Matt Chambers | September 01, 2008


GOLD output in Australia sank to an 18-year low last financial year -- and not even a better fourth quarter could avert the poor result.
What the high metal price gave to producers, soaring energy costs took away.
The drop in output comes as a dramatic increase in costs in the past quarter threatens production at the nation's second-biggest mine, the Kalgoorlie Super Pit.
Added to that was the gold price starting the current quarter with its biggest nominal monthly drop in 25 years.
Australia produced 232 tonnes, or 7.46 million ounces, in the 12 months to June 30, down 7 per cent from the previous year, according to industry analyst Surbiton Associates.
Production in the June quarter remained in the doldrums -- up just 2 tonnes (3 per cent) from the 19-year low reached in the March quarter, to 55 tonnes, or 1.77 million ounces.
That is still 13 per cent lower than last year's June quarter.
Surbiton's Sandra Close said the Australian gold industry had suffered a 20 per cent increase in costs last quarter as oil and West Australian gas prices surged, marking a big acceleration in costs, which had already been moving higher for some time.
"Higher energy costs have contributed to the cost increase," Dr Close said. "You can't draw too many conclusions from one quarter's figures, but there is cause for concern."
That concern was voiced by Super Pit part-owner Newmont last month when it said it was reviewing operations at the iconic open pit, which mines the outback town's old Golden Mile.
Despite higher costs and gold prices dropping $US89 an ounce in August to $US835, production could have bottomed as Newmont's huge $2.4 billion Boddington mine in the south of Western Australia prepares to fire up. The mine is due for first production late this calendar year or early 2009.


http://www.theaustralian.news.com.au...07-643,00.html