Although US dollar gold prices declined sharply during February to the lowest figures for almost two years, Australian gold producers were broadly shielded from this, Melbourne-based gold mining consultants Surbiton Associates said on Sunday.

The fall in US dollar gold prices was mainly owing to the appreciating US dollar compared with other currencies, including the Australian dollar, plus the effects of increasing interest rates worldwide.

“Although the US dollar gold price fell by $101/oz in February 2023, the Australian dollar gold price only declined by A$14/oz over the same period, thanks to a weaker Australian dollar,” said Surbiton director Dr Sandra Close.

“For local Australian producers and investors, it is absolutely vital to pay attention to the US dollar:Australian dollar exchange rate.”

Close was emphasising the importance of exchange rates when releasing Surbiton Associates’ figures on the Australian gold industry’s output for the full 2022 calendar year. She noted the impact that significant exchange rate variations have had throughout the 40 years since Australia’s modern gold boom began.

“Gold production for the 2022 calendar year totalled around 313 t, or a little over 10-million ounces, and just half a percent, or two tonnes, less than in 2021,” she said. “The value of gold produced in 2022 was around A$26-billion and as most of this gold is exported, the gold mining industry is an important contributor to Australia’s total foreign exchange earnings.”

“For the three months to 31 December 2022 gold output was around 78 t,” Close said. “This was around 4%, or almost three tonnes, more than for the previous three months.”

She said that overall, the industry’s performance was steady, with the usual ups and downs at individual operations. For the December quarter, excellent performances were recorded at Boddington (up 35 000 oz) and at Cadia and Thunderbox (up 27 000 oz each.) By comparison, only three operations reported a reduction in gold output of more than 5 000 oz for the quarter.

In early February, US-based Newmont made an indicative, non-binding, all-scrip bid for Newcrest Mining, Australia’s largest ASX-listed gold mining company. The bid, worth A$24.4-billion, was rejected by Newcrest’s directors as inadequate.

“It would be rather sad to see Newcrest go to an overseas-based owner, as local control of Australia’s gold mining companies would then fall to below 5%,” Close said. “Unfortunately, few people now know that huge changes in control of the Australian gold industry have happened before.”

“I recently completed my second book Australia’s Greatest Gold Boom and also published a second edition of my earlier book, The Great Gold Renaissance,” Dr Close said. “Together these books cover the whole modern gold boom and explain how Australian control of the local gold industry went from 80% to under 30% in just a few years but more recently has recovered to stand at around 60%.”

The books cover many facets of the industry and describe the reasons why, over the last 40 years, Australian gold output has risen from under 20 t/y to over 300 t/y, with around 9 500 t of gold being produced over that period. The books are an invaluable resource for investors, as well as for mining and exploration companies and a wide variety of the associated service industries.

“It will be interesting to see what happens regarding the Newmont bid for Newcrest,” Close said. “One aspect which had a major impact on the change in overseas control in the early 2000s was the US dollar:Australian dollar exchange rate – it will be worth keeping an eye on this factor particularly.”