The next change in the production of gold in Australia came in 1991 following a decision announced by the then Treasurer Paul Keating in a Ministerial Statement on 25 May 1988, that the status of the gold mining industry as the only industry in Australia not paying income tax would be phased out, beginning on 1 January 1991. Production had reached 244 tonnes a year in 1990 and had been increasing at over 40 tonnes a year towards the end of the 1980s.

From 1990 until 1996, production stalled at around 250 tonnes a year. Then, despite lower world prices, the momentum gained from higher margins and fresh exploration, and a combination of the opening of new mines and the expansion of operation of others, led to an increase in production from 1996, reaching a peak of 314 tonnes in 1997.(10) After 1997, production declined partly due to the reduction in exploration and the consequent lack of new discoveries. Nonetheless, Australia has recently replaced South Africa, after the United States of America, as the second largest world producer of gold.

After coal, iron ore, and crude petroleum, gold currently ranks fourth in value of all Australia’s merchandise exports; exports of (non-monetary) gold amounted to $5 642 million in 2004–05.

In 2004–05, the main destinations for Australia’s gold were India, Thailand, the United Kingdom, the Republic of Korea, and Singapore; India alone imported $2 773 million worth of Australia’s gold in that year.

Ten years ago, in 1994–95, the export of $4 820 million worth of gold held second place in value, after coal, in Australia’s exports. At that time, the main export destinations for gold were Singapore, Japan, and the Republic of Korea, followed by Malaysia, Thailand, and Hong Kong. Exports to Singapore, Japan, and the Republic of Korea together amounted to 81 per cent of the total.

The quantity of gold exported annually from Australia has been running at around 300 tonnes for the past ten years. Note that the abnormally large amount of gold exported in 1998 was due, not to increased production, but to several other factors at that time.

These factors were: (i) ‘a sharp increase in the imports of gold scrap (mainly jewellery, arising from the Asian economic turndown) which was subsequently refined, melted into bars and exported’, (ii) ‘the one-off export’ of gold doré (crude gold containing silver and other impurities) for overseas processing, re-import and then re-export due to a refinery fire in Melbourne, and (iii) some gold ‘round-tripped’ through the Republic of Korea, i.e. gold exported for rolling into plate, re-imported for casting, then exported again.

Gold Exploration

From amounts of around $70 million per annum in the early 1990s, the expenditure on gold exploration in Australia began to increase with the turnaround in world gold prices in 1993. It reached a peak of $226 million in the June quarter 1997, some time after the world gold price had come off its 1990s peak of US$411 an ounce in February 1996.

By the beginning of the twenty-first century expenditures on the exploration for gold had returned to the levels of the early 1990s, around $70 million per annum. There are many reasons for the downturn in exploration at this time which affected gold as well as other minerals. In part it was driven by the imperatives of a more globalised industry, in part by the changes brought by the application of native title legislation, and in part by the lower gold price driven by central bank sales and threats of sales worldwide."

I hope it made interesting reading on Australia’ boom in gold mining and production. It may not be surprising if Australia overtakes China to become the No 1 gold producer in the world in next year.

David Lew is a precious metals commentator with Commodity Online. You can contact him at info@commodityonline.com

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