Australia is a key player in the global gold industry, and gold exists in greater abundance in Australia than any other country in the world.
Australia holds 17 per cent of the world's gold resources, and exported $19.8 billion of gold in 2016-17.
The industry provided $442 million in royalty payments to state and territory governments, employed 26,000 people and paid average wages of $140,100 in 2015-16.
Gold’s unique properties are in demand.
Chemically inert, gold's non-reactivity makes it safe for use in the human body. It is also the most malleable of the metals, which means it can be beaten into thin sheets and used as a shield against heat and light.
Gold is also a ductile metal, which means it can be transformed into thin wires or threads for use in jewellery and clothing. It is also a highly conductive metal, which means it can transfer heat and electricity, making it the metal of choice for high end electronics.
New uses for gold including in antibiotics, smartphones and electric vehicles will bring new opportunities over the next three decades for gold companies in Australia.
According to Dr Trevor Keel at the World Gold Council gold compounds are also ‘showing promise as a new class of antibiotic in early-phase clinical studies. It is conceivable that gold-containing drugs will form part of our defence against infection by 2048’.
These new applications for gold combined with traditional investment demand in growing economies presents a significant opportunity for Australian gold mining companies to play a major role in future global supply chains.
However, this opportunity is far from guaranteed. A report from the World Gold Council lists a range of production challenges: ‘discoveries have been scant; permitting timelines are long; capital costs have ballooned; ESG [environmental, social and governance] requirements are becoming more challenging; operating costs have risen; and political risk has increased’.
These factors handicap the capacity of Australian gold producers in their efforts to develop new mines and sustain existing operations.
The recent risk of increased gold royalties in Western Australian and the Northern Territory shows a short-sighted approach to encouraging a world-class Australian industry at a time when production costs are growing.
Australia has already missed an opportunity in the past decade. The report shows much of the recent growth in global gold demand has been supplied from new emerging gold regions and mines in other parts of the world.
Both federal and state governments must support Australian gold miners with stable royalty and tax systems, sound environmental regulation and a commitment to exploration programs if Australia is to make the most of the next phase of technology-led growth in gold demand.