COVID cramps gold production

COVID-related personnel shortages are taking their toll on Australia's gold output, according to gold mining consultants Surbiton Associates. Australian gold production in 2021 totalled 315 tonnes, or 10.1 million ounces - lower than the peak production in 2019 and 2020 and two tonnes lower than in 2018. Australia is the second-largest gold producing country in the world after China. Local gold output for the first half of the 2021 year was slightly ahead of China but this was not sustained later in the year, so Australia remains in second place. “Compared with 2020, Australian gold production in 2021 declined by 12 tonnes or four per cent,” said Dr Sandra Close, a director of Surbiton Associates. “There are a number of factors which have contributed to the fall, many of which are a result of the pandemic.” Western Australia, which produces around three-quarters of Australian gold, closed its borders in mid-March 2020 to restrict the spread of COVID-19. Its border was not finally reopened until March 3, 2022. “Although the gold producers continued to operate extraordinarily well under the circumstances, the restrictions imposed due to the pandemic have had an increasing impact,” Dr Close said. “Personnel shortages and burn-out have been taking a toll and this year production has been negatively affected.” The availability of fly-in-fly-out workers from other states has been particularly limited. There has also been a shortage of haul truck drivers, plus shortages of some supplies and disruption to interstate haulage. Assay laboratories, for example, are just one of the many service industries also affected, with a substantial increase in the turn-around time for sample analysis. “A consequence of the shortage of haul truck drivers, is that there has been a restricted supply of higher-grade ore at some processing plants,” Dr Close said. “This has placed a greater reliance on the treatment of lower grade stockpiled material.” Dr Close said this appeared to have been a contributing factor to the lower overall gold production for the 2021 year. “Fortunately, during 2021 the gold price in Australian dollar terms trended upwards, although it was relatively flat in US dollar terms,” Dr Close said. “The 315 tonnes of gold produced in 2021 was worth around A$25.5 billion at the average price for the year, which was a substantial contribution to Australia’s exports.” Then, when Vladimir Putin ordered Russian military forces to invade Ukraine on February 24, gold prices rose sharply. The London pm fix gold price reached US$1,936 per ounce, while the corresponding Australian price rose to A$2,690 per ounce. “The gold market thrives on uncertainty,” Dr Close said. “It is not really surprising to see buoyant gold prices at present, given the huge concerns regarding the situation in the Ukraine, as well as rising inflation in the US and elsewhere.” “In the September quarter, several producers had operational difficulties. However, in the final quarter of 2021, Australian gold mine production rose by four percent to 81 tonnes.” Newmont’s operations at Tanami and Boddington both increased production by around one tonne, or approximately 32,000 ounces each, in the December quarter. Also, Northern Star’s Super Pit production was up 22,500 ounces and Gold Fields’ St Ives output increased by 16,500 ounces. By comparison, production at Kirkland Lake’s Fosterville operation in Victoria was down around 26,600 ounces for the December quarter, mostly due to lower throughput. In February 2022, fellow Canadian company, Agnico Eagle Mines Ltd completed the takeover of Kirkland Lake Gold Ltd. “Despite the problems, exploration activity for gold, lithium minerals, rare earths and base metals, continues apace,” Dr Close said. “Activity in the mining and resources industry is the strongest I’ve seen for years. A steady stream of announcements continues to flow into the Australian Securities Exchange, including reports on new discoveries, drilling results, capital raisings and initial public offerings.” Australia’s largest gold producers for the 2021 calendar year were: Operation Ounces Owner Boddington 696,000 Newmont Corp Cadia East 598,670 Newcrest Mining Ltd Fosterville 509,600 Kirkland Lake Gold Ltd. Super Pit 490,112 Northern Star Resources Ltd Tanami 485,000 Newmont Inc.

COVID cramps gold production

Industry Queensland

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