The Australian gold mining industry has finally lifted output by enough to break a 21-year annual record.
Data compiled by Melbourne firm, Surbiton and Associates show the sector produced a record 317 tonnes of the of gold last year, a boost well timed to meet the jump in prices towards the end of the year and into the first two months of 2019.
Last year’s output just topped the 314.5 tonnes produced in 1997 and shows the industry has shaken off the malaise of a decade ago when fell to 220 tonnes
“The record output last year was worth $17.3 billion at the average spot price,” Surbiton Associates director Sandra Close said in a statement.
Production would have been higher had it not been for a slower-than-expected start to the year because of wet weather, the impact of a quake at the Cadia mine in NSW in March and a pit wall collapse in May at Kalgoorlie’s Super Pit.
“It took 21 years to break the old calendar year record and the outlook for the near term looks positive,” Dr. Close said.
“After a fall to just 220 tonnes in 2008, the industry has bounced back, helped in part by the weakening of the Australian dollar against the US dollar, as it has fallen from around parity to near 70¢ in the last decade.”
A lower Australian dollar makes local bullion more attractive to international investors but the price in US dollars is rising, indicating greater global demand for the commodity.
“The last few months have been a time for records,” Dr. Close said. “Not only did we have record gold production last year, and near-record quarterly production, but the gold price in Australian dollars also hit an all-time record of $1876 per ounce on February 20.”
Surbiton said the Australian gold price averaged $1711 an ounce in the last three months of last year, rising to $1820 an ounce this year.
Production will be boosted when the Gruyere mine 200km north-east of Laverton in WA starts operating later this year. The joint venture between Gold Fields and Gold Road is expected to eventually produce 300,00 ounces, or about 10 tonnes, a year.
Newcrest’s Cadia mine in NSW was the most prolific producer last year. Its 750,000 ounces topped the 710,000 from Newmont’s Boddington mine in WA.
While a solid rise is expected this year, several big new mines coming on stream and expansions at existing moves from late this year and 2020 should push gold output higher over the next three years.
The future ownership of Boddington and the Super Pit could be up in the air if Barrick succeeds in controversial no premium takeover offer for Newmont, announced last week.
Barrick and Newmont own 50% each in the Super Pit. The Super Pit has a capacity of 850,000 ounces of gold a year but that was slashed by the big rockfall last year.
Cadia’s output was also restricted in 2017 and 2018 by the impact of separate earthquakes.
The new Carapateena project of OZ minerals in South Australia is slated to start in the last quarter of this year, while output at OZ Minerals Prominent Hill mine will rise to a range of 3.7 million to 4.1 million tonnes this year, meaning more gold and copper will be produced.
Newcrest has big expansion plans for Cadia as well, with the feasibility report for the project due to be completed this half. Cadia’s project could cost upwards of $600 million.
BHP is increasing expanding gold and copper output from Olympic Dam. Copper output is projected to grow 75% to 350,000 tonnes a year under the plan confirmed in February, while there will be a smaller increase in gold, silver and uranium output. The cost will be around $3 billion.
