Record gold price in Australian dollar blessing and curse at the same time

In Australian dollars, the price of gold has been at record levels for some time now. And as it turns out now, this is both a blessing and a curse for the industry Down Under. In fact, gold output from Australian mines in the past quarter fell to its lowest level for a year. According to Melbourne-based experts from Surbiton Associates, 78 tonnes of the yellow metal were mined on the fifth continent between July and September, a drop of around 5% on the second quarter. In fact, this was also the lowest quarterly production since the first quarter of 2018, which was affected by heavy rainfall, Surbiton said.

Two factors in particular contributed to the decline in output, the experts explained. The first was production disruption due to unexpected technical problems and planned maintenance, and the second was the high gold price in Australian dollars. As the analysts stated, the Australian spot gold price averaged AUD 2,150 per ounce in the September quarter. In the second quarter it was only AUD 1,870 per ounce and in the first quarter of 2019 approx. AUD 1,830 per ounce. And one effect of the increased price is that it allows some mines to lower the content of processed material by adding material from lower gold content stockpiles or mining ore with lower gold content – thus extending the mine’s life.

However, Surbiton believes that Australian gold production could recover in the fourth quarter of this year as some mining problems are likely to be resolved and new gold producers added.

However, another uncertainty that long overshadowed the Australian gold sector has now disappeared after Saracen Mineral Holding (WKN A0MN37) acquired Barrick Gold’s (WKN 870450) 50% stake in the Super Pit in Kalgoorlie. According to Surbiton, this deal means that Australian control of the domestic gold industry will rise to almost 60%. In 2002 this had reached a low of 30%.

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