The latest Resources and Energy Quarterly (REQ), released by the Federal Government’s Department of Industry, Science, Energy and Resources, reported Australia increased its production by 0.6% to 328 tonnes in 2020, despite a decrease in global gold supply by 3.9% due to COVID-19.
As the world’s second largest gold producer, Australia’s industry is continuing to keep our nation strong, making a vital contribution to our economic prosperity and supporting the social fabric of our communities.
Australia’s gold exports increased by 9.1% to over $25 billion in 2020, and is expected to reach record 29 billion (in real terms) in 2020-21 due to higher gold prices.
Australia’s gold exploration activities are critical to the future growth of the industry, with expenditure increasing by nearly 16% in 2020 to nearly $1.3 billion — accounting for 47% of Australia’s total minerals exploration expenditure during the year — driven by high US dollar and Australian dollar gold prices. Western Australia remained the centre of gold exploration activity in Australia, accounting for nearly 70% (or $908 million) of total gold exploration expenditure.
A solid pipeline of projects in Australia and Canada are all likely to drive higher global gold mine output in the short term, with miners focusing on expansions and extending the life of existing mines. As indicated in the September REQ, Australia is expected to overtake China as the world’s largest gold producer in 2021, producing 384 tonnes.
The medium to long term future and sustainability of the Australian gold industry is reflected by its gold economic resources, of which Australia has the largest, accounting for 21% of global gold reserves.
Production at Kirkland Lake Gold’s Fosterville mine in Victoria increased by 3.4% in 2020 to nearly 20 tonnes, driven by increased mill throughput.
Over the same period, production at Ramelius Resources’ Mt Magnet and Vivien gold mine rose by 47% to 5.7 tonnes, propelled by higher grades.
Several gold projects are expected to ramp up production in the coming years including St Barbara’s 7.9 tonnes a year Gwalia Expansion in WA and the 15 tonnes a year Tropicana Expansion project, a joint venture between AngloGold Ashanti Australia and Regis Resources.
Production at Newmont’s Boddington gold mine in Western Australia and Tanami gold operation in the Northern Territory is expected to reach nearly 26 and 16 tonnes of gold in 2021.
Several gold expansion projects are expected to be completed in 2022 and 2023. This includes Newmont’s Tanami Expansion 2 project which is expected to be commissioned in the first half of 2024, lifting the mine’s average annual gold output from 15 tonnes a year in 2020 to 18 tonnes a year in 2025.
Australian gold mine production is forecast to grow at an average annual rate of 5.7% between 2020–21 and 2023–24, reaching a peak of 410 tonnes in 2023–24, with Western Australia accounting for 68% of Australian total mined gold output.
A Global Interest
Gold has benefited from its status as a safe haven asset during the COVID-19 pandemic.
Combined with a low interest rate environment and weaker equity markets, the first half of 2020 drove the flows into gold-backed exchange traded funds (ETFs).
Global gold imports including jewellery, gold bars and coins, and ETFs rose by 8.3% in 2020, to nearly US$298 billion, driven by the ETFs based in the UK, Switzerland and the US.
About the REQ
The Resources and Energy Quarterly (REQ) is a publication produced by the Australian Government’s Department of Industry, Science, Energy and Resources contains the Office of the Chief Economist’s forecasts for the value, volume and price of Australia’s gold commodity exports.