Australia's gold industry is not reproducing the rapid output growth evident in the 1980s in a lagged response to higher gold prices

Australia's gold industry is not reproducing the rapid output growth evident in the 1980s in a lagged response to higher gold prices. A similar tripling in the gold price currently underway has improved project economics but the output response has been muted. Opportunities in the earlier period to apply new processing technologies to known areas of mineralisation and historic mining activity helped boost production. There is no comparable source of growth in the current cycle. Discovery is becoming more difficult and costly. The Commonwealth Department of Industry and Science has released an updated long term industry forecast pointing to gold mine production in 2019/20 of only 293 tonnes. This would be a growth rate since 2013-14 of just 1% a year. Low output growth and continuing upward cost pressures, albeit slightly less pronounced as a result of reduced energy and labour costs, do not bode well for the industry's investment attractiveness which hangs increasingly on an improvement in gold prices or further Australian dollar currency depreciation and less on its organic growth potential.