Gold production margins in Australia remain high even as output declines — Surbiton

According to Surbiton Associates, Australian gold mining companies produced 73 tons of gold in the first quarter of 2025. This figure is 6 tons (or 7%) lower than the previous quarter but 3 tons (4%) higher than the first quarter of 2024.

Sandra Close, director of Surbiton Associates, said the recent decline in gold production in Australia was the result of rising metal prices.

She explained that higher gold prices make it profitable to extract ore containing less precious metal. Due to the surge in prices, the proportion of low-grade material in the processed ore has significantly increased. Although an increase in market value was expected to stimulate an upturn in production, many miners found themselves limited in processing ore immediately as a lot of existing treatment facilities were operating at almost full capacity.

As head grades decrease, less pure metal is produced, resulting in an increased cost per ounce. At the same time, Close notes that the cost of each ounce of gold produced continues to go up. Thus, many Australian companies maintain high profit margins despite declining output volumes.