Mining
The Impact of COVID-19 Shutdowns on the Gold Supply Chain
How COVID-19 Shutdowns Impact the Gold Supply Chain
Chains are only as strong as their weakest link—and recent COVID-19 shutdowns have affected every link in the gold supply chain, from producers to end-users.
Increased investor demand for gold coupled with a constrained supply has led to high prices and a bullish market, which has been operating despite these pressures on the supply chain.
Today’s infographic comes to us from Sprott Physical Bullion Trust and it outlines the gold supply chain and the impacts COVID shutdowns have had on the gold market.
The Ripple Effect: Stalling a Supply Chain
Disruptions to the gold supply chain have rippled all the way from the mine to the investor:
- Production
Some gold mines halted production due to the high-risk to COVID-19 exposure, reducing the supply of gold. In many nations, operations had to shut down as a result of COVID-19 based legal restrictions. - Delivery
Strict travel regulations restricted the shipment of gold and increased the costs of delivery as less air routes were available and medical supplies were prioritized. - Refinery
Refineries depend on gold production for input. A reduction in incoming gold and the suspension of labor work shortened the supply of refined gold. - Metal Traders
Towards the other end of the gold supply chain, traders have faced both constrained supply and increased cost of delivery. These increased costs have translated over to end-users. - The End Users
Higher demand, lower supply, and increased costs have resulted in higher prices for buyers of gold.
Gold: A Safe Haven for Investors
As the virus spread around the world threatening populations and economies, investors turned to safe-haven investments such as gold to hedge against an economic lockdown.
This increase in investor demand affected the four primary financial markets for gold:
- Futures Contracts:
A futures contract is an agreement for the delivery of gold at a fixed price in the future. These contracts are standardized by futures exchanges such as COMEX. During the initial periods of the pandemic, the price of gold futures spiked to reach a high of US$70 above the spot price. - Exchange-Traded Funds (ETFs):
An ETF is an investment fund traded on stock exchanges. ETFs hold assets such as stocks, bonds, and commodities such as gold. From the beginning of 2020 to June, the amount of gold held by ETFs massively increased, from 83 million oz to 103 million oz. The SPDR Gold Trust is a great example of how the surge in ETF demand for gold has played out—the organization was forced to lease gold from the Bank of England when it couldn’t buy enough from suppliers. - Physical Gold for Commerce and Finance:
The London Bullion Market Association (LBMA) is a market where gold is physically traded over-the-counter. The LBMA recorded 6,573 transfers of gold amounting to 29.2 million oz ($46.4 billion)—all in March 2020. This was the largest amount of monthly transfers since 1996. - Coins and Small Bars:
One ounce American Gold Eagle coins serve as a good proxy for the demand for physical gold from retail investors. The COINGEAG Index, which tracks the premium price of 1 oz. Gold Eagles, spiked during the early stages of the lockdown.
Each one of these markets requires access to physical gold. COVID-19 restrictions have disrupted shipping and delivery options, making it harder to access gold. The market for gold has been functioning nonetheless.
So how does gold get to customers during a time of crisis?
Gold’s Journey: From the Ground to the Vault
Gold ore goes through several stages before being ready for the market.
- Processing:
Gold must be released from other minerals to produce a doré bar—a semi-pure alloy of gold that needs further purification to meet investment standards. Doré bars are typically produced at mine sites and transported to refiners. - Refining:
Refineries are responsible for turning semi-pure gold alloys into refined, pure, gold. In addition to reprocessing doré bars from mines, refiners also recycle gold from scrap materials. Although gold mining is geographically diverse and occurs in all continents except Antarctica, there are only a handful of gold refineries around the world. - Transportation:
Once it’s refined, gold is transported to financial hubs around the world. There are three main ways gold travels the world, each with their own costs and benefits:- Commercial Flights:
Cheapest of the three options, commercial flights are useful in transporting gold over established passenger routes. However, the volume of gold carried by a commercial flight is typically small and subject to spacing priorities. - Cargo Planes:
At a relatively moderate cost, cargo planes carry medium to large amounts of gold along established trade routes. The space dedicated to cargo determines the cost, with higher volumes leading to higher shipping prices. - Chartered Airlines:
Chartered airlines offer a wider range of travel routes with dedicated shipping space and services tailored to customer demand. However, they charge a high price for these conveniences.
- Commercial Flights:
After reaching its destination via air, armored trucks with security personnel move the gold to vaults and customers in financial hubs around the world.
The World’s Biggest Gold Hubs
The U.K.’s bullion banks hold the world’s biggest commercial stockpiles of gold, equal to 10 months of global gold mine output. London is the largest gold hub, with numerous vaults dedicated to gold and other precious metals.
Four of the largest gold refineries in the world are located in Switzerland, making it an important part of the gold supply chain. Hong Kong, Singapore, and Dubai are surprising additions and remain significant traders of gold despite having no mines within their borders.
COVID-19: The Perfect Storm for Gold?
As countries took stringent safety measures such as travel restrictions and border closures, the number of commercial flights dropped exponentially across the world. For the few commercial airlines that still operated, gold was a low-priority cargo as space was dedicated to medical supplies.
This impeded the flow of gold through the supply chain, increasing the cost of delivery and the price of gold. However, thanks to the diverse geography of gold mining, some countries did not halt production—this helped avoid a complete stall in the supply of gold.
The COVID-19 pandemic has created the perfect storm for gold by disrupting the global supply chain while investor demand for gold exploded. Despite heightened delivery risks and disruptions, the gold market has managed to continue operating thus far.
Mining
Ranked: The World’s Top Diamond Mining Countries, by Carats and Value
Who are the leaders in rough diamond production and how much is their diamond output worth?

