Australia set to overtake China as world's largest gold producer

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According to the Resources Monitor's latest report, the gold industry is fairing surprisingly well throughout the coronavirus pandemic. 

Gold prices have consistently been on the rise for the past 18 months and - unlike most commodities - have seen steady growth this year, with the precious metal set to ride out the pandemic storm.

Gold prices have risen by a dramatic 12 per cent between January 1 and May 8 of this year, according to the latest data from Markets Insider and Trading Economics. 

The report also looked at contrasting commodities like lithium and nickel which dropped by 12 per cent, iron ore which dropped by 5 per cent and of course crude oil, which has been driven down by 53 per cent. 

Gold's pole position in the market has been attributed by Resources Monitor to attractive margins being made by key Australian gold producers. 

For example, Newcrest Mining have achieved an average gold price of $1569 per ounce at an all-in sustaining cost (AISC) of $872 per ounce, giving it a price margin of $742 an ounce. 

Saracen Mineral Holdings’ average gold price was $2228 per ounce with an AISC of $1133 and $1095 margin, while Silver Lake Resources and Northern Star Resources achieved margins of $790 and $589 respectively.

These comparatively strong margins and prices allow Australian gold miners to develop their existing mines while also constructing new ones. 

Other companies, such as Regis Resources and Capricorn Metals are full steam ahead for developing new gold projects, such as Regis’ McPhillamys project in New South Wales and Capricorn’s Western Australian project, Karlawinda.

However, the continuation of gold’s strong prices remains up in the air.

“This cannot be assessed with any confidence,” Resources Monitor stated in its report. “The sector has always had its bears and bulls, with bears currently seeing gold as over-priced and bulls seeing prices in coming months exceeding $US2500 ($3823).

“What can be said with reasonable confidence is that reflecting Australia’s role as a cost-effective producer, it will overtake China next year as the world’s largest gold producer.”

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