Global demand for gold: What it means for Queensland’s gold mining industry

Gold has been one of the most sought-after commodities in human history, prized for its beauty, malleability, and status as a store of value. Over recent years, the global demand for gold has surged due to a combination of economic uncertainty, inflationary pressures, and geopolitical tensions. This heightened demand has had far-reaching implications for gold mining industries worldwide, including Queensland’s vibrant gold mining sector. Australian gold production increased by 0.5 tonnes in the September 2024 quarter to 74 tonnes according to the Department of Industry, Science and Resources. Gold prices are forecast to remain elevated in 2025 before falling in 2026. Drivers of rising gold prices The rising price of gold is attributed to several interconnected factors: Economic uncertainty: During times of economic instability, gold is often seen as a safe haven asset. Global events such as the COVID-19 pandemic, trade wars, and the Russia-Ukraine conflict have driven investors to seek the security of gold, thereby increasing demand and prices. Inflation and currency fluctuations: As inflation erodes the value of fiat currencies, gold often becomes an attractive hedge.Recent inflationary pressures in major economies like the United States and the European Union have significantly boosted gold prices. Additionally, currency depreciation in emerging markets has further enhanced the appeal of gold as a store of value. Central bank purchases: Central banks worldwide have been increasing their gold reserves as a strategy to diversify away from the U.S. dollar. This trend has added to the global demand for gold, driving up prices. Investment demand: Exchange-Traded Funds (ETFs) and other investment vehicles have made it easier for retail and institutional investors to access gold. The growing popularity of these financial products has contributed to sustained demand for the metal. Limited supply growth: Gold is a finite resource, and while technological advancements have improved mining efficiency, the discovery of new, high-grade gold deposits remains rare. This limited supply growth has further tightened the market. Impact on major gold producers in Queensland Queensland, a key player in Australia’s gold mining industry, has felt the effects of these global trends. Major producers like Newmont and Evolution Mining have reaped the benefits of higher gold prices, reporting strong financial results and enabling them to reinvest in exploration and development projects while rewarding shareholders with dividends. Newmont: As one of the world’s largest gold mining companies, Newmont has seen its profit margins expand significantly. The company’s commitment to sustainability and technological innovation has further solidified its position as a leader in the sector. High gold prices have enabled Newmont to explore new ventures, including partnerships and expansions. It achieved the landmark acquisition of Newcrest Mining in 2023, and is now throwing its money behind GBM Resources’ Central Queensland gold projects via a new $25 million farm-in deal. Under the agreement, Newcrest has the right to acquire up to a 75 per cent interest in the Mount Coolon project tenements. Evolution Mining: Evolution Mining has leveraged the favourable market conditions to increase production efficiency and invest in resource expansion. The company’s focus on operational excellence has allowed it to benefit from the rising gold price while maintaining competitive costs. Evolution Mining owns the Mount Rawdon mine near Bundaberg and Ernest Henry near Cloncurry and retained an interest in the Pajingo mine on sale to Minjar Gold in 2016. Challenges for junior gold miners and explorers Yearly gold production is forecast to fall slightly in 2024–25 before resuming growth in 2025–26 as new mines and mine expansions come online. The Department of Industry, Science and Resources also has earnings forecasts revised down by $0.4 billion to $34 billion in 2024–25 due to the adoption of a slightly stronger forecast for the AUD/USD. Earnings forecasts for 2025–26 remain at $35 billion. While established players are thriving, junior gold miners and explorers in Queensland face a different reality. Despite the high gold price environment, investors have been cautious about funding these smaller companies. Several factors contribute to this lack of response: Risk aversion: Junior miners often carry higher risk due to the speculative nature of their operations. With no guaranteed production or revenue, investors are hesitant to allocate capital, even in a favourable gold market. Competition from alternative investments: The rise of technology-driven investments, including cryptocurrencies like Bitcoin, has diverted investor interest away from traditional sectors like gold exploration. These digital assets promise high returns and have attracted a younger, tech-savvy demographic of investors. Uncertainty in exploration results: The junior mining sector’s reliance on successful exploration campaigns adds another layer of uncertainty. Investors often prefer established producers with proven reserves. Queensland’s exploration potential Despite challenges, Queensland remains a hotspot for gold exploration. The state’s diverse geology and rich mineral deposits have attracted interest from both domestic and international players. Key areas of interest include: Cloncurry: Known for its prolific mineralisation, Cloncurry is a hub for gold, copper, lead and zinc mining and exploration. The region’s well-established infrastructure and proximity to major mining operations make it a prime location for further development. Charters Towers: With a history of significant gold production, Charters Towers continues to attract exploration activity. Modern techniques are uncovering new opportunities in this historic mining district. Juniors exploring in the district include GBM Resources, Sunshine Metals and Superior Resources. Croydon and Georgetown: These areas are gaining attention for their high-grade gold potential. Recent exploration campaigns have reported promising results, sparking interest from junior miners. Rockhampton: The region’s untapped potential and favourable mining policies have positioned it as an emerging area for gold exploration. Rockhampton offers a unique opportunity for companies willing to invest in early-stage projects. Effects of alternative investments The rise of alternative investment options like cryptocurrencies and technology-focused ventures has posed a challenge for Queensland’s junior gold sector. Bitcoin and other digital currencies have been touted as the 'digital gold' of the modern era, offering high liquidity and rapid returns. These assets have diverted attention and capital away from traditional mining projects, particularly those in early exploration stages. However, gold maintains its unique advantages, including its intrinsic value and use in various industrial applications. Unlike cryptocurrencies, gold is a tangible asset that has stood the test of time as a reliable store of wealth. To remain competitive, junior miners and explorers must emphasise these attributes while adopting innovative strategies to attract investment. The future of Queensland’s gold mining industry Queensland’s gold mining industry is well-positioned to benefit from sustained global demand. However, the sector must address several challenges to realise its full potential: Attracting investment: Junior miners must find ways to differentiate themselves in a competitive investment landscape. Offering greater transparency, leveraging new technologies and forming strategic partnerships can help attract funding. Sustainability and ESG initiatives: As environmental, social, and governance (ESG) criteria become increasingly important to investors, Queensland’s mining companies must prioritise sustainability. Adopting green mining practices and engaging with local communities will be critical. Leveraging technology: Advanced exploration techniques, such as AI-driven prospecting and remote sensing, can improve the efficiency and success rate of exploration campaigns. Investing in these technologies will give Queensland’s miners a competitive edge. Infrastructure development: Continued investment in infrastructure, particularly in remote areas like Cloncurry and Croydon, will be essential to unlocking Queensland’s full resource potential. Conclusion The global demand for gold shows no signs of slowing this year, buoyed by economic uncertainty, inflation, and central bank purchases. While major producers like Newcrest and Evolution Mining have thrived, Queensland’s junior miners and explorers face challenges in attracting investment.Competition from alternative assets like cryptocurrencies and the speculative nature of exploration projects have added complexity to the sector. Despite these challenges, Queensland’s gold mining industry has significant growth potential. With rich exploration tenements, promising new discoveries, and a commitment to sustainability, the state is well-positioned to capitalize on the ongoing gold boom. By addressing investor concerns and leveraging innovative technologies, Queensland can secure its place as a global leader in gold production.

Global demand for gold: What it means for Queensland’s gold mining industry

Industry Queensland

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