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Lawrie Williams: China Losing Top Gold Producer Slot to Australia

The latest figures from Melbourne-based specialist gold consultancy, Surbiton Associates, suggest that China may have lost the global No.1 slot for gold output to Australia over the first half of 2021. Being based in the latter country, Surbiton monitors Australian domestic gold production extremely closely, so its latest figures are considered to be accurate and have been announced in a Surbiton press release. The Australian consultancy has compared its H1 assessed total for Australian new mined gold output with the latest total for Chinese domestic gold production announced by the China Gold Association, notes Lawrie Williams, noted gold authority with Sharps Pixley.

The comparative figures are as follows: China 153 tonnes. While the Australian miners produced 74 tonnes in Q1 and 83 tonnes in Q2 making a total of 157 tonnes. It should be recognised however that the reported figure for China’s gold output may just relate to new mined gold and the country’s overall total would be boosted by byproduct gold from the country’s big base metals smelting and refining industry.

Surbiton Director, Dr. Sandra Close, notes “We shall have to see what happens to gold production in the next six months, both in Australia and in China. It was reported that Chinese gold output was adversely affected by work accidents including deaths, with shut-downs resulting while investigations took place.”

Surbiton says that according to the US Geological Survey (USGS), China has been the world’s largest producer of gold since 2007 when it overtook South African output. Australia has, according to Surbiton, remained the world’s second largest producer after China for over a decade, although London based specialist precious metals consultancy, Metals Focus, in its latest global gold production estimates reckons that in reality Russia was the world’s second largest gold producer in 2020 pipping Australian output by 3 tonnes. This production estimate puts Russia’s 2020 gold output at 331tonnes, compared with China’s 368 tonnes.

Australia’s gold production was 321 tonnes for the financial year 2020/21 (the Australian financial year runs from and to end-June) and this is worth around A$26 billion at the current gold price of some A$2,500 per ounce,” Dr Close said. “Gold has certainly made a sizeable contribution to the economy in what has been a most challenging COVID year.”

Australia’s 2020/21 output fell seven tonnes, or two percent, compared with the previous financial year figure of 328 tonnes, which was an all-time record, whether on a financial or calendar year basis.

The nine tonne, or 12 percent, increase from the March 2021 to the June 2021 quarter was due to a number of existing and new operations recording higher gold production.

Dr Close said Kirkland Lake’s Fosterville mine in Victoria increased output by 49,000 oz (1.52 tonnes) in the June quarter, due to an increase in grade from almost 20 g/t gold in the previous quarter to almost 30 g/t. These are relatively high grades but nowhere near the grades of around 40 to 50 g/t treated at Fosterville from mid-2019 to mid-2020.

“Fosterville has certainly had an excellent few years and is currently Australia’s third largest single operation, for both the full 2020/21 financial year and the latest June quarter,” Dr Close said. “However, it took many years and several owners before its true worth was revealed.”

Additionally, in the June quarter 2021 Newmont’s Boddington operation in WA saw a rise of 36,000 oz (1.12 tonnes), while Evolution Mining’s Mount Carlton mine in Queensland increased output by 11,700 oz gold (0.36 tonnes).

“One of the new operations was Capricorn Resources’ Karlawinda project, in the Pilbara, south-east of Newman,” Dr Close said. “Its first gold was poured in the June quarter and it is ramping up to annual production of around 100,000 oz (3.1 tonnes).

It is interesting to look at the amount of money now being spent on gold exploration as a proportion of total mineral exploration expenditure. In 2001 gold exploration comprised around 55 percent of total mineral exploration expenditure. It had fallen to only 20 percent between 2008 and 2014 but has recovered now to around 50 percent.”

She said the local gold price remains encouraging and in the past few quarters this has driven expenditure on gold exploration to around A$375 million and total mineral exploration to around A$750 million, on a quarterly basis, according to the Australian Bureau of Statistics data. Australia’s largest gold producers for the 2020-21 financial year were:

Cadia East 23.8 tonnes Newcrest

Boddington 21.8 tonnes Newmont

Fosterville 18.4 tonnes Kirkland Lake Gold Tanami 15.0 tonnes Newmont

Super Pit 14.9 tonnes Northern Star

Editor’s Note: Lawrie Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. His commentary is featured on the Sharps Pixley website. Sharps Pixley is the one stop gold shop in London where you can buy, sell, test and store gold and silver bullion. Wholly-owned by the Degussa group, one of the largest sellers of retail physical gold in Europe.
Visit https://www.sharpspixley.com.

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