A mobile drilling rig, drilling core samples on a gold mining lease

Challenges facing the gold mining sector #blog

The gold industry has kept the Australian economy strong for the better part of the last century. Times have changed, though, with tight margins, high costs, and deeper deposits, and a whole host of new challenges facing the gold mining sector.

  • Skills

As many miners are ageing out of the business and approaching retirement, there is a distinct lack of miners waiting in the wings to pick up their downed tools to take over the operation. This includes the most skilled specialists and managers in the industry.

 

  • Costs

This is a particular problem for Australia as the country as the world’s second highest operating costs. The reason for this is the remote deposits and the cost required to power and fuel those mines and transport the product. Australian wages also factor into this, as they are higher than other countries. This isn’t helped by the skills shortage, this is driving up wages as it becomes more difficult to source replacements.

 

  • Growth Environments

Gold exploration took a nosedive in 2012 and a lot of that is down to the price of gold and a lack of interest from investors. While the government has introduced incentives to attract new campaigns, it’s certainly a long-term challenge. It affects drilling companies, assay labs, consumable supplies, and surveyors.

 

  • The Price of Gold

Gold prices are fairly volatile, they aren’t subject to the typical supply and demand limitations that other commodities are. With the majority of mined gold still in circulation, it isn’t converted, reused, or consumed like the base metal tends to be. Unfortunately, the price is also impacted by world affairs, politics, and conflict. The instability created by these factors generally have a positive impact on gold, and stable periods can weaken the price. For Australia, the exchange rate presents a unique challenge as the AUD is more volatile than the USD.

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