common
ownership or control.
ESTABLISHMENTThe smallest type of accounting unit
within an enterprise, an establishment is a single physical
location where business is conducted or where services or
industrial operations are performed. Multiple establishments
under common control make up an enterprise.
EXPORTSTotal value of industry goods and services sold by
US companies to customers abroad.
IMPORTSTotal value of industry goods and services
brought in from foreign countries to be sold in the United
States.
INDUSTRY CONCENTRATIONAn indicator of the
dominance of the top four players in an industry.
Concentration is considered high if the top players account
for more than 70% of industry revenue. Medium is 40% to
70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUEThe total sales of industry goods and

services (exclusive of excise and sales tax); subsidies on
production; all other operating income from outside the firm
(such as commission income, repair and service income, and
rent, leasing and hiring income); and capital work done by
rental or lease. Receipts from interest royalties, dividends and
the sale of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)The market value of
goods and services produced by the industry minus the cost
of goods and services used in production. IVA is also
described as the industrys contribution to GDP, or profit plus
wages and depreciation.
INTERNATIONAL TRADEThe level of international trade is
determined by ratios of exports to revenue and imports to
domestic demand. For exports/revenue: low is less than 5%,
medium is 5% to 20%, and high is more than 20%.
Imports/domestic demand: low is less than 5%, medium is
5% to 35%, and high is more than 35%.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an industrys
life cycle by considering its growth rate (measured by IVA)
compared with GDP; the growth rate of the number of
establishments; the amount of change the industrys
products are undergoing; the rate of technological change;
and the level of customer acceptance of industry products
and services.
NONEMPLOYING ESTABLISHMENTBusinesses with no
paid employment or payroll, also known as nonemployers.
These are mostly set up by self-employed individuals.
PROFITIBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a companys profitability. It is
calculated as revenue minus expenses, excluding interest
and tax.
VOLATILITYThe level of volatility is determined by
averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than 20%;
high volatility is 10% to 20%; moderate volatility is 3%
to 10%; and low volatility is less than 3%.
WAGESThe gross total wages and salaries of all employees
in the industry. The cost of benefits is also included in this
figure.
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Gold & Silver Ore Mining in The US Industry Report

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Gold & Silver Ore Mining in the USFebruary 2015 1

Fools gold: Lower prices have discouraged

IBISWorld Industry Report 21222

Gold & Silver Ore

2 About this Industry

31 Regulation & Policy

20 Market Share Concentration

20 Key Success Factors

20 Cost Structure Benchmarks

Key External Drivers

25 Barrick Gold Corporation

11 Industry Life Cycle

34 Jargon & Glossary

26 Newmont Mining Corporation

13 Products & Markets

13 Products & Services

30 Technology & Systems

www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

Gold & Silver Ore Mining in the USFebruary 2015 2

About this Industry

Operators in this industry mine gold

The primary activities of this industry are

of the semi-processed gold or silver

Gold ore mining

The major products and services in this industry are

21221 Iron Ore Mining in the US

Gold & Silver Ore Mining in the USFebruary 2015 3

About this Industry

For additional information on this industry

writes over 700 US

Gold & Silver Ore Mining in the US February 2015

Annual Growth 10-15

Annual Growth 15-20

World price of gold

Revenue vs. employment growth

$ per troy ounce

Products and services segmentation (2015)

Key External Drivers

World price of gold

Gold ore and

Silver ore and

World price of silver

Life Cycle Stage

Gold & Silver Ore Mining in the USFebruary 2015 5

Executive Summary | Key External Drivers | Current Performance

While a steep drop in mined silver ore

these metals thereafter declined along

and silver, causing investment demand

World price of gold

the economy stabilizes, investors will seek

Key External Drivers

Gold & Silver Ore Mining in the USFebruary 2015 6

Industrial production index

price of silver reflects trends in the

World price of gold

$ per troy ounce

Key External Drivers

Gold & Silver Ore Mining in the USFebruary 2015 7

The Gold and Silver Ore Mining

Gold sales account for more than 90.0%

As the economy improved and

Gold & Silver Ore Mining in the USFebruary 2015 8

exchange-traded funds (ETFs) have