Australian Gold Output Hit By Rain
Melbourne-based gold mining consultants,
Surbiton Associates Pty Ltd, said Australian
gold mine production for the three months
to March 31st, 2018 totalled some 74
tonnes, six tonnes or 7% less than in the
previous quarter.
Despite the lower March quarter output,
the result compares favourably with
the 71 tonnes of gold produced in the
corresponding quarter of 2017. “Overall
it was a reasonable performance given
that production in the December quarter
was particularly high at 80 tonnes,” said
Dr Sandra Close, a Surbiton Associates’
director. “This was an outstanding result.
However, as anticipated, the figures for
the latest quarter are down, as the usual
wet weather early in the year in Western
Australia (WA) and north Queensland
caused production cuts at several mines.”
Dr Close said the March quarter, which is two days
shorter than the December quarter, also accounted for
almost a tonne and a half of the reduced output. “Just
a handful of the largest operations accounted for some
four tonnes less gold production in the March quarter,”
Dr Close said. “When wet conditions cause mining and
haulage problems, operators have to draw from low grade
stockpiles to maintain mill throughput.”
She said that in the latest quarter, AngloGold and
Independence Group’s Tropicana Joint Venture produced
34,000 ounces less; Newcrest’s Telfer operations output
was down 33,000 ounces; Newmont and Barrick’s Super
Pit was 28,000 ounces lower; and output from Newmont’s
Boddington and Tanami operations fell by a combined
30,000 ounces.
“In addition, Newcrest’s Cadia East operation in New
South Wales (NSW) was down some 37,000 ounces in the
March quarter,” Dr Close said. “It has had a difficult time in
the last 12 months but now production has resumed once
more and gold and copper output is improving.”
In mid-July 2017, Cadia East suffered an earth tremor
which disrupted production during the September quarter.
Although production recovered in the December quarter,
it was disrupted again when a tailings dam wall was
breached in March 2018. Mining was suspended for two
weeks and processing did not resume for a further week.
“Only a small number of operations reported higher output
during the March quarter,” Dr Close said. “AngloGold’s
Sunrise Dam operation increased output by about 20,000
ounces mainly due to higher recovered ore grade from
underground, while both BHP’s Olympic Dam and Silver
Lake’s Mt Monger operations each produced 13,000
ounces more.”
Dr Close said overseas control of Australia’s gold
production has progressively fallen for some years and will
likely continue to decline as Australian companies develop
new mines and some overseas companies withdraw, often
selling their Australian operations back to local producers.
“Overseas control of Australia’s gold mines rose from
around 20% to around 70% in the late 1990s and early
2000s,” Dr Close stated. “But it has subsequently reduced
substantially, so that overseas control currently sits at
around 46%.” She added that it was disappointing to hear
that once again the subject of an increased royalty on gold
had been raised in WA, where about three quarters of
Australia’s gold is produced. Although the royalty was not
increased in the WA State Budget on May 10th, treasurer
Ben Wyatt said he believed that an increase in the royalty
for gold was justified, noting that its royalty rate was lower
than that charged for other minerals.
“Not all commodities are the same and the royalty rate
applying to one mineral may not be appropriate for another,”
Dr Close said. “For example, iron ore is a bulk commodity
that lends itself to large-scale mining and minimal
upgrading. Gold is at the other end of the spectrum, with
very low grade ore mined on a much smaller scale, with that
ore also requiring significant processing and refining.”
She added that at any particular time there were always
some operations doing well, some operations will be just
profitable and some will be really struggling. “Overall the
gold mining sector works hard to control costs but currently
some producers have All In Sustaining Costs (AISCs) well
above the gold price,” she said. “To impose a higher royalty
would seem a peculiar way for the present WA government
to keep people in work and to keep the gold industry
productive and contributing to our export earnings.” © World Gold CouncilSOLITAIRE INTERNATIONAL JULY 2018 35SPECTRUM