Australia's gold output at 2-decade low - survey

Production and Markets

Publishing Date: 23 Feb 2009 9:52am GMT
Author: Mining Journal

Australia's gold production plummeted to a two-decade low of 219 tonnes in 2008 as mining companies dug up more lower gold-bearing ores in response to rising bullion prices, a sector survey released on Sunday showed.

"This is the lowest annual production since 1989," said Sandra Close, a director of Surbiton Associates, which compiled the tally. By reducing the grade of ore mined, known as low-grading, less gold is produced immediately but the life of the mine is extended and more gold is produced in total, Close said.

"Output has trended downward over the last decade, in part due to reduced through put but also due to higher gold prices which have enabled lower grade ores to be treated profitably," Close said. Australia, the world's third largest producer behind China and South Africa, mined 219 tonnes in 2008, down 29 tonnes, or 12 percent from 2007, the survey also showed.

In Australian dollar terms, gold climbed 28 percent in 2008 due to a sharp weakening in the local currency against the U.S. dollar. The Australian-dollar gold price has risen further in 2009, hitting a record high of more than A$1,564 an ounce on Friday. U.S. gold futures rose above US$1,000 an ounce for the first time since March 2008.

Output in the fourth quarter alone dropped 13 percent to 55 tonnes versus a year ago, according to Surbiton.

(Reuters, Feb 22)