In the penultimate part of a series of exclusive outlooks for the global metals markets in 2010, MINING DAILY and IBISWorld find out whether the growth of gold will continue.
The Australian gold sector will look to appreciate steadily, rather than in leaps and bounds, sources have told MINING DAILY.
While gold prices rose sharply during the last half of 2009, they are expected to ease over the outlook period.
Andean Resources director Morrice Cordiner told MINING DAILY there is continued optimism for the gold price to rise by $150 to $200 over the course of next year.
“However, that would only be a 15% increase on the current gold price, which is not that steep a rise,” he said.
Australia’s gold production is expected to expand over the outlook period.
However, some projects in the earlier stages of development will face delays due to tightness in credit markets.
Increasingly, Australia’s gold production will come from larger mines, as smaller, short-life mines become uneconomic and are closed.
Taking this into account, Australia’s gold output is expected to be about 270 tonnes in 2011-12, before declining to about 260 tonnes in 2013-14.
Because greenfield gold exploration requires a lot of resource and is high-risk, it is likely that exploration and production will remain the province of larger companies.
Kingsgate’s Stephen Promnitz told MINING DAILY the cost of gold exploration and mining would continue to rise across the sector in 2010.
“A number of older gold provinces will be re-worked meaning that, along rising prices, many companies will be forced to look at lower grades,” he said.
“There are just very few new discoveries at the moment.
“Any real growth in the sector will come from newer provinces, such as Thailand, Brazil, Peru and Turkey, although most of the production growth will come from Asia and Russia.”
Overall, industry revenue is forecast to fall at an average annual rate of about 9.1% over the five years ending in 2013-14.
Profit is expected to drop more markedly, reflecting the flow through of lower gold prices and the typically higher costs associated with deeper mines and more complex geological formations.