By David Lew
Bullion lovers have been reading the fantastic stories that have been coming out of China in the last one year on the gold buying frenzy and the gold production momentum that is going on in the dragon country. China is today the largest producer of gold. China has beaten India to emerge as the largest consumer of gold. China now wants to emerge as the No 1 country in the world with the largest deposit of gold resources.
But why is it that not much is written about the gold fever in Australia, the second largest producer of gold in the world? I have been getting mails from readers asking me about the status of Australia in the global gold business. This article, indeed, makes a small attempt on Australia and gold.
There is a big difference between gold trading in China and Australia. Consumption of gold in the form of investments, jewellery purchases, gold coins sales is booming across Chinese urban and rural areas. But compared to this, there is not much gold buying frenzy in Australia. Australians are not great gold jewellery purchasers compared to Chinese people. But there is one thing on gold in common with China and Australia. Several new companies are permission to mine gold, silver and copper deposits across China and Australia by the respective governments.
So, the focus or the competition between China and Australia is in gold production, not in consumption.
Gold is, indeed, running on the veins of Australians. Do you know that gold is Australia's second largest export earner, after coal. Australia contains 10% of the world's gold resources—meaning the country’s mineable gold potential is huge. Western Australia is responsible for 75% of Australia's gold production and also hosts approximately two thirds of Australia's 4500 t gold resources. Queensland and Northern Territories are the other major producers.
The major gold producers in Australia are WMC's Olympic Dam Mine, Kalgoorlie Consolidated Gold Mines' Superpit, AngloGold Australia's Sunrise Dam, Delta Gold's Kanowna Belle and WMC's St Ives gold mines. Western Australia's gold deposits are hosted by greenstone belts located in the Yilgarn craton. Gold deposits are generally hosted by north northwest trending structures, which host gold in steeply dipping lenticular orebodies, similar to deposits in Zimbabwe, Tanzania and Ghana.
Here is an interesting historical gold rush that Australia has passed through over the years, culled out from the Parliament of Australia statistics on gold mining in that country:
“Since gold was first discovered in Australia in 1851, first in New South Wales then later the same year in Victoria, there have been several peaks in gold production.
From nothing, the gold rush in Australia in the 1850s rapidly led to gold outputs of around 90 tonnes per year from easily-won alluvial gold, peaking at 95 tonnes in 1856. From this time, output slowly declined as alluvial reserves were depleted and miners turned to more difficult underground deposits. Despite discoveries at Charters Towers in Queensland, by the mid-1880s gold production was down to around 30 tonnes per year.
The next surge in production of gold began during the early 1890s, with the discovery and development of the goldfields of Western Australia—the Golden Mile of Kalgoorlie–Boulder and Coolgardie—and the introduction of new technologies which allowed gold to be profitably extracted from lower grades of ore. Output rose relatively rapidly to just short of 120 tonnes in the year 1903 before slowly declining again to a low of just 13 tonnes in 1929. This decline was exacerbated by the Kalgoorlie mines chasing deeper more inaccessible gold and the manpower losses of the first world war period and after.
The third rise in production began in the 1930s depression and rose to a peak of just over 50 tonnes by 1939 and 1940. This ‘mini-boom’, was fuelled by several factors, including the increase in the price of gold, the introduction of the flotation process to treat gold ores, and the subsidised occupation of many of the unemployed in seeking gold.(8) New deposits also were discovered in Western Australia and the Northern Territory in this period.
Production declined during the second world war to a low of just 20 tonnes per year, before a revival to around 35 tonnes per year by the late 1950s. After that time gold output declined to around the 20 tonnes per annum by the late 1970s.
The most recent boom in gold production began in the early 1980s. There were two reasons for the increase in production at this time. One was the floating of the gold price in 1971 which led to an increase in world gold prices; the other was the application of the then new carbon-in-pulp (CIP) and carbon-in-leach (CIL) gold ore processing techniques.
Exploration for, and production of, gold did not begin immediately the gold price was floated in 1971 because the mining industry was focused at that time on other minerals. There was also the perception in the industry that gold investments were risky.
However, the increase in world gold prices to more than US$500 an ounce by the early 1980s and the widespread acceptance of the CIP and CIL techniques, led to a rapid increase in gold production.(9) In addition, the sometimes long lead times in bringing exploration to discovery and then to production meant the impetus given by rising gold prices did not yield increased production until the 1980s.
