The latest Resources and Energy Quarterly (REQ), from the Federal Government’s Department of Industry, Science, Energy and Resources, reported Australia’s gold mine production is projected to rise at an average of 6.8% a year in the next three years, reaching a peak of 390 tonnes in 2025–26.
Australia remains the second largest gold producer in the world, and the industry contributed $23 billion to the economy in 2021, furthering the nation’s economic prosperity, providing tens of thousands of jobs, and supporting local communities.
With 82 operating gold projects accounting for 9% of global mine production, and a solid pipeline of projects, the country’s gold mine production is expected to reach 305 tonnes in 2022. Growth over the next few years will be driven by mine reactivation and expansions, as well as production from new mines (Bellevue Gold’s 5.7 tonnes a year Bellevue gold mine in WA is expected to come online in June 2023).
Australia’s gold export earnings also increased by 6.3% to nearly $27 billion in 2020–21. This was largely propelled by a 4.4% year-on-year rise in Australian dollar gold prices, as well as a 9.9% boost in global gold consumption. Australia exports its gold to more than 55 countries, and export volumes are projected to rise from 285 tonnes in 2021–22 to 382 tonnes in 2025–26.
However, gold production is tipped to eventually decline as reserves are exhausted. After reaching a peak in 2025–26, Australian gold mine output is projected to decline by 4.1% a year to 374 tonnes in 2026–27. Output will be weighed down by lower grade ores, reserve exhaustion and closures, and will be exacerbated by falling gold prices. It is therefore essential the industry is supported and investment in exploration is incentivised and continues to rise. Exploration expenditure is a vital gateway towards finding new gold deposits and realising the local economic and jobs benefits of production.
Exploration
Australia’s gold exploration expenditure increased by nearly 22% in 2021 to $1,601 million. This accounted for 45% of Australia’s total minerals exploration expenditure during the year — driven by high US dollar and Australian dollar gold prices. Western Australia remained the centre of gold exploration activity in Australia, accounting for nearly 70% (or $1,117 million) of total gold exploration expenditure.
WA centre of Australian gold production
In 2020–21, Western Australia was the largest gold producing state in Australia, accounting for 68% (or 218 tonnes) of Australian total gold mine output, followed by New South Wales (11% or 36 tonnes), Victoria (7.6% or 24 tonnes), the Northern Territory (4.7% or 15 tonnes), Queensland (4.1% or 13 tonnes), South Australia (3.8% or 12 tonnes), and Tasmania (0.7% or 2.1 tonnes).
WA is expected to remain Australia’s largest gold mine producing State over the next several years as production rises. Production in the Northern Territory, South Australia and Tasmania is also expected to rise.
Global Consumption
On a global scale, gold consumption increased by 9.9% to 4,021 tonnes in 2021. The economic recovery from the pandemic saw gold jewellery demand jump 52% to 2,124 tonnes, while demand for gold in technology increased by 8.9%, propelled by a 9.2% rise in gold used in the electronics sector. This is expected to continue into the future, with world gold consumption tipped to rise at an annual average rate of 4.0% for the next three years, fueled by a projected fall in gold prices.
About the REQ
The Resources and Energy Quarterly (REQ) is a publication produced by the Australian Government’s Department of Industry, Science, Energy and Resources containing the Office of the Chief Economist’s forecasts for the value, volume and price of Australia’s gold commodity exports.