According to BNN Bloomberg, the ongoing drought in some parts of Australia, owed to the lack of rain, represents a serious risk to gold production in the world's second-largest gold-mining country after China.
For the past two years, New South Wales has seen minimal precipitation, as reported by Newcrest Mining Ltd. The company's representative has stated that if the drought persists, it will negatively affect one of its mining sites.
“New South Wales remains impacted by a severe drought. Cadia has implemented significant water saving efficiency measures and continues to pursue further water saving initiatives”, says Newcrest's statement.
It's worth pointing out that gold mining companies require a lot of water to extract gold from the ore. For instance, it takes 250 million liters of water to produce 1 ton of gold, according to Australia's National Science Agency.
Chinese economy is under threat
Gold prices have risen in the Asian markets amid the coronavirus outbreak. Numerous companies have halted their China-based services. For instance, British Airways and Lufthansa have stopped all flights to China, whereas Toyota announced that it will suspend its Chinese manufacturing operations.
The WHO has recently declared the outbreak as a global health emergency, granted that over 360 people have died from the virus.
According to a representative of the Chinese Academy of Social Sciences, the national growth rate could fall to 5%, due to the coronavirus. In such conditions, the authorities may take measures to stimulate economic growth in order to compensate for the losses.
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