Ranked: World Diamond Mining By Country, Carat, and Value
Only 22 countries in the world engage in rough diamond production—also known as uncut, raw or natural diamonds—mining for them from deposits within their territories.
This chart, by Sam Parker illustrates the leaders in rough diamond production by weight and value. It uses data from Kimberly Process (an international certification organization) along with estimates by Dr. Ashok Damarupurshad, a precious metals and diamond specialist in South Africa.
Rough Diamond Production, By Weight
Russia takes the top spot as the world’s largest rough diamond producer, mining close to 42 million carats in 2022, well ahead of its peers.
Russia’s large lead over second-place Botswana (24.8 million carats) and third-ranked Canada (16.2 million carats) indicates that the country’s diamond production is circumventing sanctions due to the difficulties in tracing a diamond’s origin.
Here’s a quick breakdown of rough diamond production in the world.
Rank | Country | Rough Diamond Production (Carats) |
---|---|---|
1 | 🇷🇺 Russia | 41,923,910 |
2 | 🇧🇼 Botswana | 24,752,967 |
3 | 🇨🇦 Canada | 16,249,218 |
4 | 🇨🇩 DRC | 9,908,998 |
5 | 🇿🇦 South Africa | 9,660,233 |
6 | 🇦🇴 Angola | 8,763,309 |
7 | 🇿🇼 Zimbabwe | 4,461,450 |
8 | 🇳🇦 Namibia | 2,054,227 |
9 | 🇱🇸 Lesotho | 727,737 |
10 | 🇸🇱 Sierra Leone | 688,970 |
11 | 🇹🇿 Tanzania | 375,533 |
12 | 🇧🇷 Brazil | 158,420 |
13 | 🇬🇳 Guinea | 128,771 |
14 | 🇨🇫 Central African Republic | 118,044 |
15 | 🇬🇾 Guyana | 83,382 |
16 | 🇬🇭 Ghana | 82,500 |
17 | 🇱🇷 Liberia | 52,165 |
18 | 🇨🇮 Cote D'Ivoire | 3,904 |
19 | 🇨🇬 Republic of Congo | 3,534 |
20 | 🇨🇲 Cameroon | 2,431 |
21 | 🇻🇪 Venezuela | 1,665 |
22 | 🇲🇱 Mali | 92 |
Total | 120,201,460 |
Note: South Africa’s figures are estimated.
As with most other resources, (oil, gold, uranium), rough diamond production is distributed unequally. The top 10 rough diamond producing countries by weight account for 99.2% of all rough diamonds mined in 2022.
Diamond Mining, by Country
However, higher carat mined doesn’t necessarily mean better value for the diamond. Other factors like the cut, color, and clarity also influence a diamond’s value.
Here’s a quick breakdown of diamond production by value (USD) in 2022.
Rank | Country | Rough Diamond Value (USD) |
---|---|---|
1 | 🇧🇼 Botswana | $4,975M |
2 | 🇷🇺 Russia | $3,553M |
3 | 🇦🇴 Angola | $1,965M |
4 | 🇨🇦 Canada | $1,877M |
5 | 🇿🇦 South Africa | $1,538M |
6 | 🇳🇦 Namibia | $1,234M |
7 | 🇿🇼 Zimbabwe | $424M |
8 | 🇱🇸 Lesotho | $314M |
9 | 🇸🇱 Sierra Leone | $143M |
10 | 🇹🇿 Tanzania | $110M |
11 | 🇨🇩 DRC | $65M |
12 | 🇧🇷 Brazil | $30M |
13 | 🇱🇷 Liberia | $18M |
14 | 🇨🇫 Central African Republic | $15M |
15 | 🇬🇾 Guyana | $14M |
16 | 🇬🇳 Guinea | $6M |
17 | 🇬🇭 Ghana | $3M |
18 | 🇨🇲 Cameroon | $0.25M |
19 | 🇨🇬 Republic of Congo | $0.20M |
20 | 🇨🇮 Cote D'Ivoire | $0.16M |
21 | 🇻🇪 Venezuela | $0.10M |
22 | 🇲🇱 Mali | $0.06M |
Total | $16,290M |
Note: South Africa’s figures are estimated. Furthermore, numbers have been rounded and may not sum to the total.
Thus, even though Botswana only produced 59% of Russia’s diamond weight in 2022, it had a trade value of nearly $5 billion, approximately 1.5 times higher than Russia’s for the same year.
Another example is Angola, which is ranked 6th in diamond production, but 3rd in diamond value.
Both countries (as well as South Africa, Canada, and Namibia) produce gem-quality rough diamonds versus countries like Russia and the DRC whose diamonds are produced mainly for industrial use.
Which Regions Produce the Most Diamonds in 2022?
Unsurprisingly, Africa is the largest rough diamond producing region, accounting for 51% of output by weight, and 66% by value.
Rank | Region | Share of Rough Diamond Production (%) | Share of Rough Diamond Value (%) |
---|---|---|---|
1 | Africa | 51.4% | 66.4% |
2 | Europe | 34.9% | 32.9% |
3 | North America | 13.5% | 52.8% |
4 | South America | 0.2% | 2.4% |
However diamond mining in Africa is a relatively recent phenomenon, fewer than 200 years old. Diamonds had been discovered—and prized—as far back as 2,000 years ago in India, later on spreading west to Egyptian pharaohs and the Roman Empire.
By the start of the 20th century, diamond production on a large scale took off: first in South Africa, and decades later in other African countries. In fact between 1889–1959, Africa produced 98% of the world’s diamonds.
And in the latter half of the 20th century, the term blood diamond evolved from diamonds mined in African conflict zones used to finance insurgency or crime.
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