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Gold a star performer in Australian minerals exploration

Topics [ gold ]

As gold adds shine to Australia’s lacklustre minerals exploration sector, what and who is driving the upsurge in activity?

Gold exploration rose 30 per cent year on year in the March quarter to make up 46 per cent of Australia’s total minerals expenditure, an Australian Government report released last week revealed.

Western Australia is still the core of the nation’s $155 million gold exploration activity, attracting 75 per cent of expenditure in the sector.

The diggers and dealers have been spurred by a forecast increase in world gold consumption. The June Resources and Energy Quarterly published by the Department of Industry, Innovation and Science predicts global demand to rise by 1.8 per cent in 2018 to 2,484 tonnes.

Our ancient desire for gold jewellery continues to be the overwhelming factor behind increased appetite for the precious metal. Jewellery accounts for 80 per cent of total fabricated demand and the report forecasts jewellery consumption to increase by 3.5 per cent in 2017.

Continued economic growth in India and China — the world’s two major jewellery markets — is predicted to support higher discretionary spending on gold into 2018. 

Technology linked usage of gold is also driving increased demand. 

Consumption for electronics rose by 3.7 per cent year on year in the March quarter. Growth in this use for gold, including wireless technology for smartphones and gold bonding wire, is forecast to be 2.2 per cent in 2017 taking the volume to 261 tonnes.

The value of Australia’s annual gold exports is forecast to total $16.5 billion in 2017–18 and $17 billion in 2018–19. 

Export volumes are forecast to rise by 4.5 per cent in 2018-19, reaching a peak of 334 tonnes. 

On the supply side, global mine production is forecast to rise by 1.5 per cent in 2017 to 3,305 tonnes. World production is then expected to plateau over the next three years, but this is dependent on new projects reaching commercial production.

By contrast to what is happening in gold exploration, investment in Australia’s mining sector as a whole has “declined rapidly in recent years and is expected to continue to do so”, said Mark Cully, Chief Economist at the Department of Industry, Innovation and Science, in his foreword to the report. He said this was evident in the reduction in overall mining industry employment. 

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