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Aussie gold output slumps

September 1, 2008 - 7:56AM

Sydney Morning Herald

Gold production in Australia, the world's third-largest producer, slumped 13% in the June quarter as rising production costs constrained output from mines, Surbiton Associates Pty said.

Output from mines including those owned by Newmont Mining and Newcrest Mining in the three months ended June 30 was 55 metric tons, 12% less than in the year ago period, Melbourne-based research group said in an e-mailed statement.

Surging prices of raw materials, fuel and labor are raising costs for Australian mining companies, curbing expansion plans and curtailing new production. Australian output for the full year dropped 7% to its lowest in 19 years, Surbiton said.

''Clearly, higher energy costs have contributed to the significant cost increase,'' said Sandra Close, a director of Surbiton Associates. ''While you can't draw too many conclusions from just one quarter's figures, there is cause for concern. Two of the gold sector's real challenges are cost containment and exploration spending.''

Newcrest's Telfer mine was the top Australian producing operation in the quarter with 146,101 ounces produced, followed by the Super Pit, a venture involving Newmont and the world's largest gold miner Barrick Gold Corp., the report said.

Prices have slumped 19.5% from a March 17 record of $US1,032.70 as a rally in the dollar reduced gold's appeal as an alternative investment. Bullion demand dropped 19% in the second quarter as near-record prices and wide fluctuations in costs discouraged purchases from jewelers, the biggest users, The World Gold Council said August 13.

Output rebounds

Still, Australian mine output rebounded from a 19-year low in the March quarter of 53 tons. The value of Australian gold exports was $7.2 billion in the 2008 fiscal year, Surbiton said.

Gold for immediate delivery fell 0.3% to $US831.15 an ounce on August 29, ending a three-day rally. The price has fallen about 10% since July 1.