A new report from the Association of Mining & Exploration Companies (AMEC) looks at the current and future outlook for gold mining in Australia. The report provides key insights on what to expect in gold mining.
In 2017, 9.7 million ounces of gold were mined in Australia, generating $15.8 billion in revenue. Gold has been a major player in the Australian economy since its discovery in the 1800s. Gold production in the next 40 years is forecast to fall by half, due to declining reserves, uncertainty in exploration success and an average 13 year delay between discovery and development.
Tier-1 Discoveries Scarce
Tier-1 discoveries have been non-existent over the past ten years in Australia. The last one was the Tropicana gold deposit in 2005. As many parts of Australia represent a mature exploration environment, the decrease in Tier-1 discoveries is expected, though still concerning. The crux of the challenge of finding new mines is long-term sustainability. The currently operating mines can continue to meet demand in the short to medium term but depleting reserves will lead to their inevitable closure. It’s critical to find new sites for viability in the next 10 years and beyond.
For the mid- to long-term, new mines will have to be discovered and developed to replace existing operations. In fact, in the next 15 years, over half of the country’s gold production will have to come from undiscovered mines. This means, incentives and support for exploration are critical. Otherwise, the entire ecosystem of gold production is at risk. This marks an opportunity for the industry and government to create policies to support such initiatives. This includes innovation and ideas around enhancing the efficiency of gold mine production.
New Sites Require 13 Years from Discovery to Production
Looking at the immediate production forecast, there are three groups: existing, known projects and new discoveries. It currently takes at least 13 years from discovery to development and this delay period is increasing over time. Looking at the data that stipulates the production coming from new mines in 15 years, new sites are imperative and they must be ready to produce significantly.
In the next five to ten years, the central focus of new development will be based on known deposits. To maintain current production levels in the Australian gold industry, either discovery success must be doubled or the overall exploration expenditures must be doubled.
Exploration success will be pivotal in the race to fill any shortfalls in production, which are imminent.
Production Expected to Drop by Half
In the research, many different calculations and data points were considered for the modelling. Factors influencing the forecasts include depletion of current operations and a presumed reduction in new sites and the scale of the discovered mineral reserves. The current forecast for the next 40 years of gold production in Australia is expected to drop by 50 percent. As the gold industry is such an important economic pillar, this means there needs to be preparation to sustain or replace the income. The collective minerals industry accounts for eight percent of the country’s GDP.
For additional information on the future state of the gold industry, you can refer to “Long-term forecast of Australia’s mineral production and revenue – The outlook for gold 2017-2057” published by Association of Mining & Exploration Companies.