JOHANNESBURG (miningweekly.com) – Australian gold production for 2008, was estimated at around 219 t, or seven-million ounces, which was a 12%, or 29 t fall on the 2007 figure.

Melbourne-based mining consultants Surbiton Associates this week said that production for the December 2008 quarter was some 55 t, or 1,8-million ounces, lower than the September quarter, and 13% lower than the corresponding period in 2007.

“This is the lowest annual production since 1989. Output has trended downward over the last decade, in part owing to reduced throughput, but also owing to higher gold prices, which have enabled lower grade ores to be treated profitably,” said Surbiton Associates director, Dr Sandra Close.

When a mine reduces the grade of ore treated, less gold is produced in a given period but the life of the mine is extended and more gold is produced in total.

Close noted that despite the drop in production for 2008, the value of the gold produced was higher. “At average prices, 2008 production was worth around A$7,3-billion, compared with A$6,6-billion in 2007, but at the current price of over A$1 500/oz, 2008 output would be worth more than A$10,5-billion.”

The current investor interest in gold, and the focus on a rising gold price, presented an opportunity to examine just where the benefits of higher prices would flow, given the major changes in the Australian gold industry, over the last decade, said Close.

She added that in 1997, overseas control of the local gold industry was around 20%, but by 2003, it had reached around 70%, and was currently about 60%.

In the space of a few years, companies based in the US, Canada and South Africa took advantage of the low share prices and snapped up half of the Australian gold industry at very attractive prices.

“The sell-out occurred when the gold price was in the doldrums and share prices were low. While Australian investors did not value the local industry, others clearly recognised its potential and acted accordingly,” she noted.

She added that much of the benefit of today’s higher prices would not remain in Australia but would flow to overseas shareholders.

“Sadly, it seems Australian investors often fail to appreciate the long-term value of Australia’s mineral resources and are unaware of their strategic value and economic importance. Yet, our mineral resources, including gold, provide the best hope of paying our way in the world and reducing our escalating trade deficit.”

Close added that as one of the world’s leading mineral producers, it was vital that Australians and the Australian government appreciated not only the advantages that their country’s mineral endowment provided, but also the needed to ensure that the nation’s long-term interests were not compromised.

“Mining has always been an international business and there are many good reasons for this. But at the same time Australia and Australian investors need to stay in the game, otherwise we may end up becoming merely tenants in our own land, with little say in what happens to our mineral wealth.”

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