The Gold Boom Has Miners Scrambling to Find the Next Mother Lode

Record prices are breathing new life into South Africa’s ailing gold-mining industry

By Alexandra Wexler of The WSJ. Excerpts:

"For years, hundreds of illegal miners known locally as zama zamas prospected for gold on this patch of land on the outskirts of the city with hammers and chisels in hand-dug tunnels.

Now, the site has been transformed into South Africa’s first new underground gold mine in more than 15 years, part of a global rush to boost production of a metal trading at record prices."

"Around $100 million of investment is pouring into the mine, where workers now sport hard hats, carry emergency breathing devices and use advanced drills and other equipment. The project, called Qala Shallows, recovered its first gold in October and is estimated to produce more than $4.5 billion of the metal at current market prices.

Gold futures settled above $5,000 for the first time on Monday, driven by heightened geopolitical concerns among other factors. The precious metal has more than doubled in value in less than two years.

The surge has boosted profits for mining companies around the globe, encouraging them to restart old mines, expand existing operations and develop new projects. Global gold-exploration budgets increased 11% to $6.15 billion in 2025, according to S&P Global Energy."

"The industry wide rush to boost capacity is presenting challenges. It’s harder to find skilled labor and there is now a lengthy wait list for equipment, said Deysel, a geophysicist and mining engineer who has previously worked at various mines across Africa." 

The excerpt in red might imply both a movement up along the supply line and and a rightward shift in supply.

Restarting old mines and expanding existing operations could mean moving along the supply line since the firms are using existing resources. The part where it says "It’s harder to find skilled labor" implies that they are trying to use more of a variable resource.

Moving along the supply line is what happens in the short run, when one resource is fixed in quantity. By trying to add more workers and restarting old mines, there is no increase in capital in the industry.

But there could be a long run change going on here which means the supply line (actually the short run supply line) will shift to the right. I think this is implied by saying the firms want to develop new projects. That will clearly mean an increase the amount of mine space they have (I guess we could call this land). It also mentioned trying to get more equipment.

So it seems like the quantity of land, labor and capital are all changing. That means we are in the long run. 

We also expect an increase in the amount of all resources in an industry that is competitive when profits rise. Those resources are being diverted from other uses due to the higher price.