New Gold Mining Activity Surges Ahead in Australia
SYDNEY — AFTER several sluggish years, the Australian gold industry is seeing an upturn. But analysts are careful not to call it a boom.
``I'd say it's more of a resurgence,'' says John Cairns, gold analyst, of the Australian Bureau of Agricultural and Resource Economics. ``It's regaining the strength it had.''
No matter what it is called, just try to find a drilling rig for rent in Kalgoolie, a Western Australia mining center. ``Nine months ago, you could get a discount rate,'' Mr. Cairns says. ``Now you can't get a rig.''
In South Australia, the number of applications for exploration licenses has tripled in the last nine months. ``We currently have 167 licenses in place,'' says Ric Horn, director of mineral explorations for the South Australia Department of Mines and Energy. ``The last time we had that many was 1986.''
A just-completed magnetic survey in South Australia of 197,000 square miles has revealed four prospective new mineral areas containing gold, nickel, zinc, lead, and copper.
``The new data has identified provinces or terrains not known before because of the 30 to 100 meters of sand coverage over prospective rocks,'' Mr. Horn says. ``Once we're able to see below that, we've identified potential not seen before.''
Kanowna Belle, a mine north of Kalgoolie in Western Australia has just opened. ``That was an area people went over many times before,'' says Steven Gerhardy, an economist with the Chamber of Mines and Energy in Perth. ``In fact, the town of Kanowna used to be gold producing and became a ghost town. But explorers using new techniques going deeper came across this fairly major resource.''
Spending is growing
Spending on exploration in the quarter ending in September was $101.1 million, the highest level since the end of 1989. Cairns says companies plan to expand their exploration budgets further.
``We have a high level of exploration interest due to success in finding economic ore bodies in Australia,'' Cairns says. ``In conjunction are the recent higher prices and high level of efficiency in management in exploration, mining, and mineral-processing stages.''
Australia, with 234 tons production, this year became the world's third largest gold-producing area, after North America (477 tons) and South Africa (601 tons), pushing out the Commonwealth of Independent States.
The movement can be attributed to Australian companies becoming more efficient during a decade of low gold prices, the low exchange rate for the Australian dollar, as well as to new exploration techniques.
Gold prices have had a turbulent year. After hitting a seven-year low of $326.30 an ounce in March, gold has once again begun to rise. Prices rose 26 percent to $407 an ounce in August, then fell back a bit.
Gold has closed recently at about $384 an ounce.
Overseas investors, especially from South Africa, are taking a closer look at Australia because of concerns over potential changes in land ownership laws in South Africa.
``Australia still presents a tremendous opportunity for underdeveloped resources,'' says David Galloway, research manager at McKinley Wilson, an investment house.
A few complications
Australia historically has been an attractive place to operate mines because of its stable politics, good infrastructure, and favorable investment policies compared to many developing countries.
But much has changed in Latin America and Southeast Asia. Many resource-rich countries in those regions are growing rapidly and are siphoning off the new investment that is available from outside sources.
The new Aboriginal land-rights legislation has provided another complication. It has left the industry concerned about negotiations with Aborigines over access to land.