Photo by: Bloomberg
PERTH (miningweekly.com) – The Gold Royalty Response Group (GRRG) has warned that Russia could replace Australia as the world’s second-largest gold producer if it met production forecasts by Gold Industrialists’ Union.
The Russian lobby group estimates that the country could increase its output to some 275 t during 2014, as the industry boosted production by 26.6% during the first half of the year.
GRRG spokesperson and MD of gold miner Silver Lake Resources Les Davis pointed out that gold exploration in Western Australia had dropped by some 50%, as profit margins in the sector continued to narrow.
“The big increase in Russian gold production comes at the same time as gold producers in Western Australia are putting exploration on hold,” Davis said.
“Almost two-and-a-half years ago the Western Australian government launched a review of the royalties paid for mineral commodities, including gold. High operating costs in Western Australia and low gold prices have made the sector increasingly marginal so most gold producers have put exploration on hold as they wait for the outcome of the review.”
Davis said the state’s gold miners were confronting an increasingly competitive global market and could not sustain any further cost increases.
“Our industry has been a mainstay of the Western Australian economy for more than a century, but we can’t compete if we continue to face increased cost burdens. We pay our fair share of taxes and royalties and we are competing in a very tough global market.”
The GRRG recently launched a social campaign to highlight the vital contribution made by the gold industry in an effort to sway public opinion on an increase in gold royalties.
The state government was currently undertaking a royalty review, which was expected to be completed by the end of 2014